You are given the following information for River Adventures Company:

The adjusted cash balance per bank agreed with the cash balance per books at April 30, 2014. 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.
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) Calculate the unadjusted cash balance in River Adventures' general ledger at May 31.
(b) Prepare a bank reconciliation and the necessary adjusting journal entries at May 31.
Taking It Further
When there is an error, how does a company determine if it was a bank error or a company error? How would you know if the bank has made an error in your account?

Transcribed Image Text:

RIVER ADVENTURES COMPANY Bank Reconciliation April 30, 2014 Cash balance per bank Add: Deposits in transit $9,009 846 9,855 Less: Outstanding cheques #526 #533 #541 #555 $1,358 279 363 79 2,079 Adjusted cash balance per bank $7,776 RIVER ADVENTURES COMPANY Bank Statement May 31, 2014 Cheques and Other Debits Number Date Amount May 1 846 1,250 1,650 2 Cash Receipts Date Cash Payments Cheque No. Amount Date Amount $ 223 1,800 May 5 $1,250 May 2 12 25 28 31 Total 9 Total