Tavarez Company assembled the following information in completing its July bank reconciliation: balance per bank $11,460; outstanding checks $2,325; deposits in transit $3,750; NSF check $240; bank service charge $75; cash balance per books $13,200. As a result of this reconciliation, Tavarez will
A) reduce its cash account by $1,425.
B) reduce its cash account by $75.
C) increase its cash account by $165.
D) reduce its cash account by $315.

Question

Quizplus · Accepted Answer

To reconcile the bank statement, we need to adjust the cash balance per books to the balance per bank. The outstanding checks ($2,325) and the NSF check ($240) need to be subtracted from the balance per books ($13,200). The deposits in transit ($3,750) need to be added. Additionally, the bank service charge ($75) needs to be subtracted. 
$11,460 (balance per bank) - $2,325 (outstanding checks) - $240 (NSF check) + $3,750 (deposits in transit) - $75 (bank service charge) = $12,570 (adjusted cash balance per books)
Therefore, the cash account needs to be reduced by $315 ($13,200 - $12,570) to match the balance per bank.

Tavarez Company Assembled the Following Information in Completing Its July