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.
| 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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