On May 31, 2012, Sabre Company had a cash balance per books of $6,781.50. The bank statement from New York State Bank on that date showed a balance of $6,404.60. A comparison of the statement with the cash account revealed the following facts.
1. The statement included a debit memo of $40 for the printing of additional company checks.
2. Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $886.15. The bank credited Sabre Company for the correct amount.
3. Outstanding checks at May 31 totaled $576.25. Deposits in transit were $1,916.15.
4. On May 18, the company issued check No. 1181 for $685 to Carol Stills on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Sabre Company for $658.
5. A $2,500 note receivable was collected by the bank for Sabre Company on May 31 plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note.
6. Included with the cancelled checks was a check issued by Rapier Company to Tom Lujak for $800 that was incorrectly charged to Sabre Company by the bank.
7. On May 31, the bank statement showed an NSF charge of $680 for a check issued by Jo Bennett, a customer, to Sabre Company on account.
Instructions
(a) Prepare the bank reconciliation at May 31, 2012.
(b) Prepare the necessary adjusting entries for Sabre Company at May 31, 2012.