On October 31, 2018, Damon Company’s general ledger shows a
checking account balance of $8,397. The company’s cash receipts for the month
total $74,320, of which $71,295 has been deposited in the bank. In addition,
the company has written checks for $72,467, of which $70,982 has been processed
by the bank.
The bank statement reveals an ending balance of $11,727 and
includes the following items not yet recorded by Damon: bank service fees of
$150, note receivable collected by bank of $5,000, and interest earned on the
account balance plus from the note of $320. After closer inspection, Damon
realizes that the bank incorrectly charged the company’s account $300 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, 2018.
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