Exercise 7

Exercise 7.3 7.3 Bank reconciliation and adjusting entries Grace Company's general ledger shows a cash balance of $7,850 on May 31, 20x2. May cash receipts of $1,250, included in the general ledger balance, are placed in the night depository at the bank on May 31 and processed by the bank on June 1. The bank statement dated May 31 shows an NSF check for $200 and a service fee of $50. The bank processes all checks written by the company by May 31 and lists them on the bank statement, except for one check totaling $1,640. The bank statement shows a balance of $7,990 on May 31. Required: @ Prepare a bank reconciliation to calculate the correct ending balance of cash on May 31. 6 Make necessary journal entries for Grace Company to update its cash balance.