CHAPTER 2 BANK RECONCILIATION TECHNICAL KNOWLEDGE To understand the need for a bank reconéiliation. . oe reconciling items affe fecting the cash in bank pe Tok, bad ban erate items affecting the cash in bankP” Tobe able “oprepareg bank reconciliation. To be able ios reat trie" perneile the cash jc ¢°® Necessary adjusting ¢ Per bn staemarn Pa er ledger with the cas hinBank deposits There are three kinds of bank deposits, namely demand deposi saving deposit and time deposit. iy demas denen Z Demand deposit The demand deposit is the current account or checking account or commercial deposit where deposits are covered by deposit slips and where funds are withdrawable on demand by drawing checks against the bank. A demand deposit is noninterest bearing. Saving deposit Ina saving deposit, the depositor is given a passbook upon the initial deposit. The passbook is required when making deposits and withdrawals. Withdrawals are made anytime but the bank sometimes may require notice of withdrawal. A saving deposit is interest bearing. + Time deposit The time deposit is similar to saving deposit in the sense that it is interest bearing. A time deposit is evidenced, however, by a formal agreement embodied in an instrument called certificate of deposit. Time deposit may be preterminated or withdrawn on demand or after a certain period of time agreed upon. 39Pe ee os What is a bank reconciliation? uestion, let us have a background . the ‘ Te vjemand deposit or checking account, the matter of opening & s of the three kinds of deposit, a bank reconciliat eaten only for a demand deposit or checking aceunEn When an account is opened at the bank, the person authorized to draw checks against the account will be required to sign cards furnished by the bank, to show the specimen signatures to be used on the checks. ‘These specimen signatures will be filed by the bank so that any teller who may be unfamiliar with a depositor’s signature can test the authenticity of a check by comparing the depositor’s signature on the card with the signature on the check. If the depositor is a corporation, the bank will request that the directors pass a resolution authorizing certain officers of the corporation as signatories of checks and that a copy of this resolution be filed with the bank. Let us now illustrate some fundamental transactions affecting the depositor and the bank. Assume that Company X (the depositor) collected P100,000 from a customer in settlement of collection is deposited at the First Bank. Seems The je ~ - x att entry to record the collection and the subsequent Cash (or cash in bank) Accounts receivable 100,000 100,000 On the books of the ba: nk, the journal is: entry is: Cash Company X 100,000 100,000 The j i is Company gy oe the books of the bank shows the 24 tate the illustration. This is made, for our purpose 40In practice, however, demand deposit account ledger of Company X. the account credite d by the 7 but the same is posted was oe s When the bank credits the account of the deposi X, it recognizes its liability to the depositor. Positor, Company Legally, when a deposit is made, there exists a debtor-credit relationship between the bank and the depositor, the bank ting the debtor, and the depositor being the creditor. Hence, when the account of the depositor is increased ea the same Let us assume further that Company X subsequently issued a check for P30,000 in payment of an account payable. On the books of Company X, the journal entry is. Accounts payable 30,000 Cash 30,000 The journal entry on the books of the bank is: Company X 30,000 Cash 30,000 When a check is issued, the payee will present the same to the bank for payment. The depositor is actually ordering the bank to pay the payee out of its deposit in the bank. This is the reason the bank debits the account of the depositor thereby reducing its liability to the depositor. Thus, when the depositor's account js decreased, the same is debited. At this point, when balances are extracted, rhnest fo a account on the depositor’s book has @ balance c Foo the Company X account on the book of the bank of P70,000. 