At the end of February, Howard Productions' accounting records reveal a balance for cash equal to $19,175. However, the balance of cash in the bank at the end of February is only $2,235. Howard is concerned and asks the company's accountant to reconcile the two balances. Examination of the bank statement and company records at the end of February reveals the following information:

NSF checks...................... $5,228................ Service fees........... $149

Deposits outstanding ............7,642...... Checks outstanding............. 479

In addition, during February the company's accountant wrote a check to one of its suppliers for $100. The check was recorded correctly in the company's records for $100 but processed incorrectly by the bank for $1,000. Howard has contacted the bank, which has agreed to fix the error. Finally, a petty cash fund of $3,500 was established during February. This amount was withdrawn from the checking account but not recorded.

Required:

1. Calculate the correct ending balance of cash at the end of February.

2. Discuss any problems you see with the company's cash procedures.