On October 31, 2021, Damon Company’s general ledger shows a checking account balance of $8,403. The company’s cash receipts for the month total $74,360, of which $71,305 has been deposited in the bank. In addition, the company has written checks for $72,473, of which $71,018 has been processed by the bank.
The bank statement reveals an ending balance of $11,873 and includes the following items not yet recorded by Damon: bank service fees of $170, note receivable collected by the bank of $5,200, and interest earned on the account balance plus from the note of $420. After closer inspection, Damon realizes that the bank incorrectly charged the company’s account $380 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, 2021. (Amounts to be deducted should be indicated with a minus sign.)