The cash account for Brentwood Bike Co. at May 1 indicated a balance of $15,010.

Question

The cash account for Brentwood Bike Co. at May 1 indicated a balance of $15,010. During May, the total cash deposited was $75,240 and checks written totaled $69,860. The bank statement indicated a balance of $25,510 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 $11,360.

A deposit of $9,250, representing receipts of May 31, had been made too late to appear on the bank statement.

The bank had collected for Brentwood Bike Co. $4,890 on a note left for collection. The face of the note was $4,510.

A check for $490 returned with the statement had been incorrectly charged by the bank as $940.

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.

Bank service charges for May amounted to $30.

A check for $1,130 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.

3. If a balance sheet were prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?
$

Brentwood Bike Co. Bank Reconciliation May 31 Cash balance according to bank statement $ $ $ Adjusted balance $ Cash balance according to company's records $ $ $ Adjusted balance $

Explanation / Answer

1.

2.Journal entries

3. Balance sheet will disclose $23,580 as cash balance

Brentwood Bike Company Bank Reconciliation May-31 Cash balance according to bank statement $         25,510 Adjustments Add: Bank error (940-490) $      450.00 Deposit in transit $   9,250.00 $     9,700.00 Deduct: Outstanding checks $   11,360.00 Adjusted balance $         23,850 Cash balance according to company's records $         20,390 Adjustments Add: Note collected by bank $   4,510.00 Interest income on note $      380.00 $     4,890.00 Deduct Bank service charges $         30.00 NSF Check $   1,130.00 Clerical error (410-140) $      270.00 Total adjustments $     1,430.00 Asjusted balance $   23,850.00

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