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 $13,960. During May, the total cash deposited was $70,480 and checks written totaled $65,440. The bank statement indicated a balance of $23,890 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items: a. Checks outstanding totaled $10,640. b. A deposit of $8,670, representing receipts of May 31, had been made too late to appear on the bank statement. c. The bank had collected for Brentwood Bike Co. $4,580 on a note left for collection. The face of the note was $4,230 d. A check for $580 returned with the statement had been incorrectly charged by the bank as $850 e. A check for $410 returned with the statt had been recorded by Brentwood Bike Co. as $140. The check was for the payment of an obligation to Adkins Co. on account. g. A check for $1,060 fmennings Co. was returned by the bank because of insufficient funds. 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

Explanation / Answer

Answer:

1

Brentwood Bike Co

Bank Reconciliation

may-,31

Cash balance according to bank statement

23890

Add: Deposit of May 31, not recorded by bank

8670

Bank error in charging check as $850
instead of $580

270

8940

32830

Deduct: Outstanding checks

10640

Adjusted balance

22190

Cash balance according to company’s records (w.n.-1)

19000

Add: Proceeds of note collected by bank, including $350 interest

4580

23580

Deduct: Check returned because of insufficient funds

1060

Bank service charges

60

Error in recording check (410-140)

270

1390

Adjusted balance

22190

Working note:1

Cash balance, May 1

13960

Plus cash deposited in May

70,480.00

Less checks written in May

-65,440.00

Balance per company's books, May 31

$19,000.00

______________________________________

2

DESCRIPTION

DEBIT

CREDIT

Cash

4,580.00

Notes Receivable

4,230.00

Interest Revenue

350.00

Accounts Payable-Adkins Co.

270

Accounts Receivable-Jennings Co.

1,060.00

Miscellaneous Expense

60

Cash

1,390.00

3

Brentwood Bike Co. should be reported as cash on May 31,=$22,190

Brentwood Bike Co

Bank Reconciliation

may-,31

Cash balance according to bank statement

23890

Add: Deposit of May 31, not recorded by bank

8670

Bank error in charging check as $850
instead of $580

270

8940

32830

Deduct: Outstanding checks

10640

Adjusted balance

22190

Cash balance according to company’s records (w.n.-1)

19000

Add: Proceeds of note collected by bank, including $350 interest

4580

23580

Deduct: Check returned because of insufficient funds

1060

Bank service charges

60

Error in recording check (410-140)

270

1390

Adjusted balance

22190

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