Bank Reconciliation and Entries
The cash account for Brentwood Bike Co. at May 1 indicated a balance of $14,780. During May, the total cash deposited was $74,910 and checks written totaled $69,550. The bank statement indicated a balance of $25,390 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 $11,310.
A deposit of $9,210, representing receipts of May 31, had been made too late to appear on the bank statement.
The bank had collected for Brentwood Bike Co. $4,870 on a note left for collection. The face of the note was $4,490.
A check for $360 returned with the statement had been incorrectly charged by the bank as $630.
A check for $850 returned with the statement had been recorded by Brentwood Bike Co. as $580. 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 $1,120 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 $630 instead of $360 $ Deduct outstanding checks Adjusted balance $ Cash balance according to company's records $ Add note and interest collected by bank $ Deduct check returned because of insufficient funds $ 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 Cash Notes Receivable Interest Revenue b. May 31 Accounts Payable-Adkins Co. Accounts Receivable-Jennings Co. Miscellaneous Expense Cash
3. If a balance sheet were prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?
$
Bank Reconciliation and Entries
The cash account for Brentwood Bike Co. at May 1 indicated a balance of $14,780. During May, the total cash deposited was $74,910 and checks written totaled $69,550. The bank statement indicated a balance of $25,390 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 $11,310.
A deposit of $9,210, representing receipts of May 31, had been made too late to appear on the bank statement.
The bank had collected for Brentwood Bike Co. $4,870 on a note left for collection. The face of the note was $4,490.
A check for $360 returned with the statement had been incorrectly charged by the bank as $630.
A check for $850 returned with the statement had been recorded by Brentwood Bike Co. as $580. 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 $1,120 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 $630 instead of $360 | ||
$ | ||
Deduct outstanding checks | ||
Adjusted balance | $ | |
Cash balance according to company's records | $ | |
Add note and interest collected by bank | ||
$ | ||
Deduct check returned because of insufficient funds | $ | |
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 | Cash | ||
Notes Receivable | |||
Interest Revenue | |||
b. May 31 | Accounts Payable-Adkins Co. | ||
Accounts Receivable-Jennings Co. | |||
Miscellaneous Expense | |||
Cash |
3. If a balance sheet were prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?
$