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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Question

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

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