Question

Saved 6 Nickleson Company had an unadjusted cash balance of $7750 as of May 31 The company's bank statement, also dated May 31, included a $72 NSF check written by one of Nickleson's customers. There were $700 in outstanding checks and $950 in deposits in transit as of May 31. According to the bank statement, service charges were $50, and the bank collected a $800 note receivable for Nickleson. The bank statement also showed $13 of interest revenue earned by Nickleson Required Determine the true cash balance as of May 31. (Hint: It is not necessary to use all of the preceding items to determine the true balance.) 5 Don True cash balance Book Print

Answer 1

Given:

Unadjusted Cash Balance as of May 31 = $7,750

Interest Earned = $13

Note Collected by Bank = $800

NSF check = $72

Bank charges = $50

Now,

The True Cash Balance is calculated as:

= Unadjusted Bank Balance + Deposit in transit (Interest earn + Note collected by bank) - Outstanding check (NSF check + Bank charges)

= $7,750  + ( $13 + $800)  - ( $72  + $50 )

 = $8,441

Answer 2

True Cash Balance :
Unadjusted Blance	7,750
Add : Bank Collection directly	800
Add : Interest earned	13
Less : NSF	-72
Less : Service Charge	-50
True Cash Balance	8,441