On July 31, 2001, Grace Company had a cash balance per books of $6,815.30.

The statement from Tri-County Bank on that date showed a balance of $7,695.80. A comparison of the bank statement with the cash account revealed the following facts:

1. The bank service charge for July was $25.

2. The bank collected a note receivable of $1,800 for Grace Company on July 15, plus

$68 of interest. The bank made a $10 charge for the collection. Grace 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-J. Brokaw, 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 $1,480.10.

6. On July 31 the bank statement showed an NSF charge of $550 for a check received by the company from R. Close, a customer, on account.

Instructions

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

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