Bank Reconciliation and Entries The cash account for Brentwood Bike Co. at May 1
ID: 2437171 • Letter: B
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.
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.
Explanation / Answer
(1)
(2)
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 20270Related Questions
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