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 $14,270. During May, the total cash deposited was $72,230 and checks written totaled $67,070. The bank statement indicated a balance of $24,490 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 $10,910.

A deposit of $8,880, representing receipts of May 31, had been made too late to appear on the bank statement.

The bank had collected for Brentwood Bike Co. $4,690 on a note left for collection. The face of the note was $4,330.

A check for $580 returned with the statement had been incorrectly charged by the bank as $850.

A check for $630 returned with the statement had been recorded by Brentwood Bike Co. as $360. The check was for the payment of an obligation to Adkins Co. on account.

Bank service charges for May amounted to $40.

A check for $1,080 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

Balance of Cash A/c as on May 1

14270

(+) Total cash deposit for May

72230

(-) Checks written total

67070

(+) Bank had collected note

4690

(-) Check incorrectly record by Co (630-360)

270

(-) Bank charges

40

(-) check from Jennings co was return by bank due to insufficient fund

1080

22730

Balance of Bank as on May 31

24490

(-) Checks outstanding

10910

(+) Deposit represent receipt of May 31

8880

(+) Check incorrectly charged by bank (850-580)

270

22730

(2) Journal Entries :-

Debit

Credit

Bank charges

40

Cash

40

Account Receivable-Jennings Co

1080

Cash

1080

Cash

4690

Notes Receivable

4330

Interest

360

Account Payable

270

Cash

270

Balance of Cash A/c as on May 1

14270

(+) Total cash deposit for May

72230

(-) Checks written total

67070

(+) Bank had collected note

4690

(-) Check incorrectly record by Co (630-360)

270

(-) Bank charges

40

(-) check from Jennings co was return by bank due to insufficient fund

1080

22730

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