Question

Bank Reconciliation and Entries

The cash account for Brentwood Bike Co. at May 1 indicated a balance of $14,890. During May, the total cash deposited was $75,330 and checks written totaled $69,940. The bank statement indicated a balance of $25,540 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 $11,370.

A deposit of $9,270, representing receipts of May 31, had been made too late to appear on the bank statement.

The bank had collected for Brentwood Bike Co. $4,900 on a note left for collection. The face of the note was $4,520.

A check for $360 returned with the statement had been incorrectly charged by the bank as $630.

A check for $410 returned with the statement had been recorded by Brentwood Bike Co. as $140. The check was for the payment of an obligation to Adkins Co. on account.

Bank service charges for May amounted to $70.

A check for $1,130 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

bank reconciliation Statement:
Cash balance as per bank statement:				25540
Adjustment:
Less: Checks outstanding				-11370
Add: Deposits in transit				9270
Add: Error in check recording				270
Adjusted balance in Bank Statement				23710
Balance as per Books				20280
(14890+75330-69940)
Adjustment:
Add: Notes collected along with int.				4900
Less: Error in recoding the issued check				-270
Less: Bank Service charges				-70
Less: NSF check				-1130
Adjusted balance as per books				23710
Journal entries:
Accounts title and explanations					Debit $	Credit $
Cash Account Dr.					4900
Notes receivable						4520
Interest revenue						380
Accounts payable-Adkins co. Dr.					270
Cash Account						270
Misc. Expense Account Dr.					70
Cash Account						70
Accounts receivable-Jennings Dr.					1130
Cash Account						1130
Balance to be shown in balance sheet: $ 23710