Harrison Company maintains a checking account at the First N

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 $55,803

Deposits 179,600

Checks processed (192,710)

Service charges (35)

NSF checks (1,250)

Monthly loan payment deducted directly by bank from account (includes $270 in interest). (3,370)

Balance, July 31, 2018. $38,038

The company’s general ledger account had a balance of $39,088 at the end of July. Deposits outstanding totaled $6,400 and all checks written by the company were processed by the bank except for those totaling $8,430. In addition, a $2,100 July deposit from a credit customer was recorded as a $210 debit to cash and credit to accounts receivable, and a check correctly recorded by the company as a $35 disbursement was incorrectly processed by the bank as a $350 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.

Solution

Prepare the necessary journal entries at the end of July to adjust the general ledger cash account.