FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The cash account for Brentwood Bike Co. at May 1 indicated a balance of $34,800. During May, the total cash deposited was $139,523, and checks written totaled $138,774. The bank statement indicated a balance of $43,875 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:
A. Checks outstanding totaled $6,340.
B. A deposit of $1,643 representing receipts of May 31, had been made too late to appear on the bank statement.
C. The bank had collected for Brentwood Bike Co. $5,565 on a note left for collection. The face of the note was $5,300.
D. A check for $260 returned with the statement had been incorrectly charged by the bank as $620.
E. A check for $210 returned with the statement had been recorded by Brentwood Bike Co. as $120. The check was for the payment of an obligation to Adkins Co. on account.
F. Bank service charges for May amounted to $22.
G. A check for $1,464 from Jennings Co. was returned by the bank due to insufficient funds.
 
  Instructions
1. Prepare a bank reconciliation as of May 31. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Deduct:” or “Add:” will automatically appear if it is required.
2. Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of account titles.
3. If a balance sheet is prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?
 
 
Chart of Accounts
 
 
CHART OF ACCOUNTS
Brentwood Bike Co.
General Ledger
  ASSETS
110 Cash
111 Petty Cash
112 Accounts Receivable-Jennings Co.
131 Notes Receivable
141 Merchandise Inventory
145 Office Supplies
146 Store Supplies
151 Prepaid Insurance
181 Land
191 Office Equipment
192 Accumulated Depreciation-Office Equipment
193 Store Equipment
194 Accumulated Depreciation-Store Equipment
  LIABILITIES
211 Accounts Payable-Adkins Co.
221 Notes Payable
222 Interest Payable
231 Salaries Payable
241 Sales Tax Payable
  EQUITY
310 Owner, Capital
311 Owner, Drawing
312 Income Summary
  REVENUE
410 Sales
610 Interest Revenue
  EXPENSES
510 Cost of Merchandise Sold
515 Credit Card Expense
516 Cash Short and Over
520 Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Insurance Expense
534 Office Supplies Expense
535 Rent Expense
536 Repairs Expense
537 Selling Expenses
538 Store Supplies Expense
561 Depreciation Expense-Office Equipment
562 Depreciation Expense-Store Equipment
590 Miscellaneous Expense
710 Interest Expense
 
 
Amount Descriptions
 
 
Amount Descriptions
 
Bank error in charging check as $260 instead of $620  
Bank error in charging check as $620 instead of $260  
Bank service charges  
Check returned because of insufficient funds  
Company error in recording note collected by bank  
Deposit of May 31, not recorded by bank  
Error in recording check  
Outstanding checks  
Note and interest collected by bank  
 
 
Bank Reconciliation
 
 
1. Prepare a bank reconciliation as of May 31. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Deduct:” or “Add:” will automatically appear if it is required. Whenever there is more than one adjusting item in the bank portion of the reconciliation or the general ledger portion of the bank reconciliation, enter in the order presented in the instructions.
 
BRENTWOOD BIKE CO.
Bank Reconciliation
May 31
1
Cash balance according to bank statement
 
 
2
 
 
 
3
 
 
 
4
 
 
 
5
 
 
 
6
Adjusted balance
 
 
7
 
 
 
8
Cash balance according to company’s records
 
 
9
 
 
 
10
 
 
 
11
 
 
 
12
 
 
 
13
 
 
 
14
Adjusted balance
 
 
 
 
 
 
Journal
 
 
2. Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 1
 
JOURNAL
ACCOUNTING EQUATION
 
  DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY
1
 
 
 
 
 
 
 
 
2
 
 
 
 
 
 
 
 
3
 
 
 
 
 
 
 
 
4
 
 
 
 
 
 
 
 
5
 
 
 
 
 
 
 
 
6
 
 
 
 
 
 
 
 
7
 
 
 
 
 
 
 
 
 
 
 
 
Final Question
 
 
3. If a balance sheet were prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash? 
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