10.11

Question 1

Hilltop Co.’s monthly bank statement shows a balance of $54,200. Reconciliation of the statement with company books reveals the following information:

Bank service charge $10
Insufficient funds check 650
Checks outstanding 1,500
Deposits in transit 350
Check deposited by Hilltop and cleared by the bank for $125
but improperly recorded by Hilltop as $152
What is the net cash balance after the reconciliation?

$52,363
$53,023
$53,050
$53,077

Answer 1

$53,050

**The reconciling items that need to be adjusted to the bank balance are: checks outstanding (−1,500) and deposit in transit (+350). The net cash after the reconciliation is: Bank balance $54,200 − 1,500 + 350 = $53,050. The bank service charge and insufficient funds are already reflected in the bank balance. The error is on Hilltop’s books, not on the bank statement, and therefore it does not need to be included in the reconciliation.