The bank statement for Wakiki, Inc. shows a balance of $9,750 on July 31, while the cash-in-bank account in Wakikis books has a balance of $6,425 on this date, after all cash activity for the month had been posted.

Part 1: Prepare a bank reconciliation based on the starting balances above, and the following additions and deductions:

(a) Checks outstanding, $2,402.

(b) Deposits still in transit, $1,442.

(c) Checking account service charges, $57.

(d) A note receivable was collected by the bank, $1,750 (this amount includes interest revenue of $50).

(e) A check marked NSF for $825 was returned; the customer was supposedly paying Wakiki on account.

(f) A check for $81 paid on account by Wakiki, on July 15^th had been incorrectly recorded in Wakiki's general journal as $18

(Hint: The bank does not make an error in this problem.)

Part 2: Prepare the two journal entries that are required by the just completed reconciliation from Problem 1, above, for July 31.