Question

Bank Reconciliation and Entries The cash account for Brentwood Bike Co. at May 1 indicated a balance of $13,990. During May, the total cash deposited was $69,790 and checks written totaled $64,800. The bank statement indicated a balance of $23,660 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items: Checks outstanding totaled $10,540. A deposit of $8,580, representing receipts of May 31, had been made too late to appear on the bank statement. The bank had collected for Brentwood Bike Co. $4,540 on a note left for collection. The face of the note was $4,190. A check for $270 returned with the statement had been incorrectly charged by the bank as $720. A check for $850 returned with the statement had been recorded by Brentwood Bike Co. as $580. The check was for the payment of an obligation to Adkins Co. on account. Bank service charges for May amounted to $50. A check for $1,050 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

Bank Reconciliation
	Amount($)	Amount($)
Cash balance per bank statement		23,660
Plus: Deposit of May 31, not recorded by bank	8,580
Bank error($720-$270)	450	9,030
Minus: Outstanding checks		10,540
Adjusted balance		22,150
Cash balance per books (13,990 + 69790-64,800)		18,980
Plus: Proceeds of note collected by bank		4,540
Minus: Check returned because of insufficient funds	1,050
Bank service charges	50
Error in recording check	270	1,370
Adjusted balance		22,150

b)	Description	Debit $	Credit $
A	Cash	4,540
	Note Receivable		4,190
	Interest Revenue		350
B	Accounts payable-Adkins Co.	270
	Bank Service Charges	50
	Account Receivable	1,050
	Cash		1,370