Bank Reconciliation On May 31, the Cash in Bank account of Wallace Company, a sole proprietership, had a balance of $18,367.50 On that date, the bank statement indicated a balance of $23,800.50. A comparison of returned checks and bank advices revealed the following: 1. Deposits in transit May 31 totaled $8,127.15 2. Outstanding checks May 31 totaled $9,264.75 3. The bank added to the account $83.40 of interest income earned by Wallace during May. 4. The bank collected a $7,200 note receivable for Wallace and charged a $60 collection fee. Both items appear on the bank statement. 5. Bank service charges in addition to the collection fee, not yet recorded were $60.00. 6. Included with the returned checks is a memo indicating that L. Ryder's check for $2,058.00 had been returned NSF. Ryder, a customer, had sent the check to pay an account of $2,100.00 less a discount of 2% 7. Wallace Company incorrectly recorded the payment of an account payable as $2,070 the check was for $2,880.00. Required a. Prepare a bank reconciliation for Wallace Company at May 31. b. Prepare the journal entry (or entries) necessary to bring the Cash in Bank account into agreement with the reconciled cash balance on the bank reconciliation Note: Do not round answers-enter using two decimal places, when needed. Add: Less Subtotal 0 $ WALLACE COMPANY Bank Reconciliation May 31 Balance from general ledger Add: Less: Collection Fee Add: Interest Income Less Subtotal Less: NSF Check Less: Check recorc $ Date May 31 5 31 GENERAL JOURNAL Description Miscellaneous Expense To record collection of note by bank, less collection fee. 31 To record interest earned on bank account in May. 31 To record service charges. 31 Cash in Bank To reclassify NSF check as an account receivable. To correct error in recording check. Debit 4 4 $ "A Credit