Prepare bank reconciliation and adjusting entries.

(LO 3), AP

Perth Inc.'s bank statement from Main Street Bank at August 31, 2017, 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:

Determine deposits in transit.

Determine outstanding checks.

(Hint: You need to correct disbursements for the check error.)

Prepare a bank reconciliation at August 31.

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