lo 4 thompson companys ending cash balance is $950 before adjusting items. the only adjusting items were:\n…

lo 4 thompson companys ending cash balance is $950 before adjusting items. the only adjusting items were:\n- $25 service charge\n- nsf check for $200\n- $300 deposit in transit\n- outstanding checks total $450\nwhat was thompson companys unadjusted bank balance on the bank statement?

lo 4 thompson companys ending cash balance is $950 before adjusting items. the only adjusting items were:\n- $25 service charge\n- nsf check for $200\n- $300 deposit in transit\n- outstanding checks total $450\nwhat was thompson companys unadjusted bank balance on the bank statement?

Answer

Explanation:

Step1: Analyze the impact of each item

The service - charge and NSF check reduce the company's book balance. The deposit in transit increases the bank balance when it clears and outstanding checks decrease the bank balance when they clear. We want to find the unadjusted bank balance. Let the unadjusted bank balance be $x$. The adjusted cash balance (book balance) is calculated as follows: The initial book balance is $950$. The service - charge of $25$ and NSF check of $200$ reduce it, so the adjusted book balance is $950−25 - 200=725$. The adjusted bank balance is $x + 300-450$. Since the adjusted book balance and adjusted bank balance should be equal in a bank - reconciliation.

Step2: Set up the equation

We set up the equation $x + 300-450=725$.

Step3: Solve for $x$

First, simplify the left - hand side of the equation: $x-150 = 725$. Then, add 150 to both sides of the equation: $x=725 + 150=875$.

Answer:

$875$