Milton Company has just received the following monthly bank statement for June 2003.
|
Date |
Checks |
Deposits |
Balance |
|
1 Jun |
$25,000 |
||
|
2 Jun |
$150 |
24,850 |
|
|
3 Jun |
6,000 |
30,850 |
|
|
4 Jun |
750 |
30,100 |
|
|
5 Jun |
1,500 |
$28,600 |
|
|
7 Jun |
8,050 |
20,550 |
|
|
9 Jun |
$8,000 |
$28,550 |
|
|
10 Jun |
$3,660 |
24,890 |
|
|
11 Jun |
2,690 |
22,200 |
|
|
12 Jun |
9,000 |
31,200 |
|
|
13 Jun |
550 |
30,650 |
|
|
17 Jun |
7,500 |
$23,150 |
|
|
20 Jun |
5,500 |
28,650 |
|
|
21 Jun |
650 |
28,000 |
|
|
22 Jun |
700 |
27,300 |
|
|
23 Jun |
$4,140 |
$31,440 |
|
|
25 Jun |
1,000 |
30,440 |
|
|
30 Jun |
50* |
$30,390 |
|
|
Totals |
$27,250 |
32,640 |
Data from the cash account of Milton Company for June are as follows:
|
June 1 balance |
$20,440 |
||||
|
Checks written: |
Deposits: |
||||
|
June 1 . |
$1,500 |
2 Jun |
6,000 |
||
|
4 . |
8,500 |
5 |
8,000 |
||
|
6 . |
2,690 |
10 |
9,000 |
||
|
8 . |
$550 |
18 |
5,500 |
||
|
9 . |
7,500 |
30 |
6,000 |
||
|
12 . |
650 |
$34,500 |
|||
|
19 . |
700 |
||||
|
22 . |
1,000 |
||||
|
26 . |
$1,300 |
||||
|
27 . |
1,360 |
||||
|
$25,750 |
|||||
At the end of May, Milton had three checks outstanding for a total of $4,560. All three checks were processed by the bank during June. There were no deposits outstanding at the end of May. It was discovered during the reconciliation process that a check for $8,050, written on June 4 for supplies, was improperly recorded on the books as $8,500.
Required
1. Determine the amount of deposits in transit at the end of June.
2. Determine the amount of outstanding checks at the end of June.
3. Prepare a June bank reconciliation.
4. Prepare the journal entries to correct the cash account.
5. Interpretive Question: Why is it important that the cash account be reconciled on a timely basis?