At July 31, Sandhill Co. has this bank information: cash balance per bank $8,140, outstanding checks $770, deposits in transit $1,245 and a bank service charge $35. Determine the adjusted cash balance per bank at July 31.

The adjusted cash balance per bank at July 31 is $8,615.

Explanation:

Outstanding checks are the ones which the business has issued and recorded, but which the bank has not yet cleared. Hence, Sandhill Co. should deduct this amount from the cash balance per bank.

Deposits in transit are the deposits that are received and recorded by the business, but which the bank has not yet processed. Hence, Sandhill Co. should add this amount to its cash balance per bank.

The bank service charge is already accounted for in the cash balance per bank and requires no further treatment.

Therefore,

Initial cash balance per bank               $8,140

Less: Outstanding checks                    ($770)

Add: Deposits in transit                        $1,245

Adjusted cash balance per bank         $8,615

$8,615

Explanation:

Sandhill Co

Unadjusted balance per bank statement $8,140

Add deposits in transit $1,245

Less outstanding checks $770

Adjusted balance per bank $8,615

Therefore the adjusted cash balance per bank at July 31 is $8,615

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