Mayo Company's bank statement from Lane National Bank at August 31, 1996, shows the following information:

A summary of the Cash account in the ledger for August shows: Balance, August 1, \(\$ 16,900\); receipts \(\$ 77,000\); disbursements \(\$ 73,570\); and balance, August \(31, \$ 20,330\). Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for \(\$ 4,000\) and outstanding checks of \(\$ 4,500\). The deposit in transit was the first deposit recorded by the bank in August. In addition, you determine that there were two errors involving company checks drawn in August: (1) a check for \(\$ 400\) to a creditor on account that cleared the bank in August was journalized and posted for \(\$ 420\), and (2) a salary check to an employee for \(\$ 275\) was recorded by the bank for \(\$ 285\).
\section*{Instructions}

(a) Prepare a bank reconciliation at August 31 .

(b) Journalize the adjusting entries to be made by Mayo Company at August 31. Assume the interest on the note has been accrued by the company.

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Balance, August 1 $17,400 Bank credit memorandum: August deposits 73,000 Collection of note Checks cleared in August 68,660 Balance, August 31 24,850 interest receivable plus $90 Interest earned Bank debit memorandum Safety deposit box rent $3,090 45 25 25