Exercise 4-11 Calculate the balance of cash using a bank reconciliation (LO5) On

Question

Exercise 4-11 Calculate the balance of cash using a bank reconciliation (LO5) On October 31, 2015, Damon Company's general ledger shows a checking account balance of $8,448. The company's cash receipts for the month total $74,660, of which $71,380 has been deposited in the bank. In addition, the company has written checks for $72,518, of which $71,288 has been processed by the bank The bank statement reveals an ending balance of $12,968 and includes the following items not yet recorded by Damon: bank service fees of $320, note receivable collected by bank of $6,700, and interest earned on the account balance plus from the note of $1,170. After closer inspection, Damon realizes that the bank incorrectly charged the company's account $980 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 31,2015 DAMON COMPANY Bank Reconciliation October 31, 2015 Bank's Cash Balance Company's Cash Balance $ 12,968 Per general ledger 8,448 6,700 1,170 (320) Per bank statement 3,280 (1,230) 980 15,998 15,998 Company balance per reconciliatio Bank balance per reconciliation$ n$ 15,998

Explanation / Answer

Answer 1. Damon Company Bank Recocilation October 31, 2015 Bank's Cash Balance Compnay's Cash Balance Per Bank Statement          12,968 Per General Ledger            8,448 Deposit In Transit            3,280 Bank Service Fees             (320) Outstanding Checks          (1,230) Note Receivable Collected by Bank            6,700 Bank Errors                980 Interest Earned            1,170 Bank Balance after Reconcilation          15,998 Company Balance per Reconcilation          15,998 Answer 2. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1 Bank Charges                                            Dr. 320     To Cash 320 (Bank Service Charges charged by bank directly) 2 Cash                                                            Dr. 6700     To Note Receivables 6700 (Notes Receivanbles collected by bank directly) 3 Cash                                                           Dr. 1170     To Interest - Revenue 1170 (Interest recd from Bank directly credited now recorded) No entry is recoreded for: 1 Deposit in Transit 2 Outstanding Checks 3 Bank errors

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