lOMoARcPSD|7245501 Practical Accounting by Valix Intermediate Accouting (Centro Escolar University) StuDocu is not sponsored or endorsed by any college or university Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Problem 15-4 (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 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 charges 3,000 Outstanding checks 200,000 Deposit of February 28 placed in night depository 85,000 Check issued by Axle Company charged to Able’s account What is the cash balance per bank statement? a. 1,435,000 b. 1,530,000 c. 1,340,000 d. 1,550,000 Solution 15 – 4 Answer b Downloaded by Ly Song (dallyyysong@gmail.com) 20,000 lOMoARcPSD|7245501 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 charges (2,000+3,000) (5,000) Adjusted book balance 1,435,000 Balance per bank statement (SQUEEZE) 1,530,000 Deposit in transit 85,000 Bank error - erroneous charge 20,000 Outstanding checks (200,000) Adjusted bank balance 1,435,000 The bank statement balance is “squeezed” by working back from the adjusted balance. Problem 15 - 5 (IAA) Stellar Company provided the bank statement for the month of December which included the following information: Ending balance, December 31 2,800,000 Bank service charge for December 12,000 Interest paid by bank to Stellar Company for December 10,000 Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 In comparing the bank statement to its own cash records, the entity found the following: Deposits made but not yet recorded by the bank 350,000 Checks written and mailed but not yet recorded by the bank 650,000 In addition, the entity discovered that it had drawn and erroneously recorded a check for P46,000 that should have been recorded for P64,000. What is the cash per ledger on December 31? a. 2,500,000 b. 2,520,000 c. 2,540,000 d. 2,800,000 Solution 15 – 5 Answer b Balance per book 2,800,000 Deposit in transit 350,000 Outstanding checks (650,000) Adjusted bank balance 2,500,000 Balance per ledger (SQUEEZE) 2,520,000 Interest income 10,000 Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Service charge (12,000) Book error (64,000-46,000) Adjusted book balance (18,000) 2,500,000 The cash balance per ledger is “squeezed” by working back from the adjusted balance. Problem 15 - 6 (IAA) Letty Company provided the bank statement for the month of April which included the following information: Bank service charge for April 15,000 Check deposited by Letty during April was not collectible and has been marked “NSF” by the bank and returned 40,000 In comparing the bank statement to its own records, the entity found the following: Deposits made but not yet recorded by bank 130,000 Checks written and mailed but not yet recorded by bank 100,000 All deposits in transit and outstanding checks have been properly recorded in the entity’s books. Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 A customer check for P35,000 payable to Letty Company had not yet been deposited and had not been recorded by the entity. The cash in bank account balance per ledger is P920,000. What amount should be reported as adjusted cash in bank on April 30? a. 900,000 b. 865,000 c. 930,000 d. 965,000 Solution 15 – 6 Answer a Balance per ledger 920,000 Unrecorded customer check 35,000 Bank service charge (15,000) NSF check (40,000) Adjusted book balance 900,000 The deposits in transit and checks outstanding are ignored because these are bank reconciling items. Problem 15-7 (IAA) Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Gallant Company showed a cash account balance of P4,500,000 at the month-end. The bank statement did not include a deposit of P230,000 made on the last day of the month. The bank statement showed a collection by the bank of P94,000 for the depositor and a customer check of P32,000 returned because it was NSF. A customer check for P45,000 was recorded by the depositor as P54,000 and a check written for P79,000 was recorded as P97,000. What amount should be reported as cash in bank? a. 4,765,000 b. 4,571,000 c. 4,819,000 d. 4,801,000 Solution 15 – 7 Answer b Balance per book 4,500,000 Collection by bank 94,000 NSF customer check (32,000) Book error – customer check overstated (9,000) Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Book error – check written overstated 18,000 Adjusted book balance 4,571,000 Customer check 45,000 Recorded by depositor 54,000 Book error – overstatement of a collection 9,000 Company check 79,000 Recorded by depositor 97,000 Book error – overstatement of payment 18,000 The deposit in transit of P230,000 is a bank reconciling item. Problem 15 - 8 (IAA) Aries Company kept all cash in a checking account. An examination of the accounting records and bank statement for the month of June revealed the following information: A cash balance per book on June 30 was P8,500,000. A deposit of P1,000,000 that was placed in the bank’s night depository on June 30 did not appear on the bank statement. The bank statement showed that on June 30 the bank collected note for the entity and credited the proceeds of P950,000 to the entity’s account, net of collection charge P50,000. Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Checks outstanding on June 30 amounted to P300,000 including certified check of P100,000. The entity discovered that a check written in June for P200,000 in payment of an account payable had been recorded in the entity’s records as P20,000. Included with the June bank statement was NSF check for P250,000 received from a customer on June 26. The bank statement showed a P20,000 service charge for June. 1. What amount should be reported as cash in bank on June 30? a. 9,000,000 b. 8,300,000 c. 9,360,000 d. 9,180,000 2. What is the balance per bank statement on June 30? a. 8,300,000 b. 9,700,000 c. 8,660,000 d. 8,200,000 3. What is the net adjustment to cash in bank on June 30? a. Net debit P950,000 b. Net credit P450,000 c. Net debit P500,000 d. Net debit P860,000 Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Solution 15 - 8 Question 1 Answer a Balance per book 8,500,000 Note collected by bank 950,000 Total 9,450,000 Book error (200,000–20,000) (180,000) NSF check (250,000) Service charge (20,000) Adjusted book balance 9,000,000 Question 2 Answer d Balance per bank (SQUEEZE) 8,200,000 Deposit in transit 1,000,000 Outstanding checks (300,000–200,000 certified check) (200,000) Adjusted bank balance 9,000,000 Question 3 Answer c Cash in bank 950,000 Service charge 50,000 Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Note receivable 1,000,000 Accounts payable 180,000 Accounts receivable 250,000 Service charge 20,000 Cash in bank 450,000 The two entries can be compounded and the net effect is a debit to cash in bank of P500,000. Problem 15 - 9 (PHILCPA Adapted) Boracay Company kept all cash in checking account. An examination of the bank statement for the month of December revealed a bank statement balance of P8,470,000. A deposit of P950,000 placed in the bank’s night depository on December 29 does not appear on the bank statement. Checks outstanding on December 31 amount to P270,000. The bank statement showed that on December 25 the bank collected a note for Boracay Company and credited the proceeds of P935,000 to the entity’s account which included P35,000 interest. Boracay Company discovered that a check written in December for P183,000 in payment of an account had been recorded as P138,000. Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Included with the December 31 bank statement was an NSF check for P250,000 that Boracay Company had received from a customer on December 20. The bank statement showed a P15,000 service charge for December. 1. What is the adjusted cash in bank on December 31? a. 9,150,000 b. 9,240,000 c. 9,195,000 d. 9,215,000 2. What is the unadjusted balance per book on December 31? a. 8,480,000 b. 8,525,000 c. 8,435,000 d. 8,510,000 3. What is the net adjustment to cash in bank on December 31? a. Net debit P935,000 b. Net credit P310,000 c. Net debit P625,000 d. Net credit P625,000 Solution 15 - 9 Question 1 Answer a Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Balance per bank 8,470,000 Deposit in transit 950,000 Checks outstanding (270,000) Adjusted bank balance 9,150,000 Question 2 Answer b Balance per book (SQUEEZE) 8,525,000 Note collected by bank for the depositor 935,000 Book error in recording check (183,000-138,000) (45,000) NSF check (250,000) Service charge (15,000) Adjusted book balance 9,150,000 Question 3 Answer c Cash in bank 935,000 Service charge 15,000 Note receivable 950,000 Accounts payable 45,000 Accounts receivable 250,000 Service charge 15,000 Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Cash in bank 310,000 The two entries can be compounded and the net effect is a debit to cash in bank of P625,000. Problem 16-3 (IAA) In reconciling the cash balance on December 31 with that shown in the bank statement, Sam Company provided the following information: Balance per bank statement 4,000,000 Balance per book 2,700,000 Outstanding checks 600,000 Deposit in transit 475,000 Service charge 10,000 Proceeds of bank loan, December 1, discounted for 6 months at 12%, not recorded on Sam Company’s books 940,000 Customer check charged back by bank for absence of counter signature Deposit of P100,000 incorrectly recorded by bank as 50,000 10,000 Check of Sim Company charged by bank against Sam account Downloaded by Ly Song (dallyyysong@gmail.com) 150,000 lOMoARcPSD|7245501 Customer note collected by bank in favor of Sam Company. Face 400,000 Interest 40,000 Total 440,000 Collection fee 5,000 Total 435,000 Erroneous debit memo of December 28, to charge Sam account with settlement of bank loan Deposit of Sim Company credited to Sam account 200,000 300,000 What amount should be reported as adjusted cash in bank on December 31? a. 4,315,000 b. 3,925,000 c. 3,075,000 d. 4,015,000 Solution 16 – 3 Answer d Balance per book 2,700,000 Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Add: Proceeds of bank loan 940,000 Customer note collected 435,000 Total 1,375,000 4,075,000 Less: Service charge Customer check charged back 10,000 50,000 60,000 Adjusted book balance 4,015,000 Balance per bank 4,000,000 Add: Deposit in transit 475,000 Incorrect deposit 90,000 Erroneous bank charge 150,000 Erroneous debit memo 200,000 Total 915,000 4,915,000 Less: Outstanding checks Erroneous bank credit 600,000 300,000 Adjusted bank balance 900,000 4,015,000 Problem 16 - 4 (IAA) Susan Company showed the