Consider the following situations for Company A: Situation #1: On the June 30 ba
ID: 2493205 • Letter: C
Question
Consider the following situations for Company A:
Situation #1:
On the June 30 bank reconciliation, deposits in transit total $720. During July, the Cash account in the general ledger shows deposits of $15,750. The bank statement for July shows that $15,600 in deposits were received during the month.
Situation #2:
On the June 30 bank reconciliation, outstanding checks were $680. During the month of July, the Cash account in the general ledger shows that $17,200 of checks were issued. The bank statement showed that $16,400 of checks cleared the bank in July.
Situation #3:
In September, deposits per the bank statement totaled $26,700, deposits per books were $25,400, and deposits in transit at September 30 were $2,100.
Situation #4:
In September, cash disbursements per books were $23,700, checks clearing the bank were $25,000, and outstanding checks at September 30 were $2,100.
In all 4 situations, there were no bank debit or credit memos. Also, no Cash account errors were made by either the bank of the company.
In situation #3, the deposits in transit at August 31 were $ ___________.
a. $3,100
b. $2,100
c. None of these answers are correct
d. $1,870
e. $3,400
Explanation / Answer
Situation 3 Deposits as per bank statement - Sept 26700 Less - deposits as per books 25400 Difference 1300 opening deposits in transit ( August) + checks deposited in September - checks cleared in September = closing deposit in transit x +25400-26700 = 2100 x - 1300 = 2100 x = 2100 + 1300 x = 3400 Hence, deposit in transit at August ( opening) = 3400 Option e - $ 3400 is correct