Harrison Company maintains a checking account at the First National City Bank. T

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 2018 bank statement included the following information Balance, July 1, 2018 57,928 181,300 Deposits Checks processed Service charges NSF checks Monthly loan payment deducted directly by bank from account (194,410) (65) (2,100) (4,220) (includes $220 in interest) Balance, July 31, 2018 $38,433 The company's general ledger account had a balance of $41,483 at the end of July. Deposits outstanding totaled $8,100 and all checks written by the company were processed by the bank except for those totaling $8,600. In addition, a $3,800 July deposit from a credit customer was recorded as a $380 debit to cash and credit to accounts receivable, and a check correctly recorded by the company as a $65 disbursement was incorrectly processed by the bank as a $650 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.

Explanation / Answer

1 Bank Balance to Corrected Balance Balance per bank statement 38433 Add: Deposits outstanding 8100 Less: Checks outstanding -8600 Add: Bank error in recording check 585 Corrected cash balance 38518 Book Balance to Corrected Balance Balance per books 41483 Add: Error in recording cash receipt 3420 Less: Service charges -65 Less: NSF checks -2100 Less: Automatic monthly loan payment -4220 Corrected cash balance 38518 2 Cash 3420          Accounts receivable 3420 Miscellaneous expense 65 Accounts receivable 2100 Interest expense 220 Note payable 4000          Cash 6385

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