Does anyone know why the bank statement balance of 16,000 is not included and reported as cash?
The following is from Becker FAR chapter 4 question:
Question CPA-00053
The following information pertains to Grey Co. at December 31, 1993:
Checkbook balance $12,000
Bank statement balance 16,000
Check drawn on Grey's account, payable to a vendor, dated and recorded
12/31/93 but not mailed until 1/10/94 1,800
On Grey's December 31, 1993, balance sheet, what amount should be reported as cash?
a. $12,000
b. $13,800
c. $14,200
d. $16,000
Explanation
Choice "b" is correct. Since the check is not disbursed as of December 31, 1993, it should be added back to the
checkbook balance in determining the 12/31/93 cash balance. Thus, the correct cash balance
$1,800
Because the question only asked you for the company's cash balance not the bank's.
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