41Explanation two accounts have equal or the eame balances because they me rocal accounts. are recip! ‘This means that when one account is debited, the other Account js credited or vice versa. The reason for this is that the two accounts cover or reflect the game items or transactions. Thus, if no errors are committed in recording, and the same information has been recorded by both accounts, the two should have equal or the same balances. But very frequently, there are items on the depositor’s book which do not appear on the bank records as of the same date. For example, checks issued by the depositor are not yet presented for payment to the bank or deposits may have been made after the bank records are sent out to the depositor. And less frequently, there are items on the bank records which do not appear on the depositor’s book. For example: a. The bank may have charged the depositor’s account with Service charges which the depositor may not know about until a report is received from the bank. . Notes endorsed to the b; i been ank for collection have fallested by the bank and credited to the depositor’s ac" aed collection is not yet received from the ban . rr. {nth light of the fore eae are # Feconciliation, Going, it becomes necessary to Pre? 4?gank reconciliation pank reconciliation is a statement which brings i agreement the cash balance per book and cash bi : gs inte, reconciliation is usually prepared monthly because the bank rovides the depositor with the bank statement at the.end of every month. : Abank statement is a monthly report of the bank to the depositor showing: ‘The cash balance per bank at the beginning b. The deposits made by the depositor and acknowledged by the bank c. The checks drawn by the depositor and paid by the bank d. The daily cash balance per bank during the month Actually, the bank statement is an exact copy of the depositor’s ledger in the records of the bank. When the bank statement is received, attached thereto are the depositor’s canceled checks and any debit or credit memoranda that have affected the depositor’s account. The canceled checks are the checks issued by the depositor and paid by the bank during the month. These are called canceled checks because they are literally an by stamping or punching to show that they have been Paid. 43Reconciling items every month, comparison between the At = ate uae and the bank statement received ine the bank will yield the following reconciling items: 1. Book reonciling items: a) Credit memos b) Debit memos c) Errors 2. Bank reconciling items a) Deposits in transit b) Outstanding checks ¢) Errors Credit memos Credit memos refer to by the bank to the by the depositor items not representing deposits credited account of the depositor but not yet recorded as cash receipts. ‘The credit memos have the effect of. ‘increasing the bank balance. Typi examples of credit memos eee and quate ollected by bank in favor of the deposit" to the account of the depositor. b. Pr depositor of bank loan credited to the account of th ¢. Matured tim, current sem of ta a ranaerred by the bank to th? 44Debit memos Debit memos refer to items not representing checks paid by bank which are charged or debited by the bank to the secon the depositor but not yet recorded by the depositor as cash gisbursements. The debit memos have the effect of decreasing the bank balance. Typical examples of debit memos are: NSF or no sufficient fund checks — These are checks deposited but returned by the. bank because of insufficiency of fund. The other name for NSF is DAIF or “drawn against insufficient fund". b, Technically defective checks - These are checks deposited but returned by the bank because of technical defects such as absence of signature or countersignature, erasures not countersigned, mutilated checks, conflict between amount in words and amount in figures. c. Bank service charges — These include bank charges for interest, collection, checkbook and penalty. d. Reduction of loan — This pertains to amount deducted from the current account of the depositor in payment for loan which the depositor owes to the bank and which has already matured. Deposits in transit- Deposits in. transit are collections already recorded by the depositor as cash receipts but not yet reflected on the bank statement. Deposits in transit include: & Collections already forwarded to the bank for deposit but too late to appear in the bank statement. ill in the hands of the b. Undeposited collections or those st eS h on hand awaiting depositor. In effect, these are cas delivery to the bank for deposit. 45ee es Outstanding checks checks already recorded by the depos; on eo but not yet reflected on the }, ak as ca statement. ding checks include: iven to payees but Checks drawn and already given Dot yet * resented for payment. ified checks - A certified check is one where the bank S el on its face the word “accepted” or “certifiog” indicating sufficiency of fund. When the bank certifies a check, the account of the depositor is immediately debited or charged to insure the eventual payment of the check. Certified checks should be deducted from the total outstanding checks (if included therein) because they are no longer outstanding for bank reconciliation purposes. Forms of bank reconciliation ‘The following formats may be used in reconciling the book balance and the bank balance: . a Adjusted balance method - Under this method, the book palance and the bank balance are brought to a correct cash valance that must appear on the balance sheet. 