cash account for Brentwood Bike Co. at May 1, 2016, indicated a balance of $34,2

Question

cash account for Brentwood Bike Co. at May 1, 2016, indicated a balance of $34,250. During May, the total cash deposited was $140,300, and checks written totaled $138,880. The bank statement indicated a balance of $43,525 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 $6,440. B. A deposit of $1,850 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. $5,250 on a note left for collection. The face of the note was $5,000. D. A check for $390 returned with the statement had been incorrectly charged by the bank as $930. 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 $30. G. A check for $1,325 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?

Explanation / Answer

               1 Bank Reconciliation As On May 31. Balance as per Bank statement May 31.             43,525.00 Less : Checks Outstanding             (6,440.00) Add : Deposits in Transit               1,850.00 Less : Note Collected with Interest not in cash GL             (5,250.00) Add: Mistake in Check by Bank                   540.00 Add:   Check Record mistake in Cash GL                     90.00 Add :   Bank Service change Not in Cash GL                     30.00 Add : NSF not recorded in Cash GL               1,325.00 Cash Balance As per Cash GL             35,670.00 Adjusted Cash Balance Cash Balance as Per Cash GL May 31             35,670.00 Add   Note Collected with Interest not in cash GL               5,250.00 Less Check Record mistake in Cash GL                   (90.00) Less Bank Service change Not in Cash GL                   (30.00) Less NSF not recorded in Cash GL             (1,325.00) Adjusted Cash Balance May 31.             39,475.00 Adjusted Bank Balance Balance as per Bank statement May 31.             43,525.00 Less : Checks Outstanding             (6,440.00) Add : Deposits in Transit               1,850.00 Add: Mistake in Check by Bank                   540.00 Cash Balance As per Cash GL             39,475.00                2 Journal Entries in Cash GL Date Account Title Dr $ Cr $ May 31. Cash               5,250.00 Interest Income                  250.00 Note Receivable               5,000.00 Cash                     90.00 Accounts Payable                     90.00 ( Mistake in Adkins Co Check recording rectified ) Cash                     30.00 Bank Charges                     30.00 Accounts Receivable               1,325.00 Cash               1,325.00                3 For a Balance sheet on May 31 , the Cash Balance to be reported will be of $39,475

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