The cash account for Coastal Bike Co. at October 1, 20Y9, indicated a balance of

Question

The cash account for Coastal Bike Co. at October 1, 20Y9, indicated a balance of $34,800. During October, the total cash deposited was $139,523, and checks written totaled $138,774. The bank statement indicated a balance of $43,875 on October 31, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items: A. Checks outstanding totaled $6,340. B. A deposit of $1,643 representing receipts of October 31, had been made too late to appear on the bank statement. C. The bank had collected for Coastal 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 Coastal Bike Co. as $120. The check was for the payment of an obligation to Rack Pro Co. on account. F. Bank service charges for October amounted to $22. G. A check for $1,464 from Bay View Condos was returned by the bank due to insufficient funds. Instructions 1. Prepare a bank reconciliation as of October 31, 20Y9. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. 2. Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles. 3. If a balance sheet were prepared for Coastal Bike Co. on October 31, 20Y9, what amount should be reported as cash?

1. Prepare a bank reconciliation as of October 31, 20Y9. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Score: 48/112

Coastal Bike Co.

Bank Reconciliation

October 31, 20Y9

1

Cash balance according to bank statement

2

Adjustments:

3

4

5

6

7

Adjusted balance

8

9

Cash balance according to company’s records

10

Adjustments:

11

12

13

14

15

16

P

3. If a balance sheet were prepared for Coastal Bike Co. on October 31, 20Y9, what amount should be reported as cash?

Adjusted balance Bank error in charging check as $260 instead of $620 Bank error in charging check as $620 instead of $260 Bank service charges Check returned because of insufficient funds Company error in recording note collected by bank Deposit of October 31, not recorded by bank Error in recording check Outstanding checks Proceeds of note collected by bank, including $265 interest Total adjustments

Explanation / Answer

1

Bank reconciliation statement:

Balance per bank

Adjustments:

$43,875

Balance per book($34800+$139,523-$138,774)

Adjustment:

$35,549

2.

Entries:

3. Amount shown in balance sheet for cash=$39,538

Balance per bank

Adjustments:

$43,875

Add :deposit of October 31, not recorded by bank $1643 Bank error in charging check as $260 instead of $620(620-260) $360 $2003 $45,878 Less: outstanding checks $6,340 Adjusted balance $39,538

Balance per book($34800+$139,523-$138,774)

Adjustment:

$35,549

Add: proceed of note collected by bank, including $265 interest $5,565 $41,114 Deduct: error in recording check($210-$120) $90 Bank service charges $22 Check returned because of insufficient funds $1,464 $1,576 Adjusted balance $39,538

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