4. Book to bank method — Under this method, the book balance is reconciled with the bank is adjusted to equal the bank bean the book balane® ¢. Bank to bool method ~ UJ; , i ‘Jed war 72, Under this method, the bank balan educten Hot With the book balance or the bank balance # justed to equal the book b latte The first method is preferred over the other two. 46proforma reconciliation djosted balance method a ret memos foal [ese: Debit memos Adjasted book balance sh Eek Bank balance ‘Add: Deposits in transit x emt Total Less: Outstanding checks Adjusted bank balance The reconciling items of the book are simply termed as credit memos and debit memos. lls | No details are shown to simplify the illustration. In actual formal reconciliation, details will have to be shown. Moreover, errors are excluded because no definite rule can be made whether these are to be added or deducted. Errors will have to be analyzed for proper treatment. However, errors are reconciling items of the party which committed them. It will be observed that under the adjusted balance method, the credit memos are always added to the book balance and the debit memos are always deducted from the book balance. Deposits in transit are always added to the bank balance and the checks are always deducted from the bank balance. 47Explanation The foregoing procedures can be explained as follows; ‘The adjusted balance method means that the book balance the bank balance are adjusted to equal the correct cash balance Credit memos already increased the bank balance but effect on the book balance because the credit memos yet recorded by the depositor. have ng ATE hot, Consequently, the book balance is understated in relation ty the correct cash balance. Hence, credit memos are added to the book balance. Debit memos already decreased the bank balance but have no effect on the book balance because the debit memos are not yet recorded by the depositor. Consequently, the book balance is overstated in relation to the correct cash balance. Hence, debit memgs are deducted from the book balance. ‘Deposits in transit already increased the book balance but have no effect on the bank balance because the deposits are not yet recorded by the bank. Consequently, the bank balance is understated in relation the correct cash balance. Hence, deposits in transit are added to the bank balance Outstanding checks already but decreased the book balanc have no effect on the b ks are not yet paid by the tank. ank balance because the chec! Consequently, the bai correct cash bala: Hence, nee, nk balance is overstated in relation *° _ cutatanding checks are deducted from the bank bala" 48Book to bank method nce aah et memos re aE Outstanding checks xx xx [ess: Debitmemos xX me Deposits in transit xx xz Bank balance _xx When the reconciliation starts with the book balance and ends with the bank balance, the usual book reconciling items are treated in the same manner they are treated in the “adjusted balance method”, that is, credit memos are added and debit memos are ‘deducted. However, with respect to the bank reconciling items the treatment is simply “reversed.” Thus, since the deposit in transit is added to the bank balance, it is now deducted from the book balance, and since the outstanding check is deducted from the bank balance, it is now added to the book balance. . Explanation of reversal rule The book to bank method means that the book balance is adjusted to equal the bank balance. Deposits in transit already incre: no effect on the bank balance becaus recorded by the bank. Consequently, the overstated in relation to the bank balance. ased the book balance but have e the deposits are not yet e book balance is Hence, deposits in transit are deducted from the book balance following the book to bank method. On the other hand, outstanding checks already decreased the lance but have no effect on the bank balance because han oe. not yet paid by the bank. Consequently, the ce is understated in relation to the bank balance. Hence, bal. follge’, Outstanding checks are added to the book bala ‘owing the book to bank method. nce, 49Bank to book method Bank balance ie Be Xx Add: Depositein ane xx Debit memos Xx Xx a Outstanding checks XX Credit memos Xx Xx