A review of the bank statement and accounting records of the Blake Company revea

Question

A review of the bank statement and accounting records of the Blake Company revealed the following items: Item no. Description Three outstanding checks 2) A debit memo showing a bank service charge 3) A deposit in transit 4) An NSF check written by one of Blake's customers 5) A certified check written by Blake 6) A credit memo reflecting interest revenue earned by Blake Which of the item(s) would be added to the unadjusted bank balance to determine the true cash balance? Multiple Choice tem numbers 1 and 3 tem number 2 ltem numbers 3, 4, and 6 ltem number 3

Explanation / Answer

Multiple Choice 1) Option (d) Item number 3 Deposits in transit increase a company's cash balance, and have already been recorded by Blake So they should be added to the unadjusted bank balance 2) Option (a) $ 40,130 Revenue = $1,29,000 Collection from Receivables = $85,000 Baddebt = $3,870 ($1,29,000*3%) Net Realizable value of receivables = $40,130 (1,29,000-85,000-3,870) c) Option (a) $ 7,900 As per LIFO Method :- (600*3.40+1,000*3.30+800*3.20)

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