:The cash account for Brentwood Bike Co. at May 1, 2016, indicated a balance of

ID: 2445004 • Letter: #

Question

:The cash account for Brentwood Bike Co. at May 1, 2016, indicated a balance of $32,788. During May, the total cash deposited was $139,699, and checks written totaled $138,679. The bank statement indicated a balance of $42,830 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 $6,659.

B.A deposit of $1,875 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. $6,195 on a note left for collection. The face of the note was $5,900.

D. A check for $170 returned with the statement had been incorrectly charged by the bank as $710.

E. A check for $310 returned with the statement had been recorded by Brentwood Bike Co. as $130. The check was for the payment of an obligation to Adkins Co. on account.

F. Bank service charges for May amounted to $24.

G. A check for $1,213 from Jennings Co. was returned by the bank due to insufficient funds.

Instructions 1. Prepare a bank reconciliation as of May 31. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Deduct:” or “Add:” will automatically appear if it is required.

2. Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of account titles

. 3. If a balance sheet were prepared for Brentwood Bike Co. on May 31, 2016, what amount should be reported as cash?

3. If a balance sheet were prepared for Brentwood Bike Co. on May 31, 2016, what amount should be reported as cash?

Explanation / Answer

(1) BRS

Balance as per cash Book (32788 + 139699 – 138679)

33808

Add: Checks outstanding

6659

Add: Bank collected for company

6195

46662

Deduct: A deposit not recorded in bank

1875

Deduct: Check of $170 incorrectly charged by the bank as $710

540

Deduct: Check of $310 incorrectly recorded by the Brentwood Bike Co. as $130

180

Deduct: Bank service charges

Deduct: A check for $1,213 from Jennings Co. was returned by the bank

1213

Balance as per bank statement

42830

(2) Journal Entries

Bank Charges Dr. 24

To Cash 24

-------------------------xxxx-------------------------------

Jennings Co. Dr. 1213

To Cash 1213

------------------------xxxx------------------------------

Cash Dr. 6195

To Note for Collection 6195

------------------------xxxx--------------------------------

(3)If a balance sheet were prepared for Brentwood Bike Co. on May 31, 2016, then $42830 will be reported as cash.