Book balance Xx reconciliation starts with the bank balance and en whee be bok balance, the usual bank reconciling items treated in the same manner they are treated in the “adjusted balance method”, that is, deposit in transit is added and outstanding check is deducted. However, with respect to the book reconciling items, the treatment is simply “reversed”. Thus, since the credit memos are added to the book balance, they are now deducted from the bank balance, and since the debit memos are deducted from the book balance, they are now added to the bank balance. Explanation of reversal rule The bank to book method: means that the bank balance is adjusted to equal the book balance. Debit memos alre; ao ete onthe ‘ady decreased the bank balance but hav’ aoc book a denne alance because they are not yet recor Consequently, the bank balance i a aa A nce is understated in relation Renae balance. Hence, debit memos are added to the bank On the other han balance but have Not yet recorded Consequently, the bank balance. Hence, 3 , credit memos already increased the bank £0 effect on the book balance because they ® by the depositor, . the alance is overstated in relation !° Stedit memos are deducted from the bar 50stration ou shee of Company X show the following for the month of January: ilu: cASH RECEIPTS CASH DISBURSEMENTS 8 60,000 Jan. 6 Check No. 721 5,000 13 20,000 . 7 Check No. 722 10,000 B 30,000 10 Check No. 723 18,000 3 40,000 14 Check No. 724 2,000 150,000 28 Check No. 725 37,000 ee a 31 Check No. 726 28,000 100,000 The general ledger of the company shows the cash in bank account for January as follows: Cash in bank — First Bank Jan.31 CR 150,000 Jan. 31 CD 100,000 ‘The balance of the cash in bank on the depositor’s book is P50,000. 51See ON Bank statement ‘The following is the bank statement for January receiveg from the First Bank: In account with: No. 775 Company X Quezon City ro arene awalal oDenouie gal Daw CheckNo. Withdrawals Deposits Balance Date si Ghee te Ye ee ee FIRST BANK Manila, Philippines 60,000 . 6 60,000, = 8 721 6,000 55,000 u 72 10,000 45,000 12 723 18,000 27,000 “4 20,000 47,000 7 724 2,000 45,000 26 30,000 75,000 26 15,000CM —_ 90,000 30 5,000 RT 85,000 30 1,000 SC 84,000 Code: CM-Credit memo SC-Service charge DM-Debit memo RT — Returned check The following data are gathered in connection with the CM and DM appearing on the bank statement: a. The CM of P15,000'on January 26 represents proceeds of note collected by the bank in favor of the company. b, The RT of P5,000 represents check of customer deposited previously but returned by the “no sufficient fund” or NSF. y the bank because of “no 52general procedures in preparing the reconciliation ; Determine the balance per book and the balance per bank. mentioned earlier, the cash in bank account on the book of the depositor has a debit balance of P50,000. ‘The bank balance is shown on the bank statement as the final item, P84,000. Trace the cash receipts to the bank statement to ascertain whether there are deposits not yet acknowledged by the bank. In the illustrative problem, the cash receipt of P40,000 on January 31 does not appear in the bank statement. This represents deposit in transit. . Trace the checks issued to the bank statement to ascertain whether there are checks not yet presented for payment. In the illustrative problem, Check Nos. 725 for P37,000 and 726 for P28,000 do not appear in the bank statement. These are outstanding checks. 4. The bank statement should be examined to determine whether there are bank credits or bank debits not yet recorded by the depositor. In the iustrative problem there is CM of P16,000 and DM for returned check of P5,000 and service charge of P1,000. ¢ Watch out for errors. Again, the party which committed tht are no errors committed. errors are reconciling items of em. In the illustrative problem, AC this point, a formal reconciliation may be prepared because the reconciling items have already been determined.Adjusted balance method book Balanc Pre collected by bank ne — i NSF customer check 5,000 5,009 Service charge 1,000 Gon ‘Adjusted book balance 209 Wer 3 Balanceperbank a, ‘Add: Deposit in transit ty Total : i 12409 Outstanding checks: Mess Check No. 725 37,000 Check No, 726 78000 sm ‘Adjusted bank balance 59409 Preparation of adjusting entries Only the book reconciling items require adjusting entries on the book of depositor. This is but understandable. The adjustments are necessary to bring the cash in bank balance to its correct balance for statement presentation purposes. a. To record the note collected. by bank: Cash in bank 16,000 Notes