Question

Part 1.

Journalize the entries to record the following (refer to the Chart of Accounts for exact wording of account titles):

	Instructions
A.	On March 1, Check is issued to establish a petty cash fund of $1,175.
B.	On April 1, the amount of cash in the petty cash fund is now $110. Check is issued to replenish the fund, based on the following summary of petty cash receipts: office supplies, $665; miscellaneous selling expense, $211; miscellaneous administrative expense, $178. (Because the amount of the check to replenish the fund plus the balance in the fund do not equal $1,175, record the discrepancy in the cash short and over account.)

CHART OF ACCOUNTS General Ledger

	ASSETS
110	Cash
111	Petty Cash
120	Accounts Receivable
131	Notes Receivable
132	Interest 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
210	Accounts Payable
221	Notes Payable
222	Interest Payable
231	Salaries Payable
241	Sales Tax Payable

	EQUITY
310	Owner, Capital
311	Owner, Drawing
312	Income Summary

	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
591	Miscellaneous Administrative Expense
592	Miscellaneous Selling Expense
710	Interest Expense

Part 2.

Bank Reconciliation and Entries

The cash account for Brentwood Bike Co. at May 1 indicated a balance of $13,450. During May, the total cash deposited was $66,940 and checks written totaled $62,150. The bank statement indicated a balance of $22,690 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

1. Checks outstanding totaled $10,110.
2. A deposit of $8,230, representing receipts of May 31, had been made too late to appear on the bank statement.
3. The bank had collected for Brentwood Bike Co. $4,350 on a note left for collection. The face of the note was $4,020.
4. A check for $490 returned with the statement had been incorrectly charged by the bank as $940.
5. A check for $630 returned with the statement had been recorded by Brentwood Bike Co. as $360. The check was for the payment of an obligation to Adkins Co. on account.
6. Bank service charges for May amounted to $60.
7. A check for $1,000 from Jennings Co. was returned by the bank because of insufficient funds.

Instructions:

1. Prepare a bank reconciliation as of May 31.

Brentwood Bike Co.
Bank Reconciliation
May 31
Cash balance according to bank statement		$
	$
		$
Adjusted balance		$
Cash balance according to company's records		$
		$
	$
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. May 31
b. May 31

3. If a balance sheet is prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?
$

Answer 1

Answer-1
Accounting titles And Explanations		Debit	Credit
Petty Cash		$     1,175
Cash			$     1,175
( To record petty cash )
office supplies		$        665
Miscellaneous selling expense		$        211
Miscellaneous administrative expense		$        178
Cash short and over		$          11
Cash.			$     1,065
( To record expenses )
Working Note
total disbursement 665+211+178=	$     1,054
Balance should be 1175-1054=	$        121
Balance reported	$        110
Cash short and over	$          11

Answer-2
Brentwood Bike Co.
Bank Reconciliation
May-31
Cash balance according to bank statement		$     22,690
Add deposit of May 31, not recorded by bank	$     8,230
Add bank error in charging check as $940 instead of $490	$        450	$       8,680
		$     31,370
Deduct outstanding checks		$     10,110
Adjusted balance		$     21,260
Cash balance according to company's records (13450+66940-62150)		$     18,240
Add note and interest collected by bank		$       4,350
		$     22,590
Deduct: Check returned because of insufficient funds	$     1,000
Bank service charges	$          60
Error in recording check	$        270	$       1,330
Adjusted balance		$     21,260

	Accounts title	Debit	Credit
1	Cash	$       4,350
	Notes receivable		$       4,020
	Interest Revenue		$          330
2	Accounts Receivable	$       1,000
	Cash		$       1,000
3	Bank service charge/Misce;;eneous exp	$            60
	Cash		$            60
4	Accounts payable	$          270
	Cash		$          270

Cash balance

$     21,260