Bank Reconciliation

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BANK RECONCILIATION
+Problem 1
Presented below are a series of unrelated situations:
1. The accountant of NARCISA Co. provided the following data in reconciling the April 30 cash in bank balance:
Balance per bank, April 30
P 130,350
Balance per book, April 30
85,000
Bank service charge
2,000
Deposits in transit
49,000
Outstanding checks
17,650
Notes collected by bank including P11,200 interest
(Narcisa Co. not yet informed)
136,000
Check drawn by XYZ Co. erroneously charged by
Bank to Narcisa’s Account
54,600
A transposition error was made in recording a sale and deposit in transit in the sales journal and cash receipts journal in April.
Correct amount
P 13, 658
Recorded as
P 16, 358
Requirement: What is the adjusted cash balance on April 30?
Solution:
Unadjusted balances
Bank service charge
Deposits in Transit
Outstanding checks
Collection of note
Erroneous bank debit
Transposition error (16,358-13,658)
Adjusted balances
2.
Book
85,000
(2,000)
Bank
130,350
49,000
(17,650)
136,000
54,600
( 2,700)
216,300
216,300
The following information is included in EMIL Corporation’s bank statement for the month of March:
A customer’s check has been marked NSF by the
Bank and returned
P 13,000
Bank service charge for March
1,200
In comparing the bank statement to the company’s cash records, you found:
Outstanding checks on March 31
Deposits made but are not yet shown in the April bank statement
P 184,000
14,000
The deposits in transit and outstanding checks have been correctly taken up in the company’s books. You also found a
customer’s check for P17,400 that had not yet been deposited and had not yet been recorded in Emil’s books. Your client’s
book shows a cash balance of P36,420.
Requirement: What is Emil Corporation’s correct cash balance at March 31?
Solution:
Balance per books
Unrecorded and undeposited customer’s check
Bank service charge
NSF Check
Adjusted Balance
3.
36,420
17,400
(1,200)
(13,000)
39,620
The following information pertains to a checking account of a company at June 30, 2014,
Balance per bank statement
P 200,000
Interest earned for the second quarter
500
Outstanding checks
15,000
Customers’ checks returned for insufficient fund
5,000
Deposit in transit
25,000
Requirement: What is the adjusted cash balance at June 30, 2014?
Solution:
Balance per bank statement
Outstanding checks
Deposit in transit
Interest earned
NSF check
Balance per books at June 30, 2014
200,000
( 15,000)
25,000
(500)
5,000
214,500
BANK RECONCILIATION
4.
A company is reconciling its bank statement with internal records. The cash balance per the company’s books is P45,000.
There are P5,000 of bank charges not yet recorded, P7,500 of outstanding checks, P12,500 of deposits in transit, and P15,000
of bank credits and collections not yet taken up in the company’s books.
Requirement: What is the cash balance per bank?
Solution:
Balance per books
Bank charges
Outstanding checks
Deposits in transit
Bank credits and collections
Balance per bank
5.
45,000
(5,000)
7,500
(12,500)
15,000
50,000
A company shows a cash balance of P175,000 on its bank statement dated June 30. As of June 30, there are P55,000 of
outstanding checks and P37,500 deposits in transit.
Requirement: What is the correct cash balance on the company books as of June 30?
Solution:
Balance per bank statement
Outstanding checks
Deposits in transit
Adjusted cash balance
6.
175,000
(55,000)
37,500
157,500
The cash account shows a balance of P225,000 before reconciliation. The bank statement does not include a deposit of
P11,500 made on the last day of the month. The bank statement shows a collection by the bank of P4,700 and a customer’s
check for P1,600 was returned because it was NSF. A customer’s check for P2,250 was recorded on the books as 2,700 and a
check written for P395 was recorded as P485.
Requirement: What should be the correct cash balance?
Solution:
Balance per books
Bank collection
Customer’s NSF check
Overstatement of cash receipt (2,700 – 2,250)
Overstatement of cash disbursement (485 – 395)
Adjusted balance
7.
