The cash account for Brentwood Bike Co. at May 1 indicated a balance of $13,350. During May, the total cash deposited was $66,800 and checks written totaled $62,020. The bank statement indicated a balance of $22,650 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:
Checks outstanding totaled $10,090.
A deposit of $8,220, representing receipts of May 31, had been made too late to appear on the bank statement.
The bank had collected for Brentwood Bike Co. $4,340 on a note left for collection. The face of the note was $4,010.
A check for $270 returned with the statement had been incorrectly charged by the bank as $720.
A check for $970 returned with the statement had been recorded by Brentwood Bike Co. as $790. The check was for the payment of an obligation to Adkins Co. on account.
Bank service charges for May amounted to $60.
A check for $1,000 from Jennings Co. was returned by the bank because of insufficient funds.
Instructions:
1. Prepare a bank reconciliation as of May 31.
Brentwood Bike Co. Bank Reconciliation May 31 Cash balance according to bank statement $ Add deposit of May 31, not recorded by bank $ Add bank error in charging check as $720 instead of $270 $ Deduct bank service charges Adjusted balance $ Cash balance according to company's records $ Add note and interest collected by bank $ Deduct bank error in charging check as $720 instead of $270 $ Deduct bank service charges Deduct error in recording check Adjusted balance $
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.
a. May 31 b. May 31
3. If a balance sheet were prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?
$
The cash account for Brentwood Bike Co. at May 1 indicated a balance of $13,350. During May, the total cash deposited was $66,800 and checks written totaled $62,020. The bank statement indicated a balance of $22,650 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:
Checks outstanding totaled $10,090.
A deposit of $8,220, representing receipts of May 31, had been made too late to appear on the bank statement.
The bank had collected for Brentwood Bike Co. $4,340 on a note left for collection. The face of the note was $4,010.
A check for $270 returned with the statement had been incorrectly charged by the bank as $720.
A check for $970 returned with the statement had been recorded by Brentwood Bike Co. as $790. The check was for the payment of an obligation to Adkins Co. on account.
Bank service charges for May amounted to $60.
A check for $1,000 from Jennings Co. was returned by the bank because of insufficient funds.
Instructions:
1. Prepare a bank reconciliation as of May 31.
Brentwood Bike Co. | ||
Bank Reconciliation | ||
May 31 | ||
Cash balance according to bank statement | $ | |
Add deposit of May 31, not recorded by bank | $ | |
Add bank error in charging check as $720 instead of $270 | ||
$ | ||
Deduct bank service charges | ||
Adjusted balance | $ | |
Cash balance according to company's records | $ | |
Add note and interest collected by bank | ||
$ | ||
Deduct bank error in charging check as $720 instead of $270 | $ | |
Deduct bank service charges | ||
Deduct error in recording check | ||
Adjusted balance | $ |
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.
a. May 31 | |||
b. May 31 | |||
3. If a balance sheet were prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?
$