Russel Company Assembled the Following Information in Completing Its March

question 61

Multiple Choice

Russel Company assembled the following information in completing its March bank reconciliation: $$\begin{array} { l r } \text { Balance per bank } & \$ 19,100 \\\text { Outstanding checks } & \$ 3,875 \\\text { Deposits in transit } & \$ 6,250 \\\text { NSF check } & \$ 400 \\\text { Bank service charges } & \$ 125 \\\text { Cash balance per books } & \$ 22,000\end{array}$$ As a result of this reconciliation Russel will

• A)reduce its cash account by $2375.
• B)reduce its cash account by $125.
• C)increase its cash account by $275.
• D)reduce its cash account by $525.

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Definitions:

Call Contract

A financial contract that gives the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a predetermined price within a specified time period.

Put Contract

A financial agreement that grants the holder permission, but not the requirement, to sell a certain amount of an underlying asset at a predetermined price before a certain deadline.

Call Premium

The additional cost over the par value that an investor must pay to purchase a callable security before its maturity date.

Strike Price

The predetermined price at which the holder of an option can buy (call) or sell (put) the underlying asset, until the option expires.