A) Using the five steps in the reconciliation procedure, prepare a bank reconciliation at December 31. (Round answers to 2 decimal places, e.g. 52.75. List items that increase cash balance first. Reconcile cash balance per bank first.)

B) Prepare the adjusting entries based on the reconciliation. (Hint: The correction of any errors pertaining to recording checks should be made to Accounts Payable. The correction of any errors relating to recording cash receipts should be made to Accounts Receivable.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 52.75.)

The bank portion of the bank reconciliation for Waterway Company at November 30, 2022, was as follows. Waterway COMPANY Bank Reconciliation (Partial) November 30, 2022 Cash balance per bank $14,497.90 Add: Deposits in transit 2,530.20 17,028.10 Less: Outstanding checks Check Number Check Amount 3451 $2,262.40 3470 722.40 3471 846.40 3472 1,428.40 3474 1,053.40 6,313.00 Adjusted cash balance per bank $10,715.10 The adjusted cash balance per bank agreed with the cash balance per books at November 30. The December bank statement showed the following checks and deposits. The adjusted cash balance per bank agreed with the cash balance per books at November 30. The December bank statement showed the following checks and deposits. Bank Statement Checks Deposits Date Number Amount Date Amount 12-1 3451 $2,262.40 12-1 $ 2,530.20 12-2 3471 846.40 12-4 1,213.40 12-7 3472 1,428.40 12-8 2,367.40 12-4 3475 1,642.40 12-16 2,674.40 12-8 3476 1,302.40 12-21 2,947.40 12-10 3477 2,132.40 12-26 2,569.40 12-15 3479 3,082.40 12-29 2,838.40 12-27 3480 602.40 12-30 1,027.40 12-30 3482 477.90 Total $18,168.00 12-29 3483 1,142.40 12-31 3485 530.80 Total $15,450.30 The cash records per books for December showed the following. Cash Payments Journal Cash Receipts Journal Date Number Amount Date Number Amount Date Amount 12-1 3475 $1,642.40 12-20 3482 $477.90 12-3 $ 1,213.40 12-2 3476 1,302.40 12-22 3483 1,142.40 12-7 2,367.40 12-2 3477 2,132.40 12-23 3484 799.40 12-15 2,674.40 12-4 3478 623.70 12-24 3485 350.80 12-20 2,954.00 12-8 3479 3,082.40 12-30 3486 891.90 12-25 2,569.40 12-10 3480 602.40 Total $13,857.90 12-28 2,838.40 12-17 3481 809.80 12-30 1,027.40 12-31 1,692.80 Total $17,337.20 The bank statement contained two memoranda: 1. Acredit of $6,020.00 for the collection of a $5,900.00 note for Waterway Company plus interest of $160.00 and less a collection fee of $40.00. Waterway Company has not previously recorded any interest on the note. 2. A debit of $86.60 for an NSF check written by L. Rees, a customer. At December 31, the check had not been redeposited in the bank. At December 31, the cash balance per books was $14,194.40, and the cash balance per the bank statement was $23,149.00. The bank did not make any errors, but two errors were made by Waterway Company