following information on August 31: Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Balance of cash in bank account 1,300,000 Balance of bank statement 1,200,000 Outstanding checks, August 31: Number 555 10,000 761 55,000 762 40,000 763 25,000 764 65,000 765 70,000 Receipts of August 31, deposited September 1 275,000 Service charge for August 5,000 NSF check received from a customer 85,000 The cashier book-keeper had misappropriated P30,000 and an additional P 10,000 by charging sales discounts and crediting accounts receivable. The stub for check number 765 and the invoice relating thereto showed that it was for P50,000. It was recorded incorrectly in the cash disbursements journal as P70,000. This check was drawn in payment of an account payable. Payment has been stopped on check number 555 which was drawn in payment of an account payable. The payee cannot be located. Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 What is the adjusted cash in bank on August 31? a. 1,240,000 b. 1,230,000 c. 1,210,000 d. 1,200,000 Solution 16 – 4 Answer a Balance per book 1,300,000 Add:Overstatement of check number 765 Check number 555 stopped for payment 20,000 10,000 Total 30,000 1,330,000 Less: Service charge 5,000 NSF check 85,000 90,000 Adjusted book balance 1,240,000 Company check number 765 50,000 Recorded by depositor 70,000 Overstatement of payment 20,000 Balance per bank 1,200,000 Add: Undeposited collections 275,000 Total 1,475,000 Less: Outstanding checks: Number 761 55,000 Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 762 40,000 763 25,000 764 65,000 765 50,000 Adjusted bank balance 235,000 1,240,000 Problem 16 – 5 (PHILCPA Adapted) Mcbride Company provided the following data pertaining to the cash transactions and bank account for the month of May: Cash balance per accounting period 1,719,000 Cash balance per bank statement 3,195,000 Bank service charge 10,000 Debit memo for the cost of printed checks delivered by the bank; the charge has not been recorded in the accounting record 12,000 Outstanding checks 685,000 Deposit of May 30 not recorded by bank until June 1 500,000 Proceeds of a bank loan on May 30, not recorded in the accounting record, net of interest of P30,000 Proceeds from a customer promissory note, principal Downloaded by Ly Song (dallyyysong@gmail.com) 570,000 lOMoARcPSD|7245501 amount P800,000 collected by the bank not taken up in the accounting record with interest 810,000 Check No. 1086 issued to a supplier entered in the accounting record as P210,000 but deducted in the bank statement at an erroneous amount of 120,000 Stolen check lacking an authorized signature deducted from Mcbride’s account by the bank in error 80,000 Customer check returned by the bank marked NSF, indicating that the customer balance was not adequate to cover the check; no entry has been made in the accounting record to record the returned check 77,000 What is the adjusted cash in bank? a. 3,000,000 b. 2,910,000 c. 3,080,000 d. 2,990,000 Solution 16 – 5 Answer a Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Balance per book 1,719,000 Service charge (10,000) Debit memo for printed checks (12,000) Proceeds of bank loan 570,000 Proceeds of customer note 810,000 NSF customer check (77,000) Adjusted book balance 3,000,000 Balance per bank 3,195,000 Outstanding checks (685,000) Deposit in transit 500,000 Bank error in recording check (90,000) Stolen check deducted by bank in error 80,000 Adjusted bank balance 3,000,000 Problem 16 – 6 (AICPA Adapted) Carefree Company prepared the following bank reconciliation on March 31: Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Book balance 1,405,000 Add: Deposit in transit 750,000 Collection of note 2,500,000 Interest on note 150,000 Total 3,400,000 4,805,000 Less: Careless Company deposit credited to our account Bank service charge 1,100,000 45,000 1,145,000 Adjusted book balance 3,660,000 Bank balance 5,630,000 Add: Error by depositor on recording check 45,000 Total 5,675,000 Less: Preauthorized payment for water bills 205,000 NSF customer check 220,000 Outstanding checks 1,650,000 Adjusted bank balance 2,075,000 3,600,000 The check erroneously recorded by the depositor was made for the proper amount of P249,000 in payment of account. However it was entered in the cash payments journal as P294,000. Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 The entity authorized the bank to automatically pay its water bills as submitted directly to the bank. What amount should be reported as cash in bank on March 31? a. 3,660,000 b. 3,600,000 c. 3,630,000 d. 2,880,000 Solution 16 – 6 Answer c Book balance 1,405,000 Collection of note 2,500,000 Interest on note 150,000 Book error on recording check 45,000 Bank service charge (45,000) Water bills paid directly by bank (201,000) NSF customer check (220,000) Adjusted book balance 3,630,000 Company check 249,000 Recorded by depositor 294,000 Downloaded by Ly Song (dallyyysong@gmail.com) lOMoARcPSD|7245501 Book error – overstatement of a payment 45,000 Bank balance 5,630,000 Deposit in transit 750,000 Outstanding checks (1,650,000) Bank error - Careless Company deposit erroneously credited Adjusted bank balance Downloaded by Ly Song (dallyyysong@gmail.com) (1,100,000) 3,630,000