Question

On October 31, 2021, Damon Company's general ledger shows a checking account balance of $8,439. The company's cash receipts for the month total $74,600, of which $71,365 has been deposited in the bank. In addition, the company has written checks for $72,509, of which $71,234 has been processed by the bank. 

The bank statement reveals an ending balance of $12,749 and includes the following items not yet recorded by Damon: bank service fees of $290, note receivable collected by the bank of $6,400, and interest earned on the account balance plus from the note of $1,020. After closer inspection, Damon realizes that the bank incorrectly charged the company's account $860 for an automatic withdrawal that should have been charged to another customer's account. The bank agrees to the error. 

Required:

 1. Prepare a bank reconciliation to calculate the correct ending balance of cash on October 31, 2021. (Amounts to be deducted should be indicated with a minus sign.) 

 2. Record the necessary entries to adjust the balance for cash. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1