Basic Accounting Help?

Question

Hello everyone. I'm currently taking a summer accounting course at University and having a real difficult time wrapping my head around some of the questions.

I'd love to get your help so if you can answer these questions then that'd be great! Oh and please be sure to show your work when possible : )

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1) At July 31 Ballah Company has this bank information: cash balance per bank $7,800; outstanding checks $762; deposits in transit $1,350; and a bank service charge $40.

Determine the adjusted cash balance per bank at July 31.

2) The following information is available for Gurek Company for the month of January: expected cash receipts $60,000; expected cash disbursements $67,000; cash balance on January 1, $12,000. Management wishes to maintain a minimum cash balance of $8,000.

Prepare a basic cash budget for the month of January.

Thanks!

Answer 1

1) At July 31 Ballah Company has this bank information: cash balance per bank $7,800;

less outstanding checks ($762);

add deposits in transit $1,350;  

less bank service charge ($40)

= adjusted cash balance per bank at July 31 $8,348

cash balance on January 1, $12,000

add expected cash receipts $60,000

less expected cash disbursements ($67,000)

= cash balance Jan 31 $5,000

This is short of the desired $8k, so either management has to work hard to increase receipts or defer some of the disbursements.