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 $12,770. During May, the total cash deposited was $64,320 and checks written totaled $59,720. The bank statement indicated a balance of $21,800 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 $9,710.

A deposit of $7,910, representing receipts of May 31, had been made too late to appear on the bank statement.

The bank had collected for Brentwood Bike Co. $4,180 on a note left for collection. The face of the note was $3,860.

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 $50.

A check for $960 from Jennings Co. was returned by the bank because of insufficient funds.

Instructions:

1.  Prepare a bank reconciliation as of May 31.

Explanation / Answer

SOLUTION:

Cash balance per bank statement 21,800 Plus: Deposit of May 31, not recorded by bank 7910           Bank error 270 8180 Minus: Outstanding checks 9710 Adjusted balance 20,270 Cash balance per books (12,770 + 64,320 - 59,720) 17370 Plus: Proceeds of note collected by bank 4180 Minus: Check returned because of insufficient funds 960               Bank service charges 50               Error in recording check 270 1280 Adjusted balance 20270

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