Question

Harrison Company maintains a checking account at the First National City Bank. The bank provides a...

Harrison Company maintains a checking account at the First National City Bank. The bank provides a bank statement along with canceled checks on the last day of each month. The July 2018 bank statement included the following information:

Balance, July 1, 2018 $ 56,428
Deposits 180,100
Checks processed (193,210 )
Service charges (60 )
NSF checks (1,500 )
Monthly loan payment deducted directly by bank from account
(includes $520 in interest)
(3,620 )
Balance, July 31, 2018 $ 38,138


The company’s general ledger account had a balance of $39,938 at the end of July. Deposits outstanding totaled $6,900 and all checks written by the company were processed by the bank except for those totaling $8,480. In addition, a $2,600 July deposit from a credit customer was recorded as a $260 debit to cash and credit to accounts receivable, and a check correctly recorded by the company as a $60 disbursement was incorrectly processed by the bank as a $600 disbursement.

Required:
1. Prepare a bank reconciliation for the month of July.
2. Prepare the necessary journal entries at the end of July to adjust the general ledger cash account.

Homework Answers

Answer #1
1
Bank Balance to Corrected Balance
Balance per bank statement 38138
Add: Deposits outstanding 6900
Less: Checks outstanding (8480)
Add: Bank error in recording check 540
Corrected cash balance 37098
Book Balance to Corrected Balance
Balance per books 39938
Add: Error in recording cash receipt 2340
Less: Service charges (60)
Less: NSF checks (1500)
Less: Automatic monthly loan payment (3620)
Corrected cash balance 37098
2
Cash 2340
       Accounts receivable 2340
Miscellaneous expense 60
Accounts receivable 1500
Interest expense 520
Note payable 3100
        Cash 5180
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