How would deposits in transit be handled when reconciling the ending cash balance as per the bank statement to the correct adjusted cash balance?

Added to the balance as per the bank statement.

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Subtracted from the balance as per the bank statement.

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Added to the balance as per company records.

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Ignored.

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Solution

The correct option is A Added to the balance as per the bank statement.
In case of deposits in transit the entry for would have been entered in the cash book due to which the cash book balance would be higher than the pass book balance.
So, while reconciling the ending cash balance as per the bank statement to the correct adjusted cash balance, deposits in transit should be added to the balance as per the bank statement.

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