225,000
4,700
( 1,600)
( 450)
90
227,740
On July 5, 2014, EMILIA Corp. received its bank statement for the month ending June 30. The statement showed a P209,500
balance while the cash account balance on June 30 was P35,000. In reconciling the balances, the auditor discovered that:
a. The June 30 collections of P176,000 were recorded on the books but were not deposited until July 1.
b. The bank service charges for the month of June totaled P3,000.
c. A paid check for P24,300 was entered incorrectly in the cash payments journal as P34,200.
Requirement: What is the total outstanding checks at June 30, 2014
Solution:
Balance per books, June 30, 2014
Bank service charge
Overstatement of disbursement (34,200 – 24,300)
Adjusted cash balance
Balance per bank, June 30, 2014
Add: Undeposited collections
Total
Less: Adjusted cash balance
Outstanding checks, June 30,2014
35,000
( 3,000)
9,900
41,900
209,500
176,000
385,500
41,900
343,600
Problem 2:
The bank statement for the current account of Ian Co. showed a December 31, 2014, balance of P585,284. Information that might be
useful in preparing the bank reconciliation is as follows:
a.
b.
c.
d.
e.
Outstanding checks were P52,810
The December 31, 2014 cash receipts of P23,000 were not deposited in the bank until January 2, 2015.
One check written in payment of rent P8,940 was correctly recorded by the bank but was recorded by Ian Co. as P9,840
disbursement.
In accordance with prior authorization, the bank withdrew P18,000 directly from the current account as payment on a
mortgage note payable. The interest portion of that payment was P14,000. Ian Co. has made no entry to record the automatic
payment.
Bank service charges of P740 were listed on the bank statement.
BANK RECONCILIATION
f.
g.
h.
i.
1.
A deposit of P35,000 was recorded by the bank on December 12, but it did not belong to Ian Co.
The bank statement included a charge of P3,400 for a not-sufficient-fund checl. The company will seek payment form the
customer.
Ian Co. maintains an P8,000 petty cash fund that was appropriately reimbursed at the end of December.
According to instructions from Ian Co. on December 30, the bank withdrew P40,000 from the account and purchased
treasury bills for Ian Co. The company recorded the transactions in its books on December 31 when it received notice from
the bank. Half of the treasury bills mature in three months and other half in six months.
What is the cash in bank balance per books on December 31, 2014?
a. P549,714
b. P543,514
c. P534,914
Solution:
Balance per bank statement
Outstanding checks
Undeposited collections
Error in recording the rent check (9,840-8,940)
Automatic mortgage payment
Bank service charges
Bank error-deposit incorrectly credited to Ian Co.
NSK check
Balance per books
2.
d. P541,714
585,284
( 52,810)
23,000
(900)
18,000
740
(35,000)
3,400
541,714
What is the adjusted cash in bank balance on December 31, 2014?
a. P520,474
b. P527,274
c. P518,674
d. P520,154
Solution:
Unadjusted balances
Outstanding checks
Undeposited collections
Error in recording the rent check (9,840-8,940)
Automatic mortgage payment
Bank service charges
Bank error-deposit incorrectly credited to Ian Co.
NSK check
Adjusted balances
3.
Book
541,714
Bank
585,284
(52,810)
23,000
900
(18,000)
(740)
(35,000)
( 3,400)
520,474
520,474
What amount would Ian Co. report as cash and cash equivalents in the current assets sections of the December 31, 2014,
statement of financial position?
a. P928,474
b. 728,474
c. P720,474
c. P735,274
Solution:
Current account balance
Petty cash
Treasury Bills (400,000 x 1/2)
Total cash and cash equivalents
520, 474
8,000
200,000
728,474
Problem 3:
The following data were taken from Garay’s check register for the month of April. Garay’s bank reconciliation for March showed one
outstanding check, check No. 178 for P2,150 (written on March 20) and one deposit in transit for P4,350 (made of March 31).
Date (2014)
April 1
1
1
4
27
29
Item
Beginning balance
deposit
Check No. 179
Check No. 180
Deposit
Check No. 181
Checks
Deposits
26,167
250
10,673
11,774
13,217
Balance
6, 150
32,317
32,567
21,898
33,672
20,490
The following is from Garay’s bank statement for April:
Date (2014)
April 1
3
3
5
5
5
20
20
30
Item
Beginning balance
Check No. 179
Deposit
Check No. 180
Automatic Loan
Deposit
NSF Check
Service charge
interest
Assume that any errors or discrepancised you find are Garay’s, not the bank’s.
