On October 31, 2018, Damon Company’s general ledger shows a checking account balance of $8,436. The company’s cash receipts for the month total $74,580, of which $71,360 has been deposited in the bank. In addition, the company has written checks for $72,506, of which $71,216 has been processed by the bank.
The bank statement reveals an ending balance of $12,676 and includes the following items not yet recorded by Damon: bank service fees of $280, note receivable collected by bank of $6,300, and interest earned on the account balance plus from the note of $970. After closer inspection, Damon realizes that the bank incorrectly charged the company’s account $820 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. (Amounts to be deducted should be indicated with a minus sign.)