Problem 7-5A Preparation of bank reconciliation and recording adjustments LO6 CHECK FIGURE: Adjusted book balance = $2,401.54 The bank reconciliation prepared by Gatz Company on May 31, 2020, appeared as follows: Gatz Company Bank Reconciliation May 31, 2020 Bank statement balance ................. Add: Deposit of May 31, in transit...... Deduct: Outstanding cheques: #876 ............................................ $ 655.99 Adjusted bank balance.................... #882 ............................................ 1,800.00 2,455.99 $ 8,090.53 $ 9,564.35 982.17 $10,546.52 Deduct: NSF cheque plus service charge ...................................... $11,900.50 Bank service charge ................. Adjusted book balance ................ 65.00 11,965.50 $ 8,090.53 Book balance .................................. $20,056.03 The Cash account in the general ledger appeared as follows on June 30 (Gatz uses only a general journal to record transactions):

Cash Date Explanation 2020 May 31 Balance June 1 Cheque #883 Cheque #884 Cheque #885 Cheque #886 Deposit 1 3 4 9 12 12 12 18 20 21 24 26 29 Cheque #887 Cheque #888 Cheque #889 Deposit Cheque #890 Cheque #891 Cheque #892 Cheque #893 Deposit GJ16 GJ16 GJ16 GJ16 GJ16 GJ16 GJ16 GJ16 GJ16 GJ16 GJ16 GJ16 GJ16 GJ16 1,865.30 112.70 650.84 2,018.45 4,285.26 425.15 3,040.60 974.12 3,515.60 2,640.00 1,406.24 2,590.81 75.99 1,845.35 PR Debit Credit Acct. No. 101 Balance 8,090.53 6,225.23 6,112.53 5,461.69 3,443.24 7,728.50 7,303.35 4,262.75 3,288.63 6,804.23 4,164.23 2,757.99 167.18 91.19 1,936.5

The following bank statement is available for June: Bank Statement June 30, 2020 To: Gatz Company #884 #883 #876 #889 #882 #887 #885 #891 #886 SC Cheques/Charges Deposits/Credits 05/31 06/01 06/01 06/04 06/09 06/12 06/14 06/18 06/20 06/21 06/29 06/30 NSF = Not Sufficient Funds 112.70 1,865.30 655.99 974.12 1,800.00 245.15 650.84 1,046.24 2,018.45 75.00 06/09 06/18 Bank of Montreal Balance 9,564.35 982.17 4,285.26 3,515.60 06/30 SC = Service PMT = Principal Charge Payment Required a. Prepare a bank reconciliation at June 30, 2020. Assume that any errors made were by the bookkeeper (cheque #887 was for office supplies; cheque #891 was for utilities expense). b. Prepare the necessary entries resulting from the bank reconciliation. Analysis Component: You have been employed with Gatz Company since June 1, 2020, and part of your job is writing and recording cheques as well as preparing the bank reconciliation. To your surprise, the person you replaced brought in the June bank statement as it had been mailed to her home. While preparing the June bank reconciliation, you notice that cheque #882 for $1,800 cleared the bank in June but is not among the cancelled cheques. What should you do? Explain.