Checks
Deposits
250
4,350
10,673
8,150
26,417
1,000
600
82
Balance
3,950
3,700
8,050
( 2,623)
5,527
31,944
30,944
30,344
30,426
BANK RECONCILIATION
What is the adjusted cash balance as of April 30?
a. P26,833
b. P26,838
c. P30,426
d. P26,872
Solution:
Book
20,490
Unadjusted balances
Outstanding checks:
Check no. 178
2, 150
Check no. 181
13,217
Deposit in transit
Error in recording deposit (26,417 – 26,167)
Automatic loan
Interest
NSF check
Bank service charge
Arithmetic error for:
Check no. 179 (32,567 – 32,067)
Check no. 180 (21,898 – 21,894)
Check no. 181 (20,490 – 20,455)
Adjusted balances
Bank
30,426
(15,367)
11,774
250
8,150
82
(1,000)
( 600)
(500)
( 4)
(35)
26,833
26,833
Problem 4: Bank reconciliation: Unadjusted to adjusted balances
The following information pertains to FLINT Coro.;
Flint Corp.
BANK RECONCILIATION
November 30,2014
Balance per bank statement
Less: Outstanding checks
No. 4321
6,000
No. 4329
15,000
No. 4340
1,700
No. 4341
4,675
435,000
27,375
407,625
16,200
423,825
Add: Deposit in transit
Balance per books
CHECK REGISTER
December 2014
Date
Dec. 1
Dec. 3
Dec. 7
Dec. 12
Dec. 15
Dec. 16
Dec. 18
Dec. 21
Dec. 22
Dec. 28
Payee
San Beda, Inc.
Miriam Corp.
UE Enterprises
PSBA Corp.
Payroll
BU, Inc.
New Era Co.
UST, Inc.
Petty cash fund
Payroll
Vouchers
No.
4342
4343
4344
4345
4346
4347
4348
4349
4350
4351
Payable
10,000
4,200
3,755
12,000
96,000
6,300
14,200
7,000
10,000
98,000
261,455
Discount
500
120
142
762
Cash
9,500
4,200
3,755
11,880
96,000
6,300
14,058
7,000
10,000
98,000
260,693
BANK STATEMENT
Bankable Bank
Period: November 30,2014 – December 31,2014
No.: 001-43-44
Date
Description
Balance last statement
Dec. 1
Cash Deposit
Dec. 1
Check issued
Dec. 4
Check issued
Dec. 4
Check issued
Dec. 5
Check deposit
Dec. 6
Check issued
Dec. 8
Check deposit
Dec. 10
Check issued
Dec. 15
Encashment
Dec. 22
Encashment
page 1 of 1
Check No.
Debit
4329
4342
4341
15,000
9,500
4,675
Credit
16,200
49,000
4343
4,200
4344
4346
4350
3,755
96,000
10,000
14,000
-
Balance
435,000
451,200
436,200
426,700
422,025
471,025
466,825
480,825
477,070
381,070
371,070
BANK RECONCILIATION
Dec. 28
Dec. 29
Dec. 29
Encashment
Debit memo – service charge
Credit memo - interest
4351
98,000
1,000
1,550
Deposit in transit at December 31 totaled P49,000.
1.
What is the total book receipt for December?
a. 113,550
b. 80,750
SOLUTION:
December 5 Deposit
December 8 Deposit
December 31 Deposit in transit
Total collection/book receipts
2.
3.
4.
5.
c. 63,000
d. 112,000
49,000
14.000
49,000
11200
What is the cash balance per books on December 31, 2014?
a. 275,132
b. 226,132
c. 291,332
d. 274,370
What is the total outstanding check on December 31, 2014?
a. 68,313
b. 39,238
c. 46,938
d. 40,938
What is the adjusted cash balance on November 30,2014?
a. 446,385
b. 417,825
c. 423,825
d. 435,000
What is the adjusted cash balance on December 31, 2014?
a. 281,682
b. 275,682
c. 226,682
d. 274,920
273,070
272,070
273,620
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