Bank Reconciliation and Entries The cash account for Brentwood Bike Co. at May 1

Question

Bank Reconciliation and Entries

The cash account for Brentwood Bike Co. at May 1 indicated a balance of $14,780. During May, the total cash deposited was $74,910 and checks written totaled $69,550. The bank statement indicated a balance of $25,390 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 $11,310.

A deposit of $9,210, representing receipts of May 31, had been made too late to appear on the bank statement.

The bank had collected for Brentwood Bike Co. $4,870 on a note left for collection. The face of the note was $4,490.

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

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 $1,120 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 $630 instead of $360 $ Deduct outstanding checks Adjusted balance $ Cash balance according to company's records $ Add note and interest collected by bank $ Deduct check returned because of insufficient funds $ Deduct bank service charges Deduct error in recording check Adjusted balance $

Explanation / Answer

BrentWood Bike Co. Bank Reconciliation Cash balance according to Bank statement 25,390 Add:Deposits of May 31,not recorded by bank 9,210 Add:Bank error in charging checks as 630instead of $360 270 9,480 34,870 Deduct:checks outstanding 11,310 Adjusted balance 23,560 Cash balance according to company records 20140 (14780+74910-69550) Add:collection of note 4,870 25010 Deduct: Error in recording cheque (850-580) 270 Bank service charge 60 NSF 1,120 1,450 Adjusted balance 23,560 2) Journal entries' a 31-May Cash 4,870 Note receivable 4,490 interest revenue 380 b. 31-May Accounts payable-Adkins co 270 Miscellaneous expense 60 account receivable 1,120 cash 1,450 3) 23,560

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