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 2016 bank statement included the following information:

Balance, July 1, 2016 $ 57,053
Deposits 180,600
Checks processed (193,710 )
Service charges (30 )
NSF checks (1,750 )
Monthly loan payment deducted directly by bank from account
(includes $970 in interest) (3,870 )
Balance, July 31, 2016 $
38,293

The company’s general ledger account had a balance of $40,293 at the end of July. Deposits outstanding totaled $7,400 and all checks written by the company were processed by the bank except for those totaling $8,530. In addition, a $3,100 July deposit from a credit customer was recorded as a $310 debit to cash and credit to accounts receivable, and a check correctly recorded by the company as a $30 disbursement was incorrectly processed by the bank as a $300 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field).

Harrison company

Step 1.

Preparation of adjusted Cash Book

Balance as at July 31, 2016 = $40,293

Add: bal. of Deposit by credit customer = ($3,100 - $310) = $2,790

Deduct: Bank Service charge = -$30

Deduct: NSF checks = -$1,750

Deduct: loan repayment plus interest = -$3,870

Adjusted Balance =$37,433

Step 2. Bank reconciliation statement

As at 31st July 2016

Balance as per Bank Statement = $38,293

Deduct: uncleared Cheques = -$8,530

Add: Deposits outstanding = $7,400

Add: over disbursement by bank due for recovery = $270

Adjusted Bank Statement = $37,433

Compared to Adjusted Cash Book = $37,433

Difference = $0.

Step 3.

Journal entries required

Debit Cash Account with $2,790

Credit Account Receivables with $2,790

(Under recorded Customer deposit on sales)

Debit NSF expense = $1,750

Debit Loan Account with $2,900

Debit interest on Loan Account with $970

Debit Bank Charges expense a account with $30

Credit Cash Account with $5,650

(Direct debits to bank account on sundry transactions)

Explanation:

A bank reconciliation statement is presented to reconcile a 3rd party (Bank) statement of our Account and the Account maintained by the business in house.

The objective of the Bank reconciliation statement includes:

1. Identify the missing entries in either records

2. Flag the corrections the Bank needs to do to bring our balance to a correct state

3. Pass Journals to capture entries we have missed out or captured incorrectly

4. Identify unassigned entries for investigation

explanation: doctrine of respondeat superior is a legal doctrine that is commonly used in tort. this principle makes an employer or principal legally responsible for the wrongful acts done by an employee or agent, if such acts occur within the scope of the employment or agency.