Question

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 2021 bank statement included the following information:

Balance, July 1, 2021	$	56,678
Deposits		180,300
Checks processed		(193,410	)
Service charges		(70	)
NSF checks		(1,600	)
Monthly payment on note, deducted directly by bank from account (includes $620 in interest)		(3,720	)
Balance, July 31, 2021	$	38,178

The company’s general ledger account had a balance of $40,278 at the end of July. Deposits outstanding totaled $7,100 and all checks written by the company were processed by the bank except for those totaling $8,500. In addition, a $2,800 July deposit from a credit customer was recorded as a $280 debit to cash and credit to accounts receivable, and a check correctly recorded by the company as a $70 disbursement was incorrectly processed by the bank as a $700 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.

Prepare a bank reconciliation for the month of July.

Prepare a bank reconciliation for the month of July.

Bank Balance to Corrected Balance
Balance per bank statement	$38,718
Add: Checks outstanding	7,100
Add: Bank error in recording check	630
	7,730
Less: Checks outstanding	(8,500)
Corrected cash balance	$45,908
Book Balance to Corrected Balance
Balance per books
Corrected cash balance

Answer 1

1) Bank Reconciliation statement for the month of July can be prepared using any of the 2 methods:

2) Journal entries to be booked will be as under:

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Explanation

A bank reconciliation statement or BRS is prepared to a comparison between balances as per cash book and balance as per bank statement. Differences are then identified between cash book and bank statement balance and accordingly if any entries need to be booked the same would be booked.