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 $33,857. During May, the total cash deposited was $139,616, and checks written totaled $138,547. The bank statement indicated a balance of $43,270 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

Only 7 Descriptions

The following transactions were completed by The Irvine Company during the current fiscal year ended December 31:

A. Checks outstanding totaled $6,340. B. A deposit of $1,858 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. $5,565 on a note left for collection. The face of the note was $5,300. D. A check for $590 returned with the statement had been incorrectly charged by the bank as $950. E. A check for $210 returned with the statement had been recorded by Brentwood Bike Co. as $120. The check was for the payment of an obligation to Adkins Co. on account. F. Bank service charges for May amounted to $36. G. A check for $1,217 from Jennings Co. was returned by the bank due to insufficient funds.

Explanation / Answer

Bank reconciliation statement Journal entry A No entry required - as correctly recorded in bank book B No entry required - as correctly recorded in bank book C Cash Dr 5565             Accounts receivable Cr 5300              Interest received Cr 265 ( To record collection of note by the bank) D Accounts receivable Dr 590                Cash Cr 590 ( To record return of check) No entry required for incorrect entry by bank E Accounts Payable Dr 90               Cash Cr 90 ( To record correction of incorrect amount 210 -120) F Bank charges Dr 36               Cash Cr 36 ( To record charges levied by bank) G Accounts receivable Dr 1217              Cash Cr 1217 ( To record check returned ) 1) 8-Feb Cash Dr 6800 6800         Accounts receivable Cr 6800 Allowance for uncollectibles Dr 10200            Accounts receivable Cr 10200 ( to write off the balance) 27-May Accounts receivable Dr 7405           Allowance for uncollectibles Cr 7405 Cash Dr 7405         Accounts receivable Cr 7405 13-Aug Allowance for uncollectibles Dr 6460            Accounts receivable Cr 6460 ( to write off the balance) 31-Oct Accounts receivable Dr 3940           Allowance for uncollectibles Cr 3940 Cash Dr 3940         Accounts receivable Cr 3940 31-Dec Allowance for uncollectibles Dr 23165            Accounts receivable Cr 23165 ( to write off the balance) 31-Dec Bad Debts expense Dr 35640             Allowance for uncollectibles Cr 35640 2a&b) Allowance for uncollectibles accounts 42408 To Accounts receivable 10200 1-Jan By balance b/d 25615 42595 To Accounts receivable 6460 27-May By Accounts receivable 7405 42735 To Accounts receivable 23165 31-Oct By Accounts receivable 3940 42735 To balance b/d 32160 31-Dec By Bad debt expense 35025 71985 71985 Bad Debt expense 31-Dec To Allowance for uncollectibles 35025 31-Dec By Balance c/d 35025             Accounts Receivable 1-Jan To balance b/d 1782000 8-Feb By Cash 6800 27-May To allowance for uncollectibles 7405 8-Feb By Allowance for uncollectibles accounts 10200 31-Oct To allowance for uncollectibles 3940 27-May By Cash 7405 13-Aug By Allowance for uncollectibles accounts 6460 31-Oct By Cash 3940 31-Dec By Allowance for uncollectibles accounts 23165 31-Dec By Balance c/d 1735375 1793345 1793345

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