Preparing a Bank Reconciliation Milton Company has just received the following monthly bank statement for June 2009.

Data from the cash account of Milton Company for June are as follows:

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?

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Date Checks Deposits Balance June 01 $25,000 June 02 $ 150 24,850 June 03 $ 6,000 30,850 June 04 750 30,100 June 05 1,500 28,600 June 07 8,050 20,550 June 09 8,000 28,550 June 10 3,660 24,890 June 11 2,690 22,200 June 12 9,000 31,200 June 13 550 30,650 June 17 7,500 23,150 June 20 5,500 28,650 June 21 650 28,000 June 22 700 27,300 June 23 4,140* 31,440 June 25 1,000 30,440 June 30 50* 30,390 Totals $27,250 $32,640 *Bank service charge. *Note collected, including $140 interest.