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

Question

The cash account for Brentwood Bike Co. at May 1, 2016, indicated a balance of $34,800. During May, the total cash deposited was $139,523, and checks written totaled $138,774. The bank statement indicated a balance of $43,875 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

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

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JOURNAL

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

A. Checks outstanding totaled $6,340. B. A deposit of $1,643 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. $5,565 on a note left for collection. The face of the note was $5,300. D. A check for $260 returned with the statement had been incorrectly charged by the bank as $620. E. A check for $210 returned with the statement had been recorded by Brentwood Bike Co. as $120. The check was for the payment of an obligation to Adkins Co. on account. F. Bank service charges for May amounted to $22. G. A check for $1,464 from Jennings Co. was returned by the bank due to insufficient funds.

Explanation / Answer

Particulars Amount $ Cash Account Balance (B) 34800 Add Cash deposited© 139523 Less Cash Written(D) 138774 Cash Account Balance may 31(A)=(B+C-D) 35549 Add:Note collection 5300 Add: interest collected 265 Less: Bank fees 22 Less:NSF check 1464 Less: Error correction 90 Adjusted cash ccount balance may 31 39538 Particulars Amont $ Bank balance 43875 Less: check outstanding 6340 Add: Bank error collection 360 Add: deposit in transit 1643 Adjusted bank balance may 31 39538 particulars Debit credit Cash 5300 Notes receivable 5300 bank Expenses 22 Cash 22 Accounts receivable 1464 Cash 1464 Cash 360 Accounts payable 360 Cash 90 Accounts payable 90 Cash 265 To interest on notes receivable 265

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