Question

The cash records of Mercury Company show the following:

1.		The June 30 bank reconciliation indicated that deposits in transit totaled $790. During July the general ledger account Cash shows deposits of $9,800, but the bank statement indicates that only $8,240 in deposits were received during the month.
2.		The June 30 bank reconciliation also reported outstanding checks of $1,200. During the month of July, Mercury Company books show that $11,570 of checks were issued, yet the bank statement showed that $11,100 of checks cleared the bank in July.

There were no bank debit or credit memoranda and no errors were made by either the bank or Mercury Company.

What were the deposits in transit at July 31?

Deposits in transit at July 31

$

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What were the outstanding checks at July 31?

Outstanding checks at July 31

$

Answer 1

(1). According to the scenario 1, computation of the given data are as follows:

Deposit in transit on June 30 (a) = $790

Cash deposited during July (b) = $9,800

Deposits as per bank during July (c) = $8,240

So, Deposit in transit at July 31 = (a + b) - c

= ($790 + $9,800) - $8,240

= $10,590 - $8,240

= $2,350

(2). According to the scenario 2, computation of the given data are as follows:

Outstanding checks on June 30 (a) = $1,200

Checks issued during July (b) = $11,570

Checks cleared as per bank during July (c) = $11,100

So, Outstanding Checks at July 31 = (a + b) - c

= ($1,200 + $11,570) - $11,100

= $12,770 - $11,100

= $1,670