Question

scenario 9: redwood consulting
the following information has been collected for redwood consultings may bank reconciliation:
balance according to the may bank statement: $7,050.
balance according to the internal company ledger: $5,900.
a deposit for $1,234 was incorrectly recorded in the books as $1,324.
the bank collected a $400 payment from a client and charged a $15 fee for the service.
the account earned $5 in interest during may.
check #550 for $850 has not been cashed yet.
what is the business adjusted book balance?
your answer

Explanation:

Step1: Correct the deposit error

The deposit was over - recorded by $1324 - 1234=90$. So we subtract this over - recording from the initial ledger balance. The adjusted balance after this step is $5900-90 = 5810$.

Step2: Account for bank - collected payment

The bank collected a $400$ payment from a client, so we add this amount to the balance. The balance becomes $5810 + 400=6210$.

Step3: Account for bank service fee

The bank charged a $15$ service fee, so we subtract this from the balance. The balance is $6210-15 = 6195$.

Step4: Account for interest earned

The account earned $5$ in interest, so we add this to the balance. The final adjusted book balance is $6195 + 5=6200$.

Answer:

$6200$