At April 30, Mendoza Company has the following bank information: $$\begin{array} { l r }
\text { Cash balance per bank } & \$ 7,200 \
\text { Outstanding checks } & \$ 560 \
\text { Deposits in transit } & \$ 1,100 \
\text { Credit memo for interest } & \$ 20 \
\text { Bank service charge } & \$ 40
\end{array}$$ What is Mendoza's adjusted cash balance on April 30?
A) $7,720.
B) $7,760.
C) $6,660.
D) $7,740.

Question

At April 30, Mendoza Company has the following bank information: $$\begin{array} { l r } 
\text { Cash balance per bank } & \$ 7,200 \
\text { Outstanding checks } & \$ 560 \
\text { Deposits in transit } & \$ 1,100 \
\text { Credit memo for interest } & \$ 20 \
\text { Bank service charge } & \$ 40
\end{array}$$ What is Mendoza's adjusted cash balance on April 30?
A) $7,720.
B) $7,760.
C) $6,660.
D) $7,740.

Quizplus · Accepted Answer

The adjusted cash balance is calculated by taking the cash balance per bank ($7,200), adding deposits in transit ($1,100), and subtracting outstanding checks ($560). The credit memo and bank service charge are not included in the bank reconciliation. Thus, the adjusted cash balance is $7,200 + $1,100 - $560 = $7,740.

At April 30, Mendoza Company Has the Following Bank Information