The following information is available for Trinkle Company for the month of June:

The unadjusted balance per the bank statement on June 30 was $52,607.
Deposits in transit on June 30 were $2,345.
A debit memo was included with the bank statement for a service charge of $16.
A $4,814 check written in June had not been paid by the bank.
The bank statement included a $1,400 credit memo for the collection of a note. The principal of the note was $1,365, and the interest collected amounted to $35.
Required:
Determine the true cash balance as of June 30. (Hint: It is not necessary to use all of the preceding items to determine the true balance.)

To determine the true cash balance as of June 30 for Trinkle Company, we need to adjust the unadjusted balance per the bank statement by accounting for the deposits in transit and the outstanding checks. Here's the step-by-step process:

1. **Start with the unadjusted balance per the bank statement:**
   \[
   \text{Unadjusted balance} = \$52,607
   \]

2. **Add deposits in transit:**
   \[
   \text{Deposits in transit} = \$2,345
   \]
   \[
   \text{Adjusted balance} = \$52,607 + \$2,345 = \$54,952
   \]

3. **Subtract outstanding checks:**
   \[
   \text{Outstanding check} = \$4,814
   \]
   \[
   \text{Adjusted balance} = \$54,952 - \$4,814 = \$50,138
   \]

Therefore, the true cash balance as of June 30 is:
\[
\boxed{\$50,138}
\]

This calculation considers the deposits in transit and the outstanding check, which are necessary to reconcile the bank statement balance to the company's books. Other items like the service charge, the credit memo for the note, and the interest collected are already accounted for in the company's book balance, so they do not affect the bank statement reconciliation.

Do you want details or have any questions?

Here are five questions you might consider next:
1. How do we record the debit memo for the service charge in the company's books?
2. What is the journal entry for the credit memo for the note collection?
3. How do we handle outstanding checks that remain unpaid for extended periods?
4. What is the importance of bank reconciliation in financial accounting?
5. Can you explain the impact of deposits in transit on the bank reconciliation process?

**Tip:** Always perform regular bank reconciliations to ensure that your financial records match the bank's records and to identify any discrepancies early.

Discover how to calculate the true cash balance for Trinkle Company by reconciling bank statements. Includes step-by-step instructions for adjusting balances for deposits in transit and outstanding checks. Relevant for financial professionals and accounting practitioners.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation