On October 31, 2015, 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.

1. Prepare a bank reconciliation to calculate the correct ending balance of cash on October 31, 2015.
2. Record the necessary entries to adjust the balance for cash.

  • CreatedJuly 15, 2014
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