Question

Saturn Company deposits all receipts daily and makes all payments by cheque. The following information is available from the cash records of Saturn in the month of April, its first month of operations: Month of April Results Per Bank Per Books Balance April 30 $42,000 $42,140 April deposits recorded 11,200 17,300 April cheques recorded 12,010 14,320 Items on bank statement but not in books: Note collected by bank 5,500 -0- Bank service charge 50 -0- Customer’s NSF cheque returned by the bank 1,800 -0-

Instructions a) Calculate the amount of the April 30: 1. Deposits in transit 2. Outstanding cheques. Deposits in transit:______________________________________________ Outstanding cheques:_______________________________________________

b) What is the April 30 adjusted cash balance for Saturn?

c) Prepare any necessary journal entries by Saturn.

Answer 1

Deposits in transit:
Checks deposited as per books		17300
Less: Checks deposits as per bank	11200
Deposits in transit:			6100
Outstanding checks
Checks issued as per books		14320
Less: Checks cleared as per bank	12010
Outstanding checks			2310
Req b.
Balance as per book			42140
Add: Note collected			5500
Less: Service charges			-50
Less: NSF check			-1800
Adjusted balance as per book		45790
Req c.
Entries
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Cash account			5500
	Notes receivable				5500
	(for note collected)
b.	Misc. expense			50
	Cash account				50
	(for service charges recorded)
c.	Accounts receivable			1800
	Cash account				1800
	(for NSF check)