The cash account for Brentwood Bike Co. at May 1 indicated a balance of $13,360. During May, the total cash deposited was $67,250 and checks written totaled $62,440. The bank statement indicated a balance of $22,800 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items: Checks outstanding totaled $10,150. A deposit of $8,270, representing receipts of May 31, had been made too late to appear on the bank statement. The bank had collected for Brentwood Bike Co. $4,370 on a note left for collection. The face of the note was $4,040. A check for $580 returned with the statement had been incorrectly charged by the bank as $850. A check for $850 returned with the statement had been recorded by Brentwood Bike Co. as $580. The check was for the payment of an obligation to Adkins Co. on account. Bank service charges for May amounted to $70. A check for $1,010 from Jennings Co. was returned by the bank because of insufficient funds. Instructions: 1.  Prepare a bank reconciliation as of May 31. Brentwood Bike Co. Bank Reconciliation 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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The cash account for Brentwood Bike Co. at May 1 indicated a balance of $13,360. During May, the total cash deposited was $67,250 and checks written totaled $62,440. The bank statement indicated a balance of $22,800 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 $10,150.
  2. A deposit of $8,270, 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. $4,370 on a note left for collection. The face of the note was $4,040.
  4. A check for $580 returned with the statement had been incorrectly charged by the bank as $850.
  5. A check for $850 returned with the statement had been recorded by Brentwood Bike Co. as $580. The check was for the payment of an obligation to Adkins Co. on account.
  6. Bank service charges for May amounted to $70.
  7. A check for $1,010 from Jennings Co. was returned by the bank because of insufficient funds.

Instructions:

1.  Prepare a bank reconciliation as of May 31.

Brentwood Bike Co.
Bank Reconciliation
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
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