Lee Corporation’s checkbook balance on December 31, 2006, was $4,000. In addition, Lee held the following items in its safe on December 31:

Check payable to Lee Corporation, dated January 2, 2007, not included in December 31 checkbook balance

$1,000

Check payable to Lee Corporation, deposited December 20, and included in December 31 checkbook balance, but returned by bank on December 30, stamped “NSF.” The check was redeposited January 2, 2007, and cleared January 7

200

Postage stamps received from mail order customers

75

Check drawn on Lee Corporation’s account, payable to a vendor, dated and recorded December 31, but not mailed until January 15, 2007

500

The proper amount to be shown as Cash on Lee’s balance sheet at December 31, 2006, is

  1. $3,800
  2. $4,000
  3. $4,300
  4. $4,875