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Bank Reconciliation in proper form with journal entries

On July 31, 2007, Hanlon Company had a cash balance per books of $6,140. The statement from Jackson State Bank on that date showed a balance of $7,695.80. A comparison of the bank statement with the cash account revealed the following facts:

1. The bank service charge for July was $25.

2. The bank collected a note receivable of $1,800 for Hanlon Company on July 15, plus
$30 of interest. The bank made a $10 charge for the collection. Hanlon has not accrued
any interest on the note.

3. The July 31 receipts of $1,193.30 were not included in the bank deposits for July. These
receipts were deposited by the company in a night deposit vault on July 31.

4. Company check No. 2480 issued to H. Coby, a creditor, for $384 that cleared the bank
in July was incorrectly entered in the cash payments journal on July 10 for $348.

5. Checks outstanding on July 31 totaled $1,480.10.

6. On July 31 the bank statement showed an NSF charge of $490 for a check received
by the company from P. Figura, a customer, on account.

How do I prepare the bank reconciliation at Jul. 31?
How do I prepare the necessary adjusting entries at Jul. 31?

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Solution Preview

Bank reconciliations are schedules which account for the differences between the bank balance and the book balance. They can be prepared in a ...

Solution Summary

The solution presents a two-step bank reconciliation for Hanlon Company which is one of several formats used in the real world. The two-step format is easy to understand. The journal entries needed on the company books are also shown in the solution.

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