Bank Deposit in Transit

With the holiday this month we will have checks available for deposit that 
will not actually hit the bank's statement until next month.

1) What is the best way to handle this?  I was going to make the deposit as 
of the last day of the month and then do a transfer to "Cash in Transit" for 
the month end and then back to checking next month.  Am I making too much out 
of this?

2) What happens if I do not make the deposit until next month?  How will 
those undeposited checks show up on the balance sheet?

Thanks,

John Trax
0
JohnTrax (24)
8/31/2008 6:23:10 PM
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John,

You may be over thinking it. Most companies I know would deposit it as
of the last day of the month if it's physically in house, even if it's
not at the bank. The only time they would consider making a cash in
transit adjustment would be year end or quarter end and even then,
only if the amount was material. I know one company that even counts
cash received on the 1st as last month's cash under the assumption
that the cash had to have been in transit before month end to arrive
on the first and their big 4 audit firm is ok with that.

I would show the cash you got as a deposit in GP as of the end of the
month. The bank rec will show it as a deposit in transit that clears
in the next month. If you deposit it next month, the current month
bank rece won't show anything because it's dated for next month and
the cash and AR will remain unchanged as of the last day of the month.

This is an opinion. I'm a FL licensed CPA but this is not an official
opinion by me so don't take it that way.

Mark


On Aug 31, 2:23=A0pm, John Trax <JohnT...@discussions.microsoft.com>
wrote:
> With the holiday this month we will have checks available for deposit tha=
t
> will not actually hit the bank's statement until next month.
>
> 1) What is the best way to handle this? =A0I was going to make the deposi=
t as
> of the last day of the month and then do a transfer to "Cash in Transit" =
for
> the month end and then back to checking next month. =A0Am I making too mu=
ch out
> of this?
>
> 2) What happens if I do not make the deposit until next month? =A0How wil=
l
> those undeposited checks show up on the balance sheet?
>
> Thanks,
>
> John Trax

0
mpolino (496)
8/31/2008 7:06:57 PM
Not being a CPA myself. I have always recommended to my clients that any 
amount actually deposited (with a dated depoist receipt) be deposited as 
funds in the current month, even if they will not clear the bank until next 
month.  

As Mark said, if this amount is material, or in the case of credit card 
payments on web orders that will not be deposited in the bank until next 
month through the clearing process, then a funds in transit adjustment is 
made.

-- 
Richard L. Whaley
Author / Consultant / MVP 2006-2008
Documentation for Software Users

Get our Free Tips and Tricks Newsletter and check out our books at 
http://www.AccoladePublications.com



"Mark Polino [MVP] (DynamicAccounting.net" wrote:

> John,
> 
> You may be over thinking it. Most companies I know would deposit it as
> of the last day of the month if it's physically in house, even if it's
> not at the bank. The only time they would consider making a cash in
> transit adjustment would be year end or quarter end and even then,
> only if the amount was material. I know one company that even counts
> cash received on the 1st as last month's cash under the assumption
> that the cash had to have been in transit before month end to arrive
> on the first and their big 4 audit firm is ok with that.
> 
> I would show the cash you got as a deposit in GP as of the end of the
> month. The bank rec will show it as a deposit in transit that clears
> in the next month. If you deposit it next month, the current month
> bank rece won't show anything because it's dated for next month and
> the cash and AR will remain unchanged as of the last day of the month.
> 
> This is an opinion. I'm a FL licensed CPA but this is not an official
> opinion by me so don't take it that way.
> 
> Mark
> 
> 
> On Aug 31, 2:23 pm, John Trax <JohnT...@discussions.microsoft.com>
> wrote:
> > With the holiday this month we will have checks available for deposit that
> > will not actually hit the bank's statement until next month.
> >
> > 1) What is the best way to handle this?  I was going to make the deposit as
> > of the last day of the month and then do a transfer to "Cash in Transit" for
> > the month end and then back to checking next month.  Am I making too much out
> > of this?
> >
> > 2) What happens if I do not make the deposit until next month?  How will
> > those undeposited checks show up on the balance sheet?
> >
> > Thanks,
> >
> > John Trax
> 
> 
0
info4071 (3004)
9/1/2008 12:00:01 AM
Thanks Mark (and Richard).  I think was over reacting on this.  I'll just 
make the deposit as usual on last day of month.  I was concerned that this 
would make reconciling the bank statement a mess.

Thanks again!

"Mark Polino [MVP] (DynamicAccounting.net" wrote:

> John,
> 
> You may be over thinking it. Most companies I know would deposit it as
> of the last day of the month if it's physically in house, even if it's
> not at the bank. The only time they would consider making a cash in
> transit adjustment would be year end or quarter end and even then,
> only if the amount was material. I know one company that even counts
> cash received on the 1st as last month's cash under the assumption
> that the cash had to have been in transit before month end to arrive
> on the first and their big 4 audit firm is ok with that.
> 
> I would show the cash you got as a deposit in GP as of the end of the
> month. The bank rec will show it as a deposit in transit that clears
> in the next month. If you deposit it next month, the current month
> bank rece won't show anything because it's dated for next month and
> the cash and AR will remain unchanged as of the last day of the month.
> 
> This is an opinion. I'm a FL licensed CPA but this is not an official
> opinion by me so don't take it that way.
> 
> Mark
> 
> 
> On Aug 31, 2:23 pm, John Trax <JohnT...@discussions.microsoft.com>
> wrote:
> > With the holiday this month we will have checks available for deposit that
> > will not actually hit the bank's statement until next month.
> >
> > 1) What is the best way to handle this?  I was going to make the deposit as
> > of the last day of the month and then do a transfer to "Cash in Transit" for
> > the month end and then back to checking next month.  Am I making too much out
> > of this?
> >
> > 2) What happens if I do not make the deposit until next month?  How will
> > those undeposited checks show up on the balance sheet?
> >
> > Thanks,
> >
> > John Trax
> 
> 
0
JohnTrax (24)
9/1/2008 12:26:00 AM
Reply:

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