Adjusting cash book for unrecorded bank items

Steps:

• Start with cash book debit balance of $900.
• Subtract unrecorded bank charges: $900 -$250 = $650.
• Subtract unrecorded direct debit: $650 -$280 = $370.
• Add unrecorded credit transfer: $370 +$300 = $670.

Why B is correct:

• Bank reconciliation requires updating the cash book with unrecorded items to match the true bank position, yielding $670 after deductions and addition.

Why the others are wrong:

• A. $70: Subtracts all items without adding credit transfer.
• C. $1,290: Adds credit transfer to original without any subtractions.
• D. $1,130: Subtracts only bank charges from original balance.

Final answer: B