Question

Clayborn Company' bank reconciliation as of May 31 is shown below.

Bank balance	$	15,800	Book balance	$	17,025
+ Deposit in transit		5,200	Bank service fees		−25
− Outstanding checks		−4,600	NSF returned		−600
Adjusted bank balance	$	16,400	Adjusted book balance	$	16,400

One of the adjusting journal entries that Clayborn must record as a result of the bank reconciliation includes:

A debit to cash of $25

A debit to Cash of $625

A debit to Cash of $5,200

A credit to Cash of $600

A credit to Cash of $4,600

Answer 1

Deposit in transit and Outstanding checks do not require adjusting journal entries
Two adjusting entries are required:
	Debit	Credit
Bank service fees expense	25
Cash		25
(To record Bank service fees)
	Debit	Credit
Accounts Receivable	600
Cash		600
(To record NSF returned)
A credit to Cash of $600 is correct option