On October 31, 2024, Charlie Company had a cash balance per books of $12,300. The statement from Canada Bank on that date showed a balance of $13,134. A comparison of the bank statement with the Cash account revealed the following facts:

1. The bank service charge for October was $55.
2. The bank collected $2,350 of rental revenue for Charlie Company through electronic funds transfer.
3. The $5,380 deposited by the company in a night deposit vault on September 30 was not included in the September bank statement. This amount was included in the October statement.
4. The October 31 receipts of $2,467 were not included in the bank deposits for October. These receipts were deposited by the company in a night deposit vault on October 31.
5. Company cheque No. 331 issued to J. Johnson, a creditor, for $221 that cleared the bank in October was incorrectly entered in the books as a cash payment on October 12 for $112.
6. Cash sales of $525 on October 12 were deposited in the bank. The journal entry to record the cash receipt and the deposit slip were incorrectly made out and recorded by the bookkeeper as $225. The bank detected the error on the deposit slip and credited Charlie Company for the correct amount.
7. Cheques #335 for $1,050, #336 for $435, #338 for $121, and #343 for $584 were outstanding on October 31.
8. On October 31, the bank statement showed an NSF charge of $575 for a cheque received by the company from R. Mahomes, on account. This included a $50 service charge. The company policy is to charge this amount back to the customer.
9. Payment of the monthly insurance was made using a monthly scheduled EFT payment for $800 that the bookkeeper forgot to record.

Instructions
a. Prepare the bank reconciliation as at October 31.
b. Prepare the necessary entries related to the bank reconciliation at October 31.

Taking It Further

Charlie, the owner of Charlie Company, has noted that, whenever a cheque is returned for non-sufficient funds, the cash comes out of his account. He does not understand why the cash comes out of his account when he is not the one who has bounced the cheque. Explain.