Problem:
Bourne Incorporated reports a cash balance at the end of the month of $2,620. A comparison of the company's cash records with the monthly bank statement reveals several additional cash transactions: bank service fees ($85), an NSF check from a customer ($350), a customer's note receivable collected by the bank ($1,000), and interest earned ($35).
Required:
Question 1: Record the necessary entries to adjust the balance of cash.
Question 2: Record the entries that increase cash.
Question 3: Record the entries that decrease cash.
Note: Provide support for rationale.