Question

The cash account for Brentwood Bike Co. at May 1 indicated a balance of $34,250. During May, the total cash deposited was $140,300, and checks written totaled $138,880. The bank statement indicated a balance of $43,525 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

A.	Checks outstanding totaled $6,440.
B.	A deposit of $1,850 representing receipts of May 31, had been made too late to appear on the bank statement.
C.	The bank had collected for Brentwood Bike Co. $5,250 on a note left for collection. The face of the note was $5,000.
D.	A check for $390 returned with the statement had been incorrectly charged by the bank as $930.
E.	A check for $210 returned with the statement had been recorded by Brentwood Bike Co. as $120. The check was for the payment of an obligation to Adkins Co. on account.
F.	Bank service charges for May amounted to $30.
G.	A check for $1,325 from Jennings Co. was returned by the bank due to insufficient funds.

	Instructions
1.	Prepare a bank reconciliation as of May 31. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Deduct:” or “Add:” will automatically appear if it is required.
2.	Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of account titles.
3.	If a balance sheet is prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?

Chart of Accounts

CHART OF ACCOUNTS
Brentwood Bike Co.
General Ledger
ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable-Jennings Co. 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-Adkins Co. 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 590 Miscellaneous Expense 710 Interest Expense

Amount Descriptions

Amount Descriptions
Bank error in charging check as $390 instead of $930
Bank error in charging check as $930 instead of $390
Bank service charges
Check returned because of insufficient funds
Company error in recording note collected by bank
Deposit of May 31, not recorded by bank
Error in recording check
Outstanding checks
Note and interest collected by bank

Answer 1

Answer:
Bentwood Bike Co. Bank Reconciliation May 31
Cash balance as per Bank Statement		$43,525
Add: Deposits in May	$1,850
Add: Bank error in charging check ($930 (-) $390)	$540
		$2,390
Less : Outstanding checks		($6,440)
Adjusted Balance		$39,475
Cash balance as per Company's books ( $34,250 (+) $140,300 (-) $138,880)		$35,670
Add: Note collected by Bank		$5,250
		$40,920
Less :
Error in recording check ($210 (-) $120)	($90)
Bank Service Charges	($30)
Check returned due to Insufficient Funds	($1,325)	($1,445)
Adjusted Balance		$39,475

2)
Date	Account Titles and Explanation	Debit (in $)	Credit (in $)
31-May	Cash	$5,250
	Note Receivable		$5,000
	Interest Revenue/ Income		$250
	(To record the note collected by bank)
31-May	Accounts Payable	$90
	Bank Service Charges	$30
	Accounts Receivable	$1,325
	Cash		$1,445
	(To record the cash)
3)
Cash to be reported $39,475in balance sheet