Question

Bank Reconciliation and Entries

The cash account for Coastal Bike Co. at October 1, 20Y9, indicated a balance of $14,530. During October, the total cash deposited was $72,650 and checks written totaled $67,460. The bank statement indicated a balance of $24,630 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 $10,970.

A deposit of $8,940, representing receipts of October 31 had been made too late to appear on the bank statement.

The bank had collected for Coastal Bike Co. $4,720 on a note left for collection. The face of the note was $4,360.

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 Coastal Bike Co. as $580. The check was for the payment of an obligation to Rack Pro Co. on account.

Bank service charges for October amounted to $30.

A check for $1,090 from Bay View Condos was returned by the bank due to insufficient funds.

Instructions:

1. Prepare a bank reconciliation as of October 31, 20Y9.

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.

3. If a balance sheet were prepared for Coastal Bike Co. on October 31, 20Y9, what amount should be reported as cash?

Answer 1