On october 31, 2018, damon company’s general ledger shows a checking account balance of $8,409. the company’s cash receipts for the month total $74,400, of which $71,315 has been deposited in the bank. in addition, the company has written checks for $72,479, of which $71,054 has been processed by the bank.

the bank statement reveals an ending balance of $12,019 and includes the following items not yet recorded by damon: bank service fees of $190, note receivable collected by bank of $5,400, and interest earned on the account balance plus from the note of $520. after closer inspection, damon realizes that the bank incorrectly charged the company’s account $460 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, 2018

damon compan
bank's cash balace company's cash balance
per bank statement - per general ledger
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bank balance per reconciliation - company balance per reconciliation -
# ex) bank error, checks outstanding, deposits outstanding, interest earned, note received, and service fees.

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.)