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.
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 bank reconciliation.
(b) Prepare the necessary adjusting journal entries at May 31.
Taking It Further
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, 2017 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 S7,776 RIVER ADVENTURES COMPANY Bank Statement May 31, 2017 Cheques and Other Debits Number Date Amount Amount $9,009 8,497 8,134 7,911 7,361 8,341 6,691 7,117 8,767 7,968 5,923 6,145 3,658 3,055 2,022 3,002 4,333 4,308 Apr. 30 May 1 526 541 556 557 $1,358 363 223 1,800 $ 846 1,250 980 12 559 1,650 426 1,650 561 562 799 2,045 14 16 20 21 2,487 603 1,033 564 27 28 31 980 1,771 Cash Receipts Cash Payments Cheque No. Date May 2 Date Amount Amount 5 May 5 $1,250 9 ;야 Total $6,825 Total