Question - Kane Inc.'s bank statement from Western Bank at August 31, 2010, gives the following information.
Balance, August 1 $16,400 Bank debit memorandum:
August deposits 73,000 Safety deposit box fee $ 25
Checks cleared in August 68,678 Service charge 50
Bank credit memorandum: Balance, August 31 20,692
Interest earned 45
A summary of the Cash account in the ledger for August shows the following: balance, August 1, $16,900; receipts $77,000; disbursements $73,570; and balance, August 31, $20,330. Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for $5,000 and outstanding checks of $4,500. In addition, you determine that there was an error involving a company check drawn in August: A check for $400 to a creditor on account that cleared the bank in August was journalized and posted for $40.
(a) Determine deposits in transit.
(b) Determine outstanding checks.
(c) Complete a bank reconciliation at August 31.
(d) Journalize the adjusting entry to be made by Kane Inc. at August 31.