Question

Bank Reconciliation and Entries

The cash account for Coastal Bike Co. at October 1, 20Y9, indicated a balance of $13,100. During October, the total cash deposited was $65,150 and checks written totaled $60,490. The bank statement indicated a balance of $22,090 on October 31, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

Checks outstanding totaled $9,840.

A deposit of $8,010, representing receipts of October 31 had been made too late to appear on the bank statement.

The bank had collected for Coastal Bike Co. $4,230 on a note left for collection. The face of the note was $3,910.

A check for $490 returned with the statement had been incorrectly charged by the bank as $940.

A check for $630 returned with the statement had been recorded by Coastal Bike Co. as $360. The check was for the payment of an obligation to Rack Pro Co. on account.

Bank service charges for October amounted to $30.

A check for $980 from Bay View Condos was returned by the bank due to insufficient funds.

Instructions:

1. Prepare a bank reconciliation as of October 31, 20Y9.

Coastal Bike Co.
Bank Reconciliation
October 31, 20Y9
Cash balance according to bank statement		$
Adjustments:
Deposit of October 31, not recorded by bank	$
Bank error in charging check as $940 instead of $490
Total adjustments
Adjusted balance		$
Cash balance according to company's records		$
Adjustments:
	$
Total adjustments
Adjusted balance		$

2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank.

a. 20Y9 Oct. 31
b. Oct. 31

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

Answer 1

Cash balance on oct 1					13,100
Add:total cash deposited					65,150
less:total checks written					-60,490
Cash balance on oct 31					17,760
	Bank Reconciliation
Cash balance according to bank statement						22,090
Adjustments:
Deposits of Oct 31,not recorded by bank					8,010
Bank error in charging check as $940 instead of $490					450
outstanding checks					9,840
total adjustments						-1,380
Adjusted balance						20,710
cash balance according to company's records						17,760
proceeds of note collected by bank ,including $320 interest					4,230
Bank service charges					30
checks returned due to insuffiecient funds					980
Error in recording check					270
total adjustments						2,950
Adjusted balance						20,710
Entries that increase cash
Account titles & explanations					debit	Credit
cash					4,230
note receivable						3,910
interest income						320
Accounts payable-Rack pro co					270
Accounts recievable -bay view condos					980
bank service charges/misc expense					30
cash						1280
3)	amount to be reported as cash			20,710