On May 31, O'Hearne Limited had an unadjusted cash balance per books of $13,126. The bank statement from Community Bank on that date showed a balance of $15,230. A comparison of the bank statement with the company's Cash account revealed the following:

1. The bank statement included a bank service charge of $80.

2. The bank statement included electronic collections totalling $4,188. These were not previously recorded.

3. Outstanding cheques at April 30 totalled $2,900. Of these, $2,240 worth cleared the bank in May. There were $1,892 of cheques written in May that were still outstanding on May 31.

4. Included with the cancelled cheques was a cheque issued by O'Bearne Inc. for $1,200 that was incorrectly charged to O'Hearne by the bank.

5. On May 31, the bank statement showed a returned (NSF) cheque for $1,350 issued by a customer in payment of its account. In addition, the bank charged an $80 processing fee for this transaction.

6. The May 31 deposit of $1,926 was not included in the deposits on the May bank statement. The deposit had been placed in the bank's night deposit vault on May 31.

Instructions

(a) Prepare the bank reconciliation at May 31.

(b) Prepare any adjusting journal entries required from the reconciliation.