The cash account for Brentwood Bike Co. at May 1 indicated a balance of $14,770. During May, the total cash deposited was $73,880 and checks written totaled $68,600. The bank statement indicated a balance of $25,050 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 $11,160.
A deposit of $9,090, representing receipts of May 31, had been made too late to appear on the bank statement.
The bank had collected for Brentwood Bike Co. $4,800 on a note left for collection. The face of the note was $4,430.
A check for $270 returned with the statement had been incorrectly charged by the bank as $720.
A check for $520 returned with the statement had been recorded by Brentwood Bike Co. as $250. The check was for the payment of an obligation to Adkins Co. on account.
Bank service charges for May amounted to $40. A check for $1,110 from Jennings Co. was returned by the bank because of insufficient funds.
A check for $1,120 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.
3. If a balance sheet were prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?