Bank Reconciliation and Entries

The cash account for Brentwood Bike Co. at May 1 indicated a balance of $13,760. During May, the total cash deposited was $69,910 and checks written totaled $64,910. The bank statement indicated a balance of $23,700 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

1. Checks outstanding totaled $10,560.
2. A deposit of $8,600, representing receipts of May 31 had been made too late to appear on the bank statement.
3. The bank had collected for Brentwood Bike Co. $4,540 on a note left for collection. The face of the note was $4,190.
4. A check for $580 returned with the statement had been incorrectly charged by the bank as $850.
5. A check for $970 returned with the statement had been recorded by Brentwood Bike Co. as $790. The check was for the payment of an obligation to Adkins Co. on account.
6. Bank service charges for May amounted to $60.
7. A check for $1,050 from Jennings Co. was returned by the bank due to insufficient funds.

Instructions:

1. Prepare a bank reconciliation as of May 31.

Cash balance according to bank statement Add deposit of May 31, not recorded by bank Add bank error in charging check as $850 instead of $580 Deduct outstanding checks Adjusted balance Cash balance according to company's records Add note and interest collected by bank Deduct check returned because of insufficient funds Deduct bank service charges Deduct error in recording check Adjusted balance

2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. If an amount box does not require an entry, leave it blank.

a. May 31Cash Notes Receivable Interest Revenue b. May 31Accounts Payable-Adkins Co. Accounts Receivable-Jennings Co. Miscellaneous Expense Cash

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