Carothers Company Assembled the Following Information in Completing Its March

question 223

Multiple Choice

Carothers Company assembled the following information in completing its March bank reconciliation: balance per bank $7,640; outstanding checks $1,550; deposits in transit $2,500; NSF check $160; bank service charge $50; cash balance per books $8,800. As a result of this reconciliation, Carothers will

• A) reduce its cash account by $50.
• B) reduce its cash account by $210.
• C) reduce its cash account by $950.
• D) increase its cash account by $110.

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Definitions:

Merchandise Purchased

Goods bought by a business for the purpose of resale, forming part of its inventory.

Cost Of Goods Available

The total cost of all merchandise or materials available for sale or use, including beginning inventory plus purchases.

Purchase Returns

Goods returned by the buyer to the supplier due to defects, inaccuracies in shipment, or other discrepancies.

Allowances

A deduction from the gross amount on an invoice by the buyer for goods purchased or to cover some type of shortcoming.