Shamara Systems most recently reconciled its bank balance on April 30 and reported two checks outstanding at that time, No. 1771 for $ 781 and No. 1780 for $ 1,425.90. The following information is available for its May 31, 2013, reconciliation.

Additional Information

Check No. 1788 is correctly drawn for $ 654 to pay for May utilities; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Utilities Expense and a credit to Cash for $ 644. The bank paid and deducted the correct amount. The NSF check shown in the statement was originally received from a customer, W. Sox, in payment of her account. The company has not yet re-corded its return. The credit memorandum is from a $ 7,400 note that the bank collected for the company.

The bank deducted a $ 50 collection fee and deposited the remainder in the company’s account. The collection and fee have not yet been recorded.

Required

1. Prepare the May 31, 2013, bank reconciliation for Shamara Systems.

2. Prepare the journal entries (in dollars and cents) 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 possible situations to explainthis.

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From the May 31 Bank Statement PREVIOUS BALANCE | TOTAL CHECKS AND DEBmS | TOTAL DEPOSTS AND CREDITS | CURRENT BALANCE 18,290.70 13,094.80 16.566.80 21.762.70 CHECKS AND DEBITS Date No. Amount 05/01 1771 781.00 05/02 1783 382.50 05/04 1782 1,285.50 05/11 1784 1,449.60 05/18 05/25 1787 8,032.50 05/26 1785 63.90 05/29 1788 654.00 DEPOSITS AND CREDITS Date 05/04 05/14 05/22 05/25 Amount 2,438.00 2,898.00 1,801.80 7,350.00 CM 05/04 2,079.00 DAILY BALANCE Date 04/30 05/01 05/02 Amount 18,290.70 17,509.70 17,127.20 18,279.70 16,830.10 19,728.10 431.80 NSF 20 05/14 05/18 19,296.30 05/22 21,098.10 05/25 20,415.60 05/26 22,430.70 05/29 21,776.70 05/31 14.00 SC 21,762.70 From Shamara Systems' Accounting Records Cash Receipts Deposited Cash Disbursements ec Date Debit No. Credit 2.438.00 2,898.00 1.801.80 2.079.00 2.727.30 944.10 1782 1783 1784 1785 1786 1787 1788 1789 I,285.50 382.50 1.44960 63.90 353.10 8,03250 644.00 639.50 2,850.60 ay 14 Cash Date Apr. 30 Balance May3 Total receipts Acct. No. 101 Explanation PR Debit Credit Balance 16,083.80 28,027.90 2850.60 5,177.30 R7 11,944.10 3 Total disbursements D8