Jason's bank statement is shown below:
| Beginning Balance | | 578.65 |
| ----------------- | - | ------ |
| Rent | 275.60 | - |
| Paycheck | - | 363.20 |
| Charitable donation | 20.00 | - |
| Keyboard | 63.29 | - |
| Refund on purchase | - | 21.19 |
| Groceries | 44.08 | - |
| Microwave | 68.74 | - |
| Ending Balance | | 491.33 |
However, Jason's bank statement says that his ending balance is $473.33. Which of the following is a possible explanation for the discrepancy?
A. Jason actually made two $20 charitable donations but forgot to write one of them down.
B. Jason listed the refund as a credit, but it should be a debit.
C. Jason listed the groceries out of habit, but he did not actually purchase them this week.
D. Jason transposed the digits on the microwave's price, which actually cost $86.74.
Answer (2)
The discrepancy of $18.00 in Jason's bank statement can be attributed to him mistakenly listing the microwave's price as $68.74 instead of $86.74 due to a transposition error. This led to an underreported expense, resulting in a mistakenly higher ending balance. Therefore, the correct choice is D.
;
Verify Jason's calculated ending balance: $578.65 - 275.60 + 363.20 - 20.00 - 63.29 + 21.19 - 44.08 - 68.74 = $491.33.
Calculate the discrepancy: $491.33 - $473.33 = $18.00.
Evaluate each option to see which explains the $18.00 discrepancy.
Option d, transposing the digits on the microwave's price ($86.74 - $68.74 = $18.00), accounts for the 18.00 d i scre p an cy . T h ere f ore , t h e an s w er i s \boxed{d}$.
Explanation
Problem Analysis Let's analyze Jason's bank statement discrepancy step by step to determine the most plausible explanation. We'll start by verifying Jason's calculated ending balance and then examine each option to see which one accounts for the difference between his calculation and the bank's statement.
Verifying Jason's Calculation First, let's verify Jason's calculated ending balance using the provided transactions:
Beginning Balance: $578.65 Rent: $275.60 (debit) Paycheck: $363.20 (credit) Charitable donation: $20.00 (debit) Keyboard: $63.29 (debit) Refund on purchase: $21.19 (credit) Groceries: $44.08 (debit) Microwave: $68.74 (debit)
Ending Balance = Beginning Balance - Rent + Paycheck - Charitable donation - Keyboard + Refund on purchase - Groceries - Microwave
Ending Balance = $578.65 - $275.60 + $363.20 - $20.00 - $63.29 + $21.19 - $44.08 - $68.74 = $491.33
So, Jason's calculated ending balance is indeed $491.33.
Calculating the Discrepancy Now, let's calculate the discrepancy between Jason's calculated ending balance and the bank statement ending balance:
Discrepancy = Jason's Calculated Ending Balance - Bank Statement Ending Balance
Discrepancy = $491.33 - $473.33 = $18.00
The discrepancy is $18.00. We need to find which of the given options explains this $18.00 difference.
Evaluating Each Option Let's evaluate each option:
a. Jason actually made two $20 charitable donations but forgot to write one of them down. This would mean an additional debit of $20. The new calculated balance would be $491.33 - $20 = $471.33. The discrepancy would be $491.33 - $471.33 = $20, not $18.00. This is not a possible explanation.
b. Jason listed the refund as a credit, but it should be a debit. This means the $21.19 was incorrectly added instead of subtracted. The correct calculation would be $491.33 - 2 * $21.19 = $448.95. The discrepancy would be $491.33 - $448.95 = $42.38, not $18.00. This is not a possible explanation.
c. Jason listed the groceries out of habit, but he did not actually purchase them this week. This means the $44.08 debit was incorrect and should not have been subtracted. The correct calculation would be $491.33 + $44.08 = $535.41. The discrepancy would be $535.41 - $491.33 = $44.08, not $18.00. This is not a possible explanation.
d. Jason transposed the digits on the microwave's price, which actually cost $86.74. The difference in price is $86.74 - $68.74 = $18.00. This would mean the microwave cost $18.00 more than Jason recorded. The new calculated balance would be $491.33 - $18.00 = $473.33. The discrepancy would be $491.33 - $473.33 = $18.00. This is a possible explanation.
Conclusion Therefore, option d is the correct explanation.
Examples
Understanding bank statement reconciliation is crucial in personal finance. For instance, if you're tracking your monthly expenses and notice a discrepancy between your records and your bank statement, it's essential to identify the cause. This could be due to forgotten transactions, errors in recording amounts, or even unauthorized charges. By systematically comparing your records with the bank statement, you can ensure accurate financial management and prevent potential fraud or overdraft fees. This skill is invaluable for maintaining financial health and making informed decisions about your money.
