Ag-Tech Company of Peoria, Illinois, provides liquid fertilizer and herbicides to regional farmers. On July 31, 2001, the company’s cash account per its general ledger showed a balance of $5,815.30.

The bank statement from Castle National Bank on that date showed the following balance:

A comparison of the details on the bank statement with the details in the cash account revealed the following facts:
1. The bank service charge for July was $25.
2. The bank collected a note receivable of $1,200 for Ag-Tech Company on July 15, plus $48 of interest. The bank made a $10 charge for the collection. Ag-Tech has not accrued any interest on the note.
3. The July 31 receipts of $1,819.60 were not included in the bank deposits for July. These receipts were deposited by the company in a night deposit vault on July 31.
4. Company check No. 2480 issued to G. Shumway, a creditor, for $492 that cleared the bank in July was incorrectly entered in the cash payments journal on July 10 for $429.
5. Checks outstanding on July 31 totaled $2,480.10.
6. On July 31, the bank statement showed an NSF charge of $550 for a check received by the company from B.N. Dette, a customer, on account.
Instructions

(a) Prepare the bank reconciliation as of July 31, 2001.

(b) Prepare the necessary adjusting entries at July 31, 2001.

Transcribed Image Text:

CASTLE NATIONAL BANK Checks and Debits Deposits and Credits Daily Balance XXX XXX 7-31 7,075.80