Safe Systems Co. most recently reconciled its bank balance on April 30 and reported two checks out¬ standing at that time, No. 1771 for $781.00 and No. 1780 for $1,325.90. The following information is available for its May 31, 2005, reconciliation:

Additional Information Check No. 1788 is correctly drawn for $554 to pay for May utilities; however, the recordkeeper mis¬ read the amount and entered it in the accounting records with a debit to Utilities Expense and a credit to Cash for $544. The bank paid and deducted the correct amount. The NSF check shown in the state¬ ment was originally received from a customer, S. Bax, in payment of her account. The company has not yet recorded its return. The credit memorandum is from a $7,300 note that the bank collected for the company. The bank deducted a $100 collection fee and deposited the remainder in the company’s account. The collection and fee have not yet been recorded.
Required 1. Prepare the May 31, 2005, bank reconciliation for Safe Systems.
2. Prepare the journal entries to adjust the book balance of cash to the reconciled balance.
Analysis Component 3. The bank statement reveals that some of the prenumbered checks in the sequence are missing. Describe three possible situations to explain this.

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From the May 31 Bank Statement Previous Balance Total Checks and Debits Total Deposits and Credits Current Balance 18,290.70 12,898.90 16,416.80 21,808.60 Checks and Debits Deposits and Credits Daily Balance Date No. Amount Date Amount Date Amount 05/01 1771 781.00 05/04 2,438.00 04/30 18,290.70 05/02 1783 195.30 05/14 2,898.00 05/01 17,509.70 05/04 1782 1,285.50 05/22 1,801.80 05/02 17,314.40 05/11 1784 05/18 1,449.60 05/25 7,200.00 CM 05/04 18,466.90 431.80 NSF 05/26 2,079.00 05/11 17,017.30 05/25 1787 8,032.50 05/14 19,915.30 05/26 1785 157.20 05/18 19,483.50 05/29 1788 05/31 554.00 05/22 21,285.30 12.00 SC 05/25 20,452.80 05/26 22,374.60 05/29 21,820.60 05/31 21,808.60