The cash account for Brentwood Bike Co. at May 1 indicated a balance of $13,350.

Question

The cash account for Brentwood Bike Co. at May 1 indicated a balance of $13,350. During May, the total cash deposited was $66,800 and checks written totaled $62,020. The bank statement indicated a balance of $22,650 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 $10,090.

A deposit of $8,220, representing receipts of May 31, had been made too late to appear on the bank statement.

The bank had collected for Brentwood Bike Co. $4,340 on a note left for collection. The face of the note was $4,010.

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

A check for $970 returned with the statement had been recorded by Brentwood Bike Co. as $790. 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 $1,000 from Jennings Co. was returned by the bank because of insufficient funds.

Instructions:

1. Prepare a bank reconciliation as of May 31.

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 Brentwood Bike Co. on May 31, what amount should be reported as cash?
$

Brentwood Bike Co. Bank Reconciliation May 31 Cash balance according to bank statement $ Add deposit of May 31, not recorded by bank $ Add bank error in charging check as $720 instead of $270 $ Deduct bank service charges Adjusted balance $ Cash balance according to company's records $ Add note and interest collected by bank $ Deduct bank error in charging check as $720 instead of $270 $ Deduct bank service charges Deduct error in recording check Adjusted balance $

Explanation / Answer

BrentWood Bike Co. Bank Reconciliation Cash balance according to Bank statement 22,650 Add:Deposits of May 31,not recorded by bank 8,220 Add:Bank error in charging checks as 720instead of $270 450 8,670 31,320 Deduct:checks outstanding 10,090 Adjusted balance 21,230 Cash balance according to company records 18130 (13,350+66800-62,020) Add:collection of note 4,340 22470 Deduct: Error in recording cheque (970-790) 180 Bank service charge 60 NSF 1,000 1,240 Adjusted balance 21,230 2) Journal entries' a 31-May Cash 4,340 Note receivable 4,010 interest revenue 330 b. 31-May Accounts payable-Adkins co 180 Bank service charges/miscellneous exp 60 account receivable 1,000 cash 1,240 3) 21,230

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