Question

Bank Reconciliation and Entries
The cash account for Brentwood Bike Co. at May 1 indicated a balance of $12,770. During May, the total cash deposited was $64,320 and checks written totaled $59,720. The bank statement indicated a balance of $21,800 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 $9,710.

A deposit of $7,910, representing receipts of May 31, had been made too late to appear on the bank statement.

The bank had collected for Brentwood Bike Co. $4,180 on a note left for collection. The face of the note was $3,860.

A check for $360 returned with the statement had been incorrectly charged by the bank as $630.

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 $50.

A check for $960 from Jennings Co. was returned by the bank because of insufficient funds.

Instructions:

1.  Prepare a bank reconciliation as of May 31.

Answer 1

SOLUTION:

Cash balance per bank statement		21,800
Plus: Deposit of May 31, not recorded by bank	7910
Bank error	270	8180
Minus: Outstanding checks		9710
Adjusted balance		20,270
Cash balance per books (12,770 + 64,320 - 59,720)		17370
Plus: Proceeds of note collected by bank		4180
Minus: Check returned because of insufficient funds	960
Bank service charges	50
Error in recording check	270	1280
Adjusted balance		20270