Question

Bank Reconciliation and Entries

The cash account for Coastal Bike Co. at October 1, 20Y9, indicated a balance of $13,590. During October, the total cash deposited was $67,610 and checks written totaled $62,780. The bank statement indicated a balance of $22,920 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 $10,210.

A deposit of $8,320, representing receipts of October 31 had been made too late to appear on the bank statement.

The bank had collected for Coastal Bike Co. $4,390 on a note left for collection. The face of the note was $4,060.

A check for $270 returned with the statement had been incorrectly charged by the bank as $720.

A check for $520 returned with the statement had been recorded by Coastal Bike Co. as $250. The check was for the payment of an obligation to Rack Pro Co. on account.

Bank service charges for October amounted to $50.

A check for $1,010 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:
	$
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

	Bank reconciliation
	Bank balance	22920
Add	Deposit in transit	8320
	Error by bank	450
	Total	31690
Less	Outstanding checks	10210
	Adjusted bank balance	21480
	Cash balance		18420
Add	Notes collected	4060
	Interest revenue	330
			4390
Less	Error in recording	270
	Service charges	50
	Chq returned	1010
			1330
	Adjusted cash balance		21480
	Journal entry
	Increase in cash
1	Cash	4390
	Notes receivable		4060
	Interest revenue		330
	Decrease in cash
2	Accounts payable	270
	Misc. expense	50
	Accounts receivable	1010
	Cash		1330
	Misc. expense	144
	Cash		144
3	Cash reported as 21480