Xenon, Ins's August 31 bank statement had an ending cash balance of $2,567. ON August 31, Xenon's general ledger showed a balance of $860. After comparing the general ledger to the bank statement, the following items were noted:
- Outstanding check, $2,250
- Interest paid by the bank, $12
- An NSF check from one of Xenon's customers, $32
- Deposits in transit, $1,900
- Service fee changed by the bank, $8
- A direct deposit from a customer, $1,400
- Check #345 was written to Acme Insurance; the amount of the check was $615. It was recorded in the general ledger for $600.
a.) Prepare a bank reconciliation for Xenon, Inc.
b.) Make the required journal entries associated with the bank reconciliation.
c.) Discuss the benefits and' drawbacks of maintaining a checking account at a financial institution rather than paying all bills in cash.