Reference no: EM132579501

Question - On May 31, 2014, Terrell Company had a cash balance per books of £6,781.50. The bank statement from Home Town Bank on that date showed a balance of £6,804.60. A comparison of the statement with the Cash account revealed the following facts.

1) The statement included a debit memo of £40 for the printing of additional company checks.

2) Cash sales of £836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for £886.15. The bank credited Terrell Company for the correct amount.

3) Outstanding checks at May 31 totaled £276.25. Deposits in transit were £1,916.15.

4) On May 18, the company issued check No. 1181 for £685 to Barry Dietz on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Terrell Company for £658.

5) A £3,000 note receivable was collected by the bank for Terrell Company on May 31 plus £80 interest. The bank charged a collection fee of £20. No interest has been accrued on the note.

6) Included with the cancelled checks was a check issued by Bridges Company to Jon Newton for £600 that was incorrectly charged to Terrell Company by the bank.

7) On May 31, the bank statement showed an NSF charge of £680 for a check issued by Sandy Grifton, a customer, to Terrell Company on account.

Instructions -

A. Prepare the bank reconciliation at May 31, 2014.

B. Prepare the necessary adjusting entries for Terrell Company at May 31, 2014.