Question

The cash account for Brentwood Bike Co. at May 1 indicated a balance of $34,250. During May, the total cash deposited was $140,300, and checks written totaled $138,880. The bank statement indicated a balance of $43,525 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 $6,440. B. A deposit of $1,850 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 $390 returned with the statement had been incorrectly charged by the bank as $930. 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 $30. G. A check for $1,325 from Jennings Co. was returned by the bank due to insufficient funds. Instructions 1. Prepare a bank reconciliation as of May 31. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. "Deduct:" or "Add" will automatically appear if it is required. 2. Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of account titles. 3. If a balance sheet is prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?

Answer 1

	BrentWood Bike Co.
	Bank Reconciliation
Cash balance according to Bank statement							43,525
Add:Deposits of May 31,not recorded by bank						1,850
Add:Bank error in charging checks as 930instead of $390						540	2,390
							45,915
Deduct:checks outstanding							6,440
Adjusted balance							39,475
Cash balance according to company records							35670	(34250+140300-138880)
Add:collection of note							5,250
							40920
Deduct:	Error in recording cheque			(210-120)		90
	Bank service charge					30
	NSF					1,325	1,445
Adjusted balance							39,475
2)	Journal entries'
a	31-May	Cash				5,250
		Note receivable					250
		interest revenue					5,000
b.	31-May	Accounts payable-rack pro co				90
		Miscellaneous expense				30
		account receivable				1,325
		cash					1,445
3)	39,475