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 $ 57,803 181,200 Balance, July 1, 2018 Deposits Checks processed Service charges NSF checks Monthly loan payment deducted directly by bank from account (194,310) (60) (2,050) (4,170) (includes $170 in interest) Balance, July 31, 2018 $ 38,413 The company's general ledger account had a balance of $41,313 at the end of July. Deposits outstanding totaled $8,000 and all checks written by the company were processed by the bank except for those totaling $8,590. In addition, a $3,700 July deposit from a credit customer was recorded as a $370 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.

Explanation / Answer

1) Bank reconciliation for the month of July Bank Balance to Corrected Balance Balance per bank statement $38,413 Add: Deposits outstanding $8,000 Deduct: Checks outstanding -$8,590 Add: Bank error in recording check ($600 - $60) $540 Corrected cash balance $38,363 Book Balance to Corrected Balance Balance per books $41,313 Add: Error in recording cash receipt ($3700 - 370) $3,330 Deduct: Service charges -$60 NSF checks -$2,050 Automatic monthly loan payment -$4,170 Corrected cash balance $38,363 2) To correct error in recording cash receipt from credit customer Cash ($3700 - $370) $3,330             Accounts Receivables $3,330 To record credits to cash revealed by the bank reconciliation. Miscellaneous expense (bank service charges) $60 Accounts receivable (NSF checks) $2,050 Interest expense $170 Notes Payable $4,000                   Cash $6,280

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