The Following Information Is Needed to Reconcile the Cash Balance

question 32

Multiple Choice

The following information is needed to reconcile the cash balance for Gourmet Catering Services.
• A deposit of $5,600 is in transit.
• Outstanding checks total $1,000.
• The book balance is $6,400 at February 28, 2019.
• The bookkeeper recorded a $1,800 check as $17,200 in payment of the current month's rent.
• The bank balance at February 28, 2019 was $17,410.
• A deposit of $400 was credited by the bank for $4,000.
• A customer's check for $3,300 was returned for nonsufficient funds.
• The bank service charge is $90.
What was the adjusted book balance?

• A) $18,500
• B) $18,410
• C) $18,590
• D) $17,500

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Definitions:

Deferred Income Tax Asset

A financial statement item that refers to taxes that have been accrued but not yet paid, which is considered a company asset because it indicates future tax payments that are lower than the current tax expense.

Income Before Taxes

A financial measure indicating the profitability of a company before accounting for income taxes.

Income Tax Rate

The percentage rate at which income is taxed by the government, varying based on income level and other factors.

Loss Carryback

A tax provision allowing companies to apply a net operating loss to previous tax years' profits, resulting in a tax refund.