Bank Reconciliation and Entries The cash account for Coastal Bike Co. at October

Question

Bank Reconciliation and Entries

The cash account for Coastal Bike Co. at October 1, 20Y9, indicated a balance of $15,010. During October, the total cash deposited was $75,650 and checks written totaled $70,240. The bank statement indicated a balance of $25,650 on October 31, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

Checks outstanding totaled $11,420.

A deposit of $9,300, representing receipts of October 31 had been made too late to appear on the bank statement.

The bank had collected for Coastal Bike Co. $4,920 on a note left for collection. The face of the note was $4,540.

A check for $490 returned with the statement had been incorrectly charged by the bank as $940.

A check for $970 returned with the statement had been recorded by Coastal Bike Co. as $790. The check was for the payment of an obligation to Rack Pro Co. on account.

Bank service charges for October amounted to $50.

A check for $1,130 from Bay View Condos was returned by the bank due to insufficient funds.

Instructions:

1. Prepare a bank reconciliation as of October 31, 20Y9.

2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank.

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

Coastal Bike Co. Bank Reconciliation October 31, 20Y9 Cash balance according to bank statement $ Adjustments: $ Total adjustments Adjusted balance $ Cash balance according to company's records $ Adjustments: $ Total adjustments Adjusted balance $

Explanation / Answer

1) Bank Recociliation Balance as per bank 25,650 Add: Error in recording (940-490) 450 Deposits in transit 9,300 35,400 less: Checks outstanding 11,420 Adjusted balance as per bank 23,980 Balance as per cash book 20,420 Add: note with interest 4,920 25,340 less: NSF 1,130 Service charge 50 Error in recording (970-790) 180 1360 Adjusted balance as per cash 23,980 2) Journal Entry Account titles & explanations Debit Credit Cash 4,920 Notes receivable 4,540 interest earned 380 Accounts receivable 1,130 cash 1,130 Service charge 50 cash 50 Accounts payable 180 Cash 180 3) Amount to be reported as cash $23,980

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