The cash account for Brentwood Bike Co. at May 1 indicated a balance of $34,250. During May, the total cash deposited was $140,300, and checks written totaled $138,880. The bank statement indicated a balance of $43,525 on May 31. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:
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
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A. |
Checks outstanding totaled $6,440. |
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B. |
A deposit of $1,850 representing receipts of May 31, had been made too late to appear on the bank statement. |
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C. |
The bank had collected for Brentwood Bike Co. $5,250 on a note left for collection. The face of the note was $5,000. |
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D. |
A check for $390 returned with the statement had been incorrectly charged by the bank as $930. |
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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. |
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F. |
Bank service charges for May amounted to $30. |
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G. |
A check for $1,325 from Jennings Co. was returned by the bank due to insufficient funds. |
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Instructions and Questions: 1.Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of account titles. 2.If a balance sheet is prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash? |
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DATE |
DESCRIPTION |
POST. REF. |
DEBIT |
CREDIT |
ASSETS |
LIABILITIES |
EQUITY |
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1 |
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2 |
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3 |
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4 |
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5 |
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6 |
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7 |
3. If a balance sheet were prepared for Brentwood Bike Co. on May 31, what amount should be reported as cash?
CHART OF ACCOUNTS
Brentwood Bike Co.
General Ledger
ASSETS
110Cash
111Petty Cash
112Accounts Receivable-Jennings Co.
131Notes Receivable
141Merchandise Inventory
145Office Supplies
146Store Supplies
151Prepaid Insurance
181Land
191Office Equipment
192Accumulated Depreciation-Office Equipment
193Store Equipment
194Accumulated Depreciation-Store Equipment
LIABILITIES
211Accounts Payable-Adkins Co.
221Notes Payable
222Interest Payable
231Salaries Payable
241Sales Tax Payable
EQUITY
310Owner, Capital
311Owner, Drawing
312Income Summary
REVENUE
410Sales
610Interest Revenue
EXPENSES
510Cost of Merchandise Sold
515Credit Card Expense
516Cash Short and Over
520Salaries Expense
531Advertising Expense
532Delivery Expense
533Insurance Expense
534Office Supplies Expense
535Rent Expense
536Repairs Expense
537Selling Expenses
538Store Supplies Expense
561Depreciation Expense-Office Equipment
562Depreciation Expense-Store Equipment
590Miscellaneous Expense
710Interest Expense
Amount Descriptions
Bank error in charging check as $390 instead of $930
Bank error in charging check as $930 instead of $390Bank 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
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