When a company records adjusting entries following the completion of a bank reconciliation, the cash account is debited for the amount of any deposit in transit.

Question

Quizplus · Accepted Answer

The cash account should not be debited for a deposit in transit in adjusting entries following a bank reconciliation. This adjustment would have already been made during the bank reconciliation process. Instead, the company may need to make other adjustments such as recording bank fees, interest income, or outstanding checks.

When a Company Records Adjusting Entries Following the Completion of a Bank