receivable sm b. To record the NSF customer check: Accounte recei Cashinbank oe ¢. To record the bank service charge: Bank servi soar weg In the Preparation j ct ie debe! *diustments, an item added to ty book ct 22 debited to cash anac item deducted f°” 8, to cash. 54to bank method Boo! COMPANY X Bank Reconciliation January 31 per book seeenote collected Outstanding checks No.725 37,000 No.726 _28,000 total fe NSF check Service charge _ Deposit in transit Balance per bank Bank to book method COMPANY X Bank Reconciliation January 31 Balance per bank Add: Deposit in transit NSF check Service charge ‘Total : less: Outstanding checks: No. 725 37,000 No, 726 28,000 Note collected by bank Balance per book 15,000 5,000 1,000 40,000 40,000 5,000 1,000 65,000 16,000 50,000 80,000 130,000Some errors and p their correction Understatement of cash receipts on the book of depositor, the collection from customer which is depogi For exam 30,000 but recorded in the book only ag Prone’ is derstatement of cash receipt of P9,000. The sa to the book balance and adjusted as follows: error Cashinbank 9,000 ‘Accounts receivable 9,000 . Understatement of checks drawn by depositor. For example, a check in payment of account payable amounting to P20,000 is recorded in the book as P2,000, ‘There is an understatement of cash disbursement and a consequent overstatement of book balance in the amount of P18,000. The errar is deducted from the book balance and adjusted, as follows: Accounts payable 18,000 Cash in bank 18,000 . Deposit of another entity is credited by the bank to the account of the depositor. This is a deduction from the bank balance because it erroneously increased the account balance of the depositar in the bank. No adj _ daphaiton: ‘0 adjustment is neceasary on the book of the . Cheek of an depositor. “®t entity charged to the account of the Thie is an addition it to the bank balance because erroneously alan 4 in the bank. Ne adcet® S€20unt balance af the deposits depositor. ae is necessary on the book of thPROBLEMS Problem 2-1 (IAA) ‘Apathy Company provided the following information; Apathy Campany Date CheckNo. Withdrawal Deposits Balance Dec. 2 100,000 100,09) 18 104 10,000 sooty 2 101 5,000 00 2 106 25,000 60000 a 50,000 110,000 a 10,000 120,000 9 103 40,000 30,000 39 CM 30,000 110,000 31 Service charge DM 2,000 108,000 FIRST BANK Dec. 1 Deposit 100,000 | Dec. 4 CheckNo.101 5000 21 Deposit 80,000 6 Check No. 102 15,000 37 Deposit, 10,000 8 CheckNo. 103 40,00 31 Deposit "90,000 8 CheckNo. 104 10000 10 Check No. 105 30,000 14 Check No. 106 25,000 28 Check No. 107 0.00 Tha cea; ron made by the bank on December 29 represents the to the bank Required; & Prepare Of a note rece; for calle ived from a customer which was ge ction by the entity on December 2° pce method, & bank Feconciliation using adjusted pala! . Prepare adi ing entriesproblem 2-2 (IAA) ible Company provided the followi — bank maintained with Second Bene” Pp Argan af the SECOND BANK 20,000 Dec. 1 Check No. 771 4 ¢ Deposit 30,000 72 12, Deposit 40,000 6 7713 ana 24 Deposit 50,000 10 774 16,000 31 Deposit 60,000 4 775 30,000 18 776 25,000 24 777 40,000 The following bank statement was received from the Second Bank by Sensible Company. Date Checks Deposits Balance Dec. 1 Balance 130,000 Check No. 768 10,000 1 ™m 20,000 4 7712 5,000 6 173 35,000 30,000 12 714 15,000 40,000 2 716 52,000 4 1042 8,000 50,000 28 NSF check 10,000 45,000 CM 28 Service charge 5,000 "ca em OMENS AOther information : any reconciled its bank balance 1 Se So with two checks, No. 768 for P10,009 aa No, 770 for ‘P20,000 outstanding. 2, Check No. 1042 was drawn by Sensitive Company, ‘The bank charged it in error to the account of Sensible Company. 8. Check No. 776 was correctly drawn for P52,000 in payment of account. The amount P25,000 was entered in the books of original entry. 4. The bank credit on December 28 represents the proceeds of a P60,000 note, less a collection fee of P5,000 collected by the bank and credited to the account. . The NSF check was received from a customer in payment of account, Required; &. Prepare a bank reconciliation statement on December 5). . Prepare adjusting entries on December 31.jem 2-3 CAA) prod ys Company provided the following b antes raat 31 of the current year: # bank reconciliation on balan i 300,000 Bet epast in transit 600,000 tn Outstanding checks: 900,000 No. 114 240,000 115 160,000 116 60,000 Adjusted bank balance Allreceipts of cash are deposited in the bank account. The bank statement for the month of February is presented below. THIRD BANK Checks Deposit Date Balance Balance forwarded Jan. 31 