Determine the amount of deposits in transit

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Reference no: EM132801240

Problem - Patry Corp. deposits all receipts intact and makes all payments by cheque. The following information is available from the cash records:

April 30 Bank Reconciliation

Balance per bank

$7,120

Add: Deposits in transit

1,540

Deduct: Outstanding cheques

(2,000)

Balance per books

$6,660

Month of May Results

 

Per Bank

Per Books

Balance on May 31

$7,760

$10,570

May deposits

5,000

5,810

May cheques

4,000

3,100

May note collected (not included in May deposits)

900

-

May bank service charge

25

-

May NSF cheque from a customer, returned by the bank (recorded by the bank as a charge)

235

-

Required -

a. Determine the amount of deposits in transit and outstanding cheques at May 31. Keep in mind the time lag between deposits and cheques being recorded in the books and when they are recorded by the bank.

b. Prepare a May 31 bank reconciliation showing balance per bank statement and balance per books and correct cash balance.

c. Prepare the journal entry or entries to correct the Cash account at May 31.

Reference no: EM132801240

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