Linville Company Gathered the Following Reconciling Information in Preparing Its

question 114

Multiple Choice

Linville Company gathered the following reconciling information in preparing its April bank reconciliation: $\begin{array}{lr}\text { Cash balance per books, } 4 / 30 & \$ 17,600 \\\text { Deposits in transit } & 2,400 \\\text { Notes receivable (face, } \$ 5,000 \text { ) and interest collected by bank } & 5,920 \\\text { Bank charge for check printing } & 30 \\\text { Outstanding checks } & 12,000 \\\text { NSF check } & 1,120\end{array}$ Use the following tabular analysis to determine the required adjustment for the notes receivable to Linville's accounts assuming that no interest has been accrued:

• A)Increase Cash $5920 decrease Notes Receivable $5920.
• B)Decrease Cash $5920 increase Interest Expense $920 decrease Notes Payable $5000.
• C)Increase Cash $5920 increase Interest Revenue $920 decrease Notes Receivable $5000.
• D)No adjustment is needed because the bank collected the note.

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Definitions:

Merchandise Inventory

Merchandise inventory consists of products that a company intends to sell in the regular course of business.

Building Contractors

Professionals or companies responsible for the construction, repair, or renovation of buildings, overseeing project completion from start to finish.

Monthly Depreciation

The portion of a fixed asset's cost allocated as an expense over a single month, reflecting the asset's usage and loss of value.

Cash Balance

The total amount of cash or cash equivalents a company or individual holds at any given time.