Herbert Company deposited $25,000 in its bank on the same day as, but after the bank prepared Herbert Company's bank statement. The deposit should appear on the bank reconciliation as a(n) ________ and is called a(n) ________.
A) addition to the bank balance; outstanding deposit
B) addition to the bank balance; deposit in transit
C) deduction to the bank balance; deposit in transit
D) deduction to the bank balance; outstanding deposit

Question

Quizplus · Accepted Answer

The deposit that was made by Herbert Company but not yet recorded by the bank is called a deposit in transit. It should be added to the bank balance on the bank reconciliation. Therefore, the best choice is B, which states that the deposit should be added to the bank balance and it is a deposit in transit.

Herbert Company Deposited $25,000 in Its Bank on the Same