Question

The cash account for Brentwood Bike Co. at May 1 indicated a balance of $13,080. During May, the total cash deposited was $65,880 and checks written totaled $61,170. The bank statement indicated a balance of $22,330 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 $9,950.

A deposit of $8,100, representing receipts of May 31, had been made too late to appear on the bank statement.

The bank had collected for Brentwood Bike Co. $4,280 on a note left for collection. The face of the note was $3,950.

A check for $580 returned with the statement had been incorrectly charged by the bank as $850.

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 $60.

A check for $990 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 were prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?
$

Answer 1

	BrentWood Bike Co.
	Bank Reconciliation
Cash balance according to Bank statement							22,330
Add:Deposits of May 31,not recorded by bank						8,100
Add:Bank error in charging checks as 850 instead of $580						270	8,370
							30,700
Deduct:checks outstanding							9,950
Adjusted balance							20,750
Cash balance according to company records							17790	(13080+65880-61170)
Add:collection of note							4,280
							22070
Deduct:	Error in recording cheque					270
	Bank service charge					60
	NSF					990	1,320
Adjusted balance							20,750
2)	Journal entries'
a	31-May	Cash				4,280
		Note receivable					3,950
		interest revenue					330
b.	31-May	Accounts payable-Adkins co				270
		Bank service charges/miscellneous exp				60
		account receivable				990
		cash					1,320
3)	20,750