On May 31, 2017, Terrell Ltd. had a cash balance per books of £6,781.50. The bank statement from Home Town Bank on that date showed a balance of £6,824.60. A comparison of the statement with the Cash account revealed the following facts.
1. The statement included a debit memo of £60 for the printing of additional company checks.
2. Cash sales of £836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for £886.15. The bank credited Terrell Company for the correct amount.
3. Outstanding checks at May 31 totaled £276.25. Deposits in transit were £1,916.15.
4. On May 18, the company issued check No. 1181 for £685 to Barry Dietz on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Terrell for £658.
5. A £3,000 note receivable was collected by the bank for Terrell on May 31 plus £80 interest. The bank charged a collection fee of £20. No interest has been accrued on the note.
6. Included with the cancelled checks was a check issued by Bridges plc to Jon Newton for £600 that was incorrectly charged to Terrell by the bank.
7. On May 31, the bank statement showed an NSF charge of £640 for a check issued by Sandy Grifton, a customer, to Terrell on account.
Instructions
(a) Prepare the bank reconciliation at May 31, 2017.
(b) Prepare the necessary adjusting entries for Terrell at May 31, 2017.