Ch 8-3 Exercises & Problems

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Bank Reconciliationand Entries Thecashaccount 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. Thebank statementindicated 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.

Brentwood Bike Co.Bank ReconciliationMay 31Cash balance according to bank statement$$$Adjusted balance$Cash balance according to company's records$$$Adjusted balance$

2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank.

a. May 31b. May 31

3. If a balance sheet were prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash? $