You are given the following information for River Adventures Company:

The unadjusted cash balance at May 31 was $1,075. The May bank statement showed the following:

Additional information from the bank statement:1. The deposit of $1,650 on May 13 is an electronic transfer from a customer in payment of its account. The amount includes $35 of interest, which River Adventures Company had not previously accrued.

2. The NSF for $440 is for a $425 cheque from a customer, Ralph King, in payment of his account, plus a $15 processing fee. The company?s policy is to pass on all NSF processing fees to the customer.

3. SC represents bank service charges for the month.4. The bank made an error when processing cheque #564. The company also made two errors in the month. All cheques were written to pay accounts payable; all cash receipts were collections of accounts receivable.

The company?s recorded cash payments and cash receipts for the month were as follows:

Instructions

a. Prepare a bank reconciliation.

b. Prepare the necessary adjusting journal entries at May 31.

How would you know if the bank has made an error in your account? Does this require an adjustment to your books?

Transcribed Image Text:

RIVER ADVENTURES COMPANY Bank Reconciliation April 30, 2021 Cash balance per bank Add: Deposits in transit $9,009 846 9,855 Less: Outstanding cheques #526 $1,358 #533 279 #541 363 #555 79 2,079 Adjusted cash balance per bank $7,776 RIVER ADVENTURES COMPANY Bank Statement May 31, 2021 Cheques and Other Debits Date Number Amount Deposits Amount Apr. 30 May 1 $ 846 $9,009 8,497 526 $1,358 541 363 8,134 556 223 7,911 557 1,800 1,250 7,361 8,341 980 12 559 1,650 6,691 13 426 7,117 13 1,650 8,767 7,968 14 561 799 5,923 6,145 16 562 2,045 20 222 21 563 2,487 3,658 3,055 22 564 603 23 565 1,033 2,022 3,002 27 980 28 NŠF 440 1,771 4,333 31 25 4,308