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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?


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.