240,000 600,000 Feb. 1 2,000,000 3 200,000 5 900,000 400,000 7 160,000 9 1,000,000 10 500,000 13 1,200,000 16 1,300,000 21 550,000 23 nooo'o00 Fe 3,795,000 000,000 550,000 27 3,795, 800,000 270,000 CM 28 3,265,000 The following information was taken from the credit memo of February 28: fee of the note —" ‘on the note turity valu CaUection aes note 61‘eh iekee “a following data were taken from the cash journals op ‘The follow: Yanthous Company: receipt Journal Cash Disbursement Journ Cash pugivoaib CheckNo. Credit Cag, Date 2,000,000 117 200,000 Feb. 2 “400,000 118 900,000" § 200,000 119 800,000 10 200,000 fat ee 18 1,200,000 121 550,000 i 1300.00 122 180,000 * 850,000 123 1,000,000 B 450,000 124 120,000 125 250,000 6,900,000 4,800,000 Required: a, Prepare bank reconciliation on February 28, showing the book balances before and after adjustment. b Prepare journal entries to record the adjustments that are indicated by the bank reconciliation.problem 2-4 (IAA) yelry Company prepared the following bank reconciliation og March 3k balance : 1,408, e March 31 deposit 750,000 ano Collection of note 2,500,000 Interest on note 150,000 3,400,000 4,805,000 “ Cavalry Company's deposit to our account di 100,000 Bank service charge 5,000 1,105,000 Ajusted book balance 3,700,000 Bank balance 5,630,000 ‘Add: Error on check No. 175 45,000 ‘Total 5,675,000 Less: Preauthorized payment for light and water 245,000 NSF check 220,000 Outstanding checks 1,650,000 2,115,000 Adjusted bank balance Check No. 175 was made for the proper amount of P249,000 in payment of account. However the check was entered in the cash disbursements journal as P294,000. stitalry Company authorized the bank to automatically pay light and water bills as submitted directly to the bank. Required: * Prepare a corrected bank reconciliation. b, Prepare adjusting entries on March 81.cereal oN TAA) lem 2-5 ( Stee co Company provided the following information, ut book, March 31 4 Balan ps for April vil it Cas! pursements for April nat at Cash diab checks as of April 3t ie e et oaths No. 1939 had been certified: x No. 1831 a No. 1382 4 No. 1333 st No. 1334 si No. 1335 i ata i] debit memos were: oo : For ec] n i for note collected ‘ryt ine name of Zodiac Company em ited collections fom Balaooperbenk, April 30 ae Required: Prepare a bank reconciliation on April 30 following the book to bank approach and prepare adjusting entries. Problem 2-6 (IAA) Radiant Company provided the following data for the month of January: Balance per bank statement, Ji january 31 550008 Collections on Januazy 31 but undepesited Sam NSF check sscaivad from acustomer returned by ank on February 6 with the Jaruary bank statement Si Checks. outstanding on Ji lanuary 31 ee Bank debit memo for safety deposit box Tental not: Tecorded by depositor e A creditor's check for P30,000 was incorrect Acustantedin the depositor'sbookae en woe 8 check for Pai * Teo ded by the deposi sooo was 30,000 ste peeitor Neglected tom sin i its for a check drawn gen entry in ofan account Payable Payment at Required: Compute aad : the b, . ectitt® repare adjasng oe oa sh account before °°" paproolem™ 2-7 (IAA) ompany provided the following information for the Cr cor : wb of December: ce per bank statement 4,000,000 ct per cash book 2'700,000 pustanding checks 600,000 Deposit in transit 475,000 ice charee 10,000 proceeds of bank loan, December 1, discounted for 6 months at 12%, not recorded on company books 940,000 Customer's check charged back by bank for absence of counter signature . 50,000 Deposit of P100,000 incorrectly recorded by bank as 10,000 Check of Rancid Company charged by bank against Rancor Company account 150,000 Customers note collected by bank in favor of Rancor Company. Face 400,000 _ Interest 40,000 Total 440,000 Collection fee 5,000 435,000 Erroneous debit memo of December 28, tocharge company’s account with settlement of bank loan 200,000 300,000 Deposit of Rancid Company credited to Rancor account Required: & Prepare a bank reconciliation using the adjusted balance approach. b. Prepare adjusting entries on December 31. 