Bank Reconciliation

The  cash  account for Coastal Bike Co. at October 1, 20Y9, indicated a balance of $5,140. During October, the total cash deposited was $39,175, and checks written totaled $40,520. The  bank statement  indicated a balance of $8,980 on October 31, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

a. Checks outstanding totaled $3,260.
b. A deposit of $2,450 representing receipts of October 31 had been made too late to appear on the bank statement.
c. The bank had collected for Coastal Bike Co. $5,300 on a note left for collection. The face of the note was $5,000.
d. A check for $460 returned with the statement had been incorrectly charged by the bank as $640.
e. A check for $430 returned with the statement had been recorded by Coastal Bike Co. as $340. The check was for the payment of an obligation to Rack Pro Co. on account.
f. Bank service charges for October amounted to $50.
g. A check for $605 from Bay View Condos was returned by the bank due to insufficient funds.
  Required:
1. Prepare a bank reconciliation as of October 31, 20Y9.
2. Journalize the necessary entries.
3. If a balance sheet were prepared for Coastal Bike Co. on October 31, 20Y9, what amount should be reported as cash?

Chart of Accounts

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CHART OF ACCOUNTS
Coastal Bike Co.
General Ledger
  ASSETS
110 Cash
111 Petty Cash
112 Accounts Receivable-Bay View Condos
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-Rack Pro Co.
221 Notes Payable
222 Interest Payable
231 Salaries Payable
241 Sales Tax Payable
  EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends

 

 

  REVENUE
410 Sales
610 Interest Revenue
  EXPENSES
510 Cost of Goods 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

 

Labels and Amount Descriptions

Labels  
For the Month Ended October 31, 20Y9  
October 31, 20Y9  
Amount Descriptions  
Adjusted balance  
Bank error in charging check as $640 instead of $460  
Bank service charges  
Check returned because of insufficient funds  
Deposit in transit on October 31  
Error in recording check  
Note collected by bank, including $300 interest  
Outstanding checks  
Total additions  
Total deductions  

Bank Reconciliation

1. Prepare a bank reconciliation as of October 31, 20Y9.

Bank Reconciliation Instructions

Coastal Bike Co.
Bank Reconciliation
 

 

 
1 Cash balance according to bank statement    
2      
3      
4      
5      
6      
7      
8 Cash balance according to company’s records    
9      
10      
11      
12      
13      
14      

 

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 Coastal Bike Co. on October 31, 20Y9, what amount should be reported as cash?

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