The cash account for Santiago Co. on May 31, 2014 indicated a balance of $20,915. The March bank statement indicated an ending balance of $25,645. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items: a. Checks outstanding totaled $5,975 b. A deposit of $3,796 had been made too late to appear on the bank statement. c. A check for $1,482 returned with the statement had been incorrectly recorded at $482. The check was originally issued to pay on account. d. The bank collected $4,515 on a note left for collection. e. Bank service charges for May amounted to $70. f. A check for $894 was returned by the bank because of insufficient funds.

1) Prepare a bank reconciliation as of May 31, 2014.

2) Journalize the necessary entries. Record the entry to increase cash first.