To elaborate, because I had a SHIT TON of trouble with this because the textbook barely explained it, the reason why you subtract the deposits in transit from June from the bank's deposits in July before subtracting that number from the book's deposit balance is because deposits in transit from June are otherwise included as deposits from July by the bank, since end-of-month deposits of cash recorded on the depositor’s books in one month are received and recorded by the bank in the following month. Thus, when you subtract the difference of the two, you'll find the true difference in JULY deposits alone!

Likewise with outstanding checks which for the bank are not recorded until July despite originating from June. You're looking at differences in ONLY JULY.

Hopefully this helps someone. It helped me just to write this out in my own words. Holy shit lmfao this should not have taken me this long.