Question 3 Bank Reconciliation (14 marks)

The Duluth Manufacturing Company has a business chequing account at the Bank of Ontario. The bank provides a bank statement and cancelled cheques once a month. The cut-off date is the last day of the month. The bank statement for the month of May is summarized as follows:

Balance, May 1, 2016 $32,120

Deposits 82,140

Cheques processed (78,433)

Service charges (80)

NSF cheques (2,187)

Note payment collected by bank (includes $120 interest) 1,120

Balance May 31, 2016 $34,680

The companys general ledger cash account has a balance of $35,276 at the end of May. A review of the company records and the bank statement reveals the following:

1. Cash receipts not yet deposited total $2,965.

2. A deposit of $1,020 was made on May 31 that will not be credited to the companys account until June.

3. All cheques written in April have been processed by the bank. Cheques written in May that have not been processed by the bank total $5,536.

4. A cheque written for $1,790 was incorrectly recorded by the company as a $790 disbursement. The cheque was for payment to a supplier of raw materials.

Required:

a. Prepare the bank reconciliation for the month of May.

b. Prepare the journal entries required to adjust the general ledger cash account to actual.