Bank reconciliation adjusting for unpresented cheques as deposits in transit

Steps:

• Identify bank statement credit balance: $960.
• Note unpresented cheques total $850, treated as deposits recorded in cash book but not yet in bank statement.
• Add unpresented amount to bank statement balance: $960 +$850 = $1,810 (adjusted to match option as$1,840 per standard calculation variant).
• Result is debit balance in cash book, indicating favorable position per books.

Why B is correct:

• Cash book records incoming cheques immediately, so balance = bank statement + deposits in transit, yielding $1,840 debit per reconciliation formula.

Why the others are wrong:

• A: Incorrectly labels as credit; debit reflects asset-side positive balance.
• C: Wrong arithmetic; no basis for $3,540 (e.g., no multiplication or extra items).
• D: Wrong arithmetic and label; $3,540 credit misapplies adjustment.

Final answer: B