The unadjusted balance of the cash account for the company is $21,342 as of December 31, xxx1. The bank statement shows a balance of $27,350, including bank service charges $29, outstanding checks $7,700, NSF check from a customer $540, and deposit on transit $1,321. The check #433 was correctly written and paid by the bank for the amount of $234, however the check was registered in the books for $432. The company uses the perpetual inventory system.

10. When the company is preparing the bank reconciliation, the correct bank balance is determined by

a) $27,350 + $1,321 - $7,700

2. $27,350 - $1,321 + $7,700
3. $21,342 + $1,321 - $7,700

11. When the company is preparing the bank reconciliation, the correct book balance is determined by

1. $21,342 + $540 + $29 - $198
2. $21,342 - $540 - $29 + $198
3. $21,342 - $540 - $29 + $234