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Which adjustment is made in regards to deposits in transit

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As of 12/31 the cash balance in Ellery, Inc.'s books is $75,000. The bank statement, however, showed a balance of $100,000 as of the same date. The only reconciling items were deposits in transit of $15,000, interest earned of $225, a bank service charge of $115 and outstanding checks.

Problem 1: In determining the Adjusted Book Balance, the following adjustment is made in regards to the deposits in transit:

Option 1: $15,000 is subtracted from the balance of Ellery, Inc.'s 12/31 cash balance on its bank statement.

Option 2: $15,000 is added to the balance of Ellery, Inc.'s 12/31 cash balance on its bank statement.

Option 3: $15,000 is subtracted from the balance of Ellery, Inc.'s 12/31 cash balance on its books.

Option 4: $15,000 is added to the balance of Ellery, Inc.'s 12/31 cash balance on its books.

Option 5: No adjustment is required.

Reference no: EM132804156

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