Kesler Co. deposits all receipts intact on the day received and makes all payments by cheque. On July 31, 2020, after all posting was completed, its Cash account showed a $10,919 debit balance. However, Keslers July 31 bank statement showed only $10,077 on deposit in the bank on that day along with the following information.

1. Outstanding cheques, $2,757.
2. Included with the July cancelled cheques returned by the bank was a $18 debit memo for bank services.
3. Cheque #919, returned with the cancelled cheques, was correctly drawn for $236 in payment of the utility bill and was paid by the bank on July 15. However, it had been recorded with a debit to Utilities Expense and a credit to Cash as though it were for $326.
4. The July 31 cash receipts, $3,671, were placed in the banks night depository after banking hours on that date and were unrecorded by the bank at the time the July bank statement was prepared.

Required: a. Prepare a bank reconciliation for Kesler Co. at July 31.

b. Give the journal entries that Kesler Co. should make as a result of having prepared the bank reconciliation in part (a).

• 1

  Record to correct utilities error.

• 2

  Record bank service charges.

Analysis Component: Identify whether profit, assets, liabilities, and equity would be over- or understated if the journal entries in part (b) were not recorded. (If there is no effect on any of the elements, select "No effect".)

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