On September 30 the bank statement of Fine Company showed a balance of $7,800. The following information was revealed by comparing the bank statement to the cash balance in Fine's accounting records: Deposits in transit amounted to $3,150 Outstanding checks amounted to $6,200 A $550 check was incorrectly drawn on Fine's account NSF checks returned by the bank were $750 The bank service charge was $29 Credit memo for $75 for the collection of one of the company's account receivable. Based on the above information the true cash balance was:

The true cash balance was $5,300

Explanation:

Bank Reconciliation: The bank reconciliation deals with the bank statement balance and the cash statement balance. The motive is to compare these two statements so that the organization can run in the smoothly manner.

There are various transactions due to which the bank statement balance and the cash statement balance do not match. To match these statements, we adjust the transactions accordingly.

The computation of the true balance is shown below:

= Bank balance + deposit in transit + check error - outstanding checks

= $7,800 + $3,150 + $550 - $6,200

= $5,300

The other information is related to the cash book balance. So, we do not consider in the computation part. Hence, ignored it