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To determine the correct cash balance as of May 31 when the bank statement shows $4,905, it is essential to consider various factors that could affect this figure. The balance reported on the bank statement may not reflect the actual cash balance due to outstanding items such as deposits in transit and checks that have not yet cleared.

If you arrive at a balance of $5,080, it suggests that $175 in transactions may not have been accounted for in the bank statement. This could include a deposit that was made shortly before the end of the month but wasn't recorded by the bank until the following month or outstanding checks that were written against the account that have yet to be processed by the bank.

Hence, the cash balance of $5,080 represents a reconciliation between the bank's records and the transactions that have occurred in the account, taking into account any outstanding items that alter the balance reported by the bank. This understanding is crucial for maintaining accurate financial records and ensuring that discrepancies between your records and the bank statement are reconciled effectively.