Reference no: EM132605493

The cash account for Brentwood Bike Co. at May 1 indicated a balance of $15,090. During May, the total cash deposited was $75,640 and checks written totaled $70,230. The bank statement indicated a balance of $25,640 on May 31.

Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

1. Checks outstanding totaled $11,420.
2. A deposit of $9,300, representing receipts of May 31, had been made too late to appear on the bank statement.
3. The bank had collected for Brentwood Bike Co. $4,920 on a note left for collection. The face of the note was $4,540.
4. A check for $490 returned with the statement had been incorrectly charged by the bank as $940.
5. 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.
6. Bank service charges for May amounted to $50.
7. A check for $1,130 from Jennings Co. was returned by the bank because of insufficient funds.

Instructions:

Question 1: Create a bank reconciliation as of May 31.

Question 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 31

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