Question

The cash account for Coastal Bike Co. at October 1, 20Y9, indicated a balance of $33,857. During October, the total cash deposited was $139,616, and checks written totaled $138,547. The bank statement indicated a balance of $43,270 on October 31, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

a.	Checks outstanding totaled $6,340.
b.	A deposit of $1,858 representing receipts of October 31, had been made too late to appear on the bank statement.
c.	The bank had collected for Coastal Bike Co. $5,565 on a note left for collection. The face of the note was $5,300.
d.	A check for $590 returned with the statement had been incorrectly charged by the bank as $950.
e.	A check for $210 returned with the statement had been recorded by Coastal Bike Co. as $120. The check was for the payment of an obligation to Rack Pro Co. on account.
f.	Bank service charges for October amounted to $36.
g.	A check for $1,217 from Bay View Condos was returned by the bank due to insufficient funds.

	Instructions
1.	Prepare a bank reconciliation as of October 31, 20Y9. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. "Add:" & "Deduct:" will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
2.	Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles.
3.	If a balance sheet were prepared for Coastal Bike Co. on October 31, 20Y9, what amount should be reported as cash?

CHART OF ACCOUNTS
Coastal Bike Co.
General Ledger
ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable-Bay View Condos 131 Notes Receivable 141 Merchandise Inventory 145 Office Supplies 146 Store Supplies 151 Prepaid Insurance 181 Land 191 Office Equipment 192 Accumulated Depreciation-Office Equipment 193 Store Equipment 194 Accumulated Depreciation-Store Equipment LIABILITIES 211 Accounts Payable-Rack Pro Co. 221 Notes Payable 222 Interest Payable 231 Salaries Payable 241 Sales Tax Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 515 Credit Card Expense 516 Cash Short and Over 520 Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Insurance Expense 534 Office Supplies Expense 535 Rent Expense 536 Repairs Expense 537 Selling Expenses 538 Store Supplies Expense 561 Depreciation Expense-Office Equipment 562 Depreciation Expense-Store Equipment 590 Miscellaneous Expense 710 Interest Expense

Amount Descriptions
Adjusted balance
Bank error in charging check as $950 instead of $590
Bank service charges
Check returned because of insufficient funds
Deposit in transit on October 31
Error in recording check
Note collected by bank, including $265 interest
Outstanding checks
Total additions
Total deductions

1. Prepare a bank reconciliation as of October 31, 20Y9. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. "Add:" & "Deduct:" will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Coastal Bike Co.

Bank Reconciliation

October 31, 20Y9

1	Cash balance according to bank statement
2
3
4
5
6
7
8	Cash balance according to company’s records
9
10
11
12
13
14

2. Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6
7

3. If a balance sheet were prepared for Coastal Bike Co. on October 31, 20Y9, what amount should be reported as cash?

Answer 1

Part 1

Coastal Bike Co. Bank Reconciliation October 31, 20Y9
Cash balance according to Bank statement		43270
Add: Deposit of October 31,not recorded by bank	1858
Bank error in charging check as $590 instead of $950	360	2218
		45488
Deduct : Outstanding check		6340
Adjusted balance		$39148
Cash balance according to company’s record (33857+139616-138547)		34926
Add: proceeds of note collected by bank, including $265 interest		5565
		40491
Deduct :check returned because of insufficient balance	1217
Bank service charges	36
Error in recording check (210-120)	90	1343
Adjusted balance		$39148

Part 2

No.	accounts title and explanation	debit	credit
1	cash	5565
	Notes receivable		5300
	Interest revenue		265
2	accounts payable - Rack Pro Co.	90
	Accounts receivable -Bay View Condos	1217
	Miscellaneous expense	36
	Cash		1343

Part 3

Amount reported as cash = $39148