On October 31, 2024, Gibson Companys general ledger shows a cash account balance of $8,457. The companys cash receipts for the month total $74,720, of which $71,395 has been deposited in the bank. In addition, the company has written checks for $72,527, of which $71,342 has been processed by the bank.

The bank statement reveals an ending balance of $13,187 and includes the following items not yet recorded by Gibson: bank service fees of $350, note receivable collected by the bank of $7,000, and interest earned on the note of $1,320. After closer inspection, Gibson realizes that the bank incorrectly charged the companys account $1,100 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, 2024. 2. Record the necessary entries to adjust the balance for cash.