Updating cash book for unrecorded bank items

Steps:

• Start with debit balance: $25,000
• Subtract unrecorded direct debits: $25,000 -$6,500 = $18,500
• Add unrecorded customer deposits: $18,500 +$5,500 = $24,000
• Subtract unrecorded bank charges: $24,000 -$1,500 = $22,500

Why C is correct:

• Cash book balance reflects all bank transactions per double-entry accounting, adjusted to $22,500 after including outflows and inflows.

Why the others are wrong:

• A: Mistakenly subtracts the $4,500 as an additional outflow, ignoring it's not an unrecorded cash book item.
• B: Results from arithmetic error, like subtracting customer deposits instead of adding.
• D: Ignores all unrecorded items, leaving original balance unchanged.

Final answer: C