Madison Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for $1,089 and No. 5893 for $542. The following information is available for its September 30, 2011, reconciliation.
From the September 30 Bank Statement

Additional Information
Check No. 5904 is correctly drawn for $2,073 to pay for computer equipment; however, the record keeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash of $2,037. The NSF check shown in the statement was originally received from a customer, S. Nilson, in payment of her account. Its return has not yet been recorded by the company. The credit memorandum is from the collection of a $1,640 note for Madison Company by the bank. The bank deducted a $22 collection fee. The collection and fee are not yet recorded.
Required
1. Prepare the September 30, 2011, bank reconciliation for this company.
2. Prepare the journal entries to adjust the book balance of cash to the reconciled balance.
Analysis Component
3. The bank statement reveals that some of the prenumbered checks in the sequence are missing. Describe three situations that could explain this.

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PREVIOUS BALANCE TOTAL CHECKS AND DEBITS TOTAL DEPOSITS AND CREDITS CURRENT BALANCE 20.164 CHECKS AND DEBITS DEPOSITS AND CREDITS DAILY BALANCE Amoun 18,500 17,411 16,700 17,845 16,040 18,322 17,691 16,705 20,777 18,302 20,625 20,412 18,523 20,164 18,500 11.463 Date No.Amount 09/03 5888 1,089 09/04 5902 711 09/07 5901 1,805 Date 09/05 09/12 09/21 09/25 09/30 09/30 Amount 1,145 2,282 4,072 2,323 Date 08/31 09/03 09/04 09/05 09/07 09/12 631 NSF 09/20 5905 986 09/22 5903 402 09/22 5904 2,073 09/28 5907 213 09/29 5909 1,889 1,618 см 09/20 09/21 09/22 09/25 09/28 09/29 09/30 From Madison Company's Accounting Records Cash Receipts Deposited Cash Disbursements Cash Debit Check No. Cash Credit Date Sept!5 5901 5902 5903 5904 5905 5906 5907 5908 5909 1,805 12 2,282 4,072 402 2,037 986 1,003 25 1,753 1,575 378 1,889 9,424 Cash Acct. No. 101 Date Explanation PRI Debit | Credit | Balance 6,869 28,444 19.020 3Balance Sept 30 Total receipts RI2 11,575 30 Total disbursements D23 9.424