Werth Inc.’s bank statement from Hometown Bank at August 31, 2014, gives the following information.

Balance, August 1 $18,400 Bank debit memorandum:

August deposits 71,000 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, $18,700; receipts $74,000; disbursements $73,570; and balance, August 31,

$19,130. Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for $4,800 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.

Instructions

(a) Determine deposits in transit.

(b) Determine outstanding checks. (Hint: You need to correct disbursements for the check error.)

(c) Prepare a bank reconciliation at August 31.

(d) Journalize the adjusting entry(ies) to be made by Werth Inc. at August 31.AppendixLO1