Bank Reconciliation and Entries The cash account for Brentwood Bike Co. at May 1

Question

Bank Reconciliation and Entries The cash account for Brentwood Bike Co. at May 1 indicated a balance of $13,310. During May, the total cash deposited was $66,640 and checks written totaled $61,880. The bank statement indicated a balance of $22,590 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconiling items: a. Checks outstanding totaled $10,060. b. A deposit of $8,200, 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. $4,330 on a note left for collection. The face of the note was $4,000. d. A check for $490 returned with the statement had been incorrectly charged by the bank as $940. e. 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. f. Bank service charges for May amounted to $40. g. 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 $ 22,590 8,200 450 8,650

Explanation / Answer

SOLUTION

(A) Bank Reconciliation statement-

(B) Journal Entries-

(C) Cash balance on balance sheet as on 31st May is $21,360.

Particulars Amount ($) Particulars Amount ($) Balance as per bank statement 22,590 Balance as per cash account 13,310 Add: Deposits in transit 8,200 Add: Cash deposits 66,640 Add: Incorrect charges by bank (940-490) 450 Less: Checks written (61,880) Add: Incorrect recording by bank (970-790) 180 Balance as per cash book 18,070 31,420 Add: Note collections 4,330 Deduct: Outstanding checks (10,060) Less: Bank service charges (40) Less: NSF Checks (1,000) Adjusted balance as per banks 21,360 Adjusted balance as per bookds 21,360

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