65Problem 2-8 (IAA) ha Company provided the following information for ears of December: the led Cashbalance Perk atatement Senem pean pds ofbenk loan discounted on ‘en ‘December 1 for one year at 14% 516,009 Undeposited collections on. December 31 300,00) Check of Omega Company had been incorrectly deducted by bank from ‘Alpha Company account 50,000 Check of Alpha Company in payment of. an account payable had been recorded by the depositor a8 P20,000. The correct amountis 200,000 ‘The ledger account for cash was the only cash account kept by the entity. Ttincluded a petty cash account comprised of the following items: Currency and coin 4,000 Supplies 2,000 tion 3,000 Postage 1,000 10,000 Deposit of Omega Company credited by aa oe Sg me {December 27 omitted from bank statement 160,000 Out statement Baan Required: a Prepare bank ne b tee, Teconciliation on December 31. Prepare one j sessting journal entry only necessary to adjust the cath 66problem 2-9 (IAA) pathetic Company revealed the following facts on August 31; of cash in bank account 1,300, ce of bank statement 200000 tanding checks, August 31: Number 555 10,000 761 55,000 re 40,000 163 : ‘ 25,000 764 65,000 765 70,000 Receipts of August 31, deposited September 1 275,000 ‘The bank statement showed the following charges: 4. Service charge for August 5,000 >. NSF check received from a customer 85,000 The cashier-bookkeeper had misappropriated P30,000 and an Additional P10,000 by charging sales discounts and crediting accounts receivable. ‘The stub for check number 765 and the invoice relating thereto show that it was for P50,000. The check was recorded incorrectly in the cash disbursements jounal as P70,000. The check was drawn in payment of an account payable. Payment has been stopped on check number 555 which was ‘awn in payment of an account payable. The payee cannot be located. Required: © Prepare a bank reconciliation on August 31 using the adjusted balance method. Prep justi i in bank account are adjusting entries to correct the cash in on August 31, 67ree 4 10 (AICPA Adapted) Jem 2- Prob! ing the bank reconciliation for the month of Angus In HE iy provided the following information: Apex Balance per bank statement slag at a ms ane ‘customer check for insufficient fund ca Outstanding checks me Bank service charge for August hen What is the adjusted cash in bank? 1,855,000 1,795,000 1,785,000 1,755,000 ae op Problem 2-11 (IAA) Core Company provided the following data for the purpose of reconciling the cash balance per book with the cash balance per bank statement on December 31: Balance per book 850,000 Balance per bank statement 2,000,000 Outstanding checks, ; inchudi i 000 500,000 Deposit in 7 ‘uding certified check of P100, 300,000 December NSF checks, of which P50,000 had nredeposited and cleared on December 27 ae wee Fitorty Core’s account, representing 000 at oneal to another company my eer What am 7 end? “™t Should be reported as cash in bank at) £ 1:500,000 1,400,009 Fy i 180.000problem 2-12 (AICPA Adapted) reparing the bank reconciliation for the month of In P C i December , Case Company provided the following data: ance per bank statement . ak in transit ; pee ond Amount: erroneously credited by bank to Case’s account om Bank service charge for December Hed i 50,000 Outstanding checks 675,000 What is the unadjusted cash in bank balance per book? 2. 3,550,000 b. 3,660,000 c. 3,610,000 d. 3,655,000 Problem 2-18 (AICPA Adapted) ‘Able Company received the bank statement for the month of March. However, the closing balance of the account was unreadable. Attempts to contact the bank after office hours did not secure the desired information. February 28 book balance 1,460,000 Note collected by bank 100,000 Interest earned on note 10,000 NSF check of customer 130,000 Bank service charge on NSF check 2,000 Other bank service charge 3,000 Outatanding checks ; 200,000 Deposit of February 28 placed in night depository 85,000 Check issued by Axle Company charged to ‘Able'saccount 20,000 What is the cash balance per bank statement? & 1,435,000 ». 1,530,000 © 1,340,000 4. 1,550,000 69problem 2-14 (AA) ; any received the bank statement for th, ee included the following information: © month for April ‘ Bank er ed by Laconic during April was not collectible 15000 he ne i ey bank ated so, i but not y« Deptt aad mailed but not yet recorded by bank ron ntity found a customer check for P35,000 payeh ie that had not yet been deposited and had not re recorded. The general ledger showed a bank account balance of P920,000. What amount should be reported as adjusted cash in bank on April 30? a. 900,000 b. 865,000 ¢. 930,000 d. 965,000 Problem 2-15 (IAA) Sapphire Company-provided the following information for the month of December: Balance per bank statement December 31 2,800,000 Intarstpald by Deak Se ino at paic to Sapphire Ci bi 10, Peposia made but not yet recorded by the ie ae 350,000 lecks written but not yet recorded by the bank gs0,000 The entity discover, ith ly ed that it had drawn and erroneow! reco1 for Pence for P46,000 that should have been recordet What . cae balance per ledger on December 3! b. 2.520.000 § 2.540,000 4. 2,800,000 70