Mayo Inc.’s bank statement from Western Bank at August 31, 2007, gives the following information.

Balance, August 1 $16,400 Bank debit memorandum:

August deposits 73,000 Safety deposit box fee $ 25 Checks cleared in August 68,660 Service charge 50 Bank credit memorandum: Balance, August 31 20,710 Interest earned 45 A summary of the Cash account in the ledger for August shows the following: balance, August 1, $16,900; receipts $77,000; disbursements $73,570; and balance, August 31, $20,330.

Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for $5,000 and outstanding checks of $4,500. In addition, you determine that there were two errors involving company checks drawn in August: (1) A check for $400 to a creditor on account that cleared the bank in August was journalized and posted for

$40. (2) A salary check to an employee for $275 was recorded by the bank as $257.

Instructions

(a) Prepare a bank reconciliation at August 31.

(b) Journalize the adjusting entry(ies) to be made by Mayo Inc. at August 31.