Assume the following facts for Kurt Company: The month-end bank statement shows a balance of P40,000; outstanding checks total P2,000; a deposit of P8,000 is in transit at month-end; and a check for P400 was erroneously charged against the account by the bank

Accounting Jan 16, 2021

Assume the following facts for Kurt Company: The month-end bank statement shows a balance of P40,000; outstanding checks total P2,000; a deposit of P8,000 is in transit at month-end; and a check for P400 was erroneously charged against the account by the bank.

What is the correct cash balance at the end of the month?

Expert Solution

Computation of Correct Cash Balance at the End of the Month:

Balance as per Bank Statement Balance = 40,000

Less: Outstanding Checks = 2,000

Add: Deposit in Transit = 8,000

Add: Check erroneously charged = 400

Correct Cash Balance at the End of the Month = 46,400

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