Mayo Company's bank statement from Lane National Bank at August 31, 1998, gives this information:

A summary of the Cash account in the ledger for August shows: Balance, August 1, \(\$ 16,900\); receipts \(\$ 77,000\); disbursements \(\$ 73,570\); and balance, August \(31, \$ 20,330\). Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for \(\$ 4,000\) and outstanding checks of \(\$ 4,500\). The deposit in transit was the first deposit recorded by the bank in August. In addition, you determine that there were two errors involving company checks drawn in August: (1) a check for \(\$ 400\) to a creditor on account that cleared the bank in August was journalized and posted for \(\$ 420\), and (2) a salary check to an employee for \(\$ 275\) was recorded by the bank for \(\$ 285\).
\section*{Instructions}

(a) Prepare a bank reconciliation at August 31.

(b) Journalize the adjusting entries to be made by Mayo Company at August 31. Assume the interest on the note has been accrued by the company.

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Balance, August 1 $17,400 August deposits 73,000 Checks cleared in August 68,660 Balance, August 31 24,850 Bank credit memoranda: Collection of note receivable plus $90 interest Interest earned $3,090 45 Bank debit memorandum: Safety deposit box rent 25