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givi
1 month ago
11

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:
A. 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.)
B. Record the necessary entries to adjust the balance for cash.
Business
1 answer:
Nady [3.6K]1 month ago
8 0

Answer:

1.                                Damon Company

                     Bank Reconciliation Statement

                               October 31, 2018

Bank Balance                        

                                                                        Amount$

Bank cash balance as per statement             11,725

Add: Adjustment

       Deposits outstanding                               3,025

       (74,320 - 71,295)

       Bank error                                                  300

Less: Adjustment

         Check outstanding                                  1,485

         (72,467 - 70,983)

Bank balance as per Reconciliation              $13,567

Company's Cash balance

                                                                                   Amount$

Company's Cash balance as per General Ledger    8,397

Add: Adjustment

         Interest earned                                                    320

         Note collected                                                      5,000

Less: Adjustment

         Bank service fees                                                 150

Company's Cash balance as per Reconciliation         13,567

Thus, the accurate cash balance as of December 31, 2016 is $13,567

2. Required entries to modify the cash balance.

Date      Account Title and Explanation               Debit     Credit

31 Oct   Cash                                                            $5,320

                   Notes Receivables                                              $500

                    Interest revenue                                                 $320

              (For recording cash increase)

Date   Account Title and Explanation               Debit     Credit

31 Oct  Service charges                                        $150

                  Cash                                                                  $150

            (For recording cash decreases)

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