TCO F) Northville Paper and Paint deposits all receipts and makes all payments b
ID: 2501853 • Letter: T
Question
TCO F) Northville Paper and Paint deposits all receipts and makes all payments by check. The following information is available from the cash records.
April 30
BANK RECONCILIATION
Balance per bank
$26,746
Add: Deposits in transit
2,100
Deduct: Outstanding checks
(3,800)
Balance per books
$25,046
Month of May Results
Per Bank
Per Books
Balance May 31
$27,995
$24,355
May deposits
10,000
12,889
May checks
11,100
16,080
May note collected
3,000
-0-
(not included in April deposits)
May bank service charge
35
-0-
May NSF check of a customer
900
-0-
returned by the bank
(recorded by bank as a charge)
Calculate the following amounts.
(1) Deposits in transit on May 31
(2) Outstanding checks on May 31
Balance per bank
$26,746
Add: Deposits in transit
2,100
Deduct: Outstanding checks
(3,800)
Balance per books
$25,046
Month of May Results
Per Bank
Per Books
Balance May 31
$27,995
$24,355
May deposits
10,000
12,889
May checks
11,100
16,080
May note collected
3,000
-0-
(not included in April deposits)
May bank service charge
35
-0-
May NSF check of a customer
900
-0-
returned by the bank
(recorded by bank as a charge)
Explanation / Answer
Part 1)
The value of deposits in transit will be calculated with the use of following formula:
Deposits in Transit = May Deposits Per Books - (May Deposits Per Bank - Deposits in Transit as Per Bank Reconciliation on 30th April)
_________
Here, May Deposits Per Books = $12,889, May Deposits Per Bank = $10,000 and Deposits in Transit as Per Bank Reconciliation on 30th April = $2,100
Using these values in the above formula, we get,
Deposits in Transit on May 31 = 12,889 - (10,000 - 2,100) = $4,989
_________
Part 2)
The value of outstanding checks will be calculated with the use of following formula:
Outstatanding Checks = May Checks Per Books - (May Checks Per Bank - Outstanding Checks as Per Bank Reconciliation on 30th April)
_________
Here, May Check Per Books = $16,080, May Checks Per Bank = $11,100 and Outstanding Checks as Per Bank Reconciliation on 30th April = $3,800
Using these values in the above formula, we get,
Outstatanding Checks on May 31 = 16,080 - (11,100 - 3,800) = $8,780
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