Question

Bank Reconciliation and Entries The cash account for Brentwood Bike Co. at May 1 indicated a balance of $14,370. During May, the total cash deposited was $72,740 and checks written totaled $67,540. The bank statement indicated a balance of $24,660 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 $10,980. b. A deposit of $8,950, 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. $4,730 on a note left for collection. The face of the note was $4,360. d. A check for $360 returned with the statement had been incorrectly charged by the bank as $630. e. 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. f. Bank service charges for May amounted to $40. g. A check for $1,090 from Jennings Co. was returned by the bank because of insufficient funds.

Answer 1

1
Brentwood Bike Co.
Bank Reconciliation
May 31
Cash balance according to bank statement		24660
Add deposit of May 31, not recorded by bank	8950
Add bank error in charging check as $630 instead of $360	270	9220
		33880
Deduct outstanding checks		10980
Adjusted balance		22900
Cash balance according to company's records		19570
Add note and interest collected by bank		4730
		24300
Deduct Check returned because of insufficient funds	1090
Deduct Bank service charges	40
Deduct Error in recording check	270	1400
Adjusted balance		22900
2
	Debit	Credit
a. May 31     Cash	4730
Notes Receivable		4360
Interest Revenue		370
b. May 31   Accounts Payable-Adkins Co.	270
Accounts Receivable-Jennings Co.	1090
Miscellaneous expense	40
Cash		1400
3
Amount reported as Cash $22900