The cash account for Brentwood Bike Co. at May 1, 2016, indicated a balance of $

Question

The cash account for Brentwood Bike Co. at May 1, 2016, indicated a balance of $32,527. During May, the total cash deposited was $139,121, and checks written totaled $135,890. The bank statement indicated a balance of $43,660 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

A. Checks outstanding totaled $6,625. B. A deposit of $1,888 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. $5,250 on a note left for collection. The face of the note was $5,000. D. A check for $260 returned with the statement had been incorrectly charged by the bank as $620. E. A check for $410 returned with the statement had been recorded by Brentwood Bike Co. as $140. The check was for the payment of an obligation to Adkins Co. on account. F. Bank service charges for May amounted to $37. G. A check for $1,418 from Jennings Co. was returned by the bank due to insufficient funds.

Explanation / Answer

Bank Reconciliation Cash balance according to bank statement 43660 ADD Deposit of May 31, not recorded by bank 1888 Bank error in charging check as 620 instead of 260 360 2248 Deduct outstanding checks 6625 6625 Adjusted balance 39283 Cash balance according to company’s records 35758 Add proceeds of note collected by bank, including interest 5250 Deduct: Error in recording check 270 Bank service charges 37 NSF Check 1418 1725 Adjusted balance 39283 Cash Balance at May 1 2016 32527 Add Cash Deposited 139121 Less Check Written -135890 Cash balance according to company’s records 35758 DR CR Cash 5250 Notes Receivable 5000 Interest Revenue 250 DR CR Accounts Payable—Adkins Co 270 Accounts Receivable—Jennings Co. 1418 Miscellaneous Expense 37 Cash 1725 If a balance sheet were prepared for Brentwood Bike Co. on May 31, 2016, what amount should be reported as cash? Adjusted balance 39283

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