Question
The cash account for Brentwood Bike Co. at May 1, 2016, indicated a balance of $34,250. During May, the total cash deposited was $140,300, and
The cash account for Brentwood Bike Co. at May 1, 2016, 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 were prepared for Brentwood Bike Co. on May 31, 2016, what amount should be reported as cash? |
Chart of Accounts
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brentwood Bike Co. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Amount Descriptions
Amount Descriptions | |
---|---|
Bank error in charging check as $390 instead of $930 | |
Bank error in charging check as $930 instead of $390 | |
Bank service charges | |
Check returned because of insufficient funds | |
Company error in recording note collected by bank | |
Deposit of May 31, not recorded by bank | |
Error in recording check | |
Outstanding checks | |
Proceeds of note collected by bank, including $250 interest |
Bank Reconciliation
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.
BRENTWOOD BIKE CO. |
Bank Reconciliation |
May 31, 2016 |
1 | Cash balance according to bank statement | ||
2 | |||
3 | |||
4 | |||
5 | |||
6 | Adjusted balance | ||
7 | |||
8 | Cash balance according to companys records | ||
9 | |||
10 | |||
11 | |||
12 | |||
13 | |||
14 | Adjusted balance |
Journal
2. Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 1
JOURNAL
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | |
---|---|---|---|---|---|
1 | |||||
2 | |||||
3 | |||||
4 | |||||
5 | |||||
6 | |||||
7 |
Final Question
3. If a balance sheet were prepared for Brentwood Bike Co. on May 31, 2016, what amount should be reported as cash?
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