On May 31, 2012, Laban Company had a cash balance per books of $5,681.50. The bank statement from Citizens Bank on that date showed a balance of $7,964.60. A comparison of the statement with the Cash account revealed the following facts. 1. The statement included a debit memo of $70 for the printing of additional company checks.
2. Cash sales of $786.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $796.15. The bank credited Laban Company for the correct amount.
3. Outstanding checks at May 31 totaled $1,106.25, and deposits in transit were $799.15.
4. On May 18, the company issued check No. 1181 for $685 to A. Hawkins, on account.
The check, which cleared the bank in May, was incorrectly journalized and posted by Laban Company for $658.
5. A $2,500 note receivable was collected by the bank for Laban Company on May 31 plus $80 interest. The bank charged a collection fee of $42. No interest has been accrued on the note.
6. Included with the cancelled checks was a check issued by Logan Company to D. Reyes for $290 that was incorrectly charged to Laban Company by the bank.
7. On May 31, the bank statement showed an NSF charge of $165 for a check issued by G. Verdier, a customer, to Laban Company on account.
Instructions
(a) Prepare the bank reconciliation as of May 31, 2012.
(b) Prepare the necessary adjusting entries at May 31, 2012.