On October 31, 2015, Damon Companys general ledger shows a checking account balance of $8,421. The companys cash receipts for the month total $74,480, of which $71,335 has been deposited in the bank. In addition, the company has written checks for $72,491, of which $71,126 has been processed by the bank.

The bank statement reveals an ending balance of $12,311 and includes the following items not yet recorded by Damon: bank service fees of $230, note receivable collected by bank of $5,800, and interest earned on the account balance plus from the note of $720. After closer inspection, Damon realizes that the bank incorrectly charged the companys account $620 for an automatic withdrawal that should have been charged to another customers 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.

2.	Record the necessary entries to adjust the balance for cash.