P7-4A The May 31 bank statement of Payne Stationers has just arrived from First State Bank. To prepare the Payne bank reconciliation, you gather the following data.

a. The May 31 bank balance is $21,110.82.

b. The bank statement includes two charges for returned checks from customers. One is an NSF check in the amount of $67.50 received from Sarah Batten, a student, recorded on the books by a debit to Cash, and deposited on May 19. The other is a $195.03 check received from Lena Masters and deposited on May 21. It was returned by Masters' bank with the imprint "Unauthorized Signature."

c. The following Payne checks are outstanding at May 31: Check No. 616 Amount $403.00 802 74.25 806 36.60 809 161.38 810 229.05 811 48.91

d. Payne Stationers collects from a few customers by EFT. The May bank statement lists a $200 deposit for a collection on account from customer Jack Oates.

e. The bank statement includes two special deposits: $899.14, which is the amount of divi- dend revenue the bank collected from General Electric Company on behalf of Payne, and $16.86, the interest revenue Payne earned on its bank balance during May.

f. The bank statement lists a $6.25 subtraction for the bank service charge. g. On May 31, the Payne treasurer deposited $381.14. but this deposit does not appear on the bank statement. h. The bank statement includes a $410.00 deduction for a check drawn by Marimont Freight Company. Payne promptly notified the bank of its error. i. Payne's Cash account shows a balance of $20.101.55 on May 31.

Required 1. Prepare the bank reconciliation for Payne Stationers at May 31. 2. Record the entries necessary to bring the book balance of Cash into agreement with the adjusted book balance on the reconciliation. Include an explanation for each entry.