Hiking Adventures

You have been asked to prepare a bank reconciliation statement for the business Hiking Adventures at 31 July. You compare the bank statement for July received by the business with its own accounting records, and note the following:

(i)

(ii)

The bookkeeper of Hiking Adventures has posted cash journal totals for July to the Cash at bank ledger account leaving a balance in the account of $450 CR. The final balance on the bank statement for July is $300 DR.

The difference between the bank's records and the records of the business at the end of June was completely explained by:

2 unpresented cheques (no. 602 for $370, no. 638 for $215)

a deposit of $440 not recorded by the bank

bank charges of $40 recorded by the bank but disputed by the business.

Neither of the unpresented cheques at the end of June were presented in July but the outstanding deposit at the end of June does appear on the July bank statement. Hiking Adventures and the bank have recently agreed that the business will accept half the disputed bank charges. The bank adjusted its records in July but the business has yet to do so.

1. (iii)The unpresented cheques for July are no. 715 for $190 and no. 720 for $120.
2. (iv)The last day's receipts for July of $715, although deposited at the bank, do not appear on the bank statement.
3. (v)The bank statement reveals interest charged on the overdrawn account of $45, further bank charges of $15 as well as the adjustment for the disputed charges, a dividend of $200 on shares owned by the business deposited directly into its bank account, and the dishonour of a cheque for $150 previously received from a debtor and recorded in the cash receipts journal.

Required

a Prepare a bank reconciliation statement for Hiking Adventures at 31 July.

b Prepare journal entries for the adjustments that are necessary to the business records.