Bank Reconciliation and Entries

The cash account for Brentwood Bike Co. at May 1 indicated a balance of $13,960. During May, the total cash deposited was $70,250 and checks written totaled $65,230. The bank statement indicated a balance of $23,810 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 $10,610.

B. A deposit of $8,640, 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. $4,570 on a note left for collection. The face of the note was $4,220.

D. A check for $270 returned with the statement had been incorrectly charged by the bank as $720.

E. 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.

F. Bank service charges for May amounted to $30.

G. A check for $1,050 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 is prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?