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FAR.16 - Bank Reconciliation
DISCUSSION PROBLEMS
1. Bank reconciliation
a. Explains the difference between the bank balance
and the balance shown in the depositor’s records.
b. Can help identify cash errors or irregularities that
have occurred in accounting for cash, either by the
entity or the bank.
c. Should be prepared by an individual who neither
handles nor records cash.
d. All the statements are correct.
2. If the cash balance in a company’s bank statement is
more than the correct cash balance and neither the
company nor the bank has made any errors, there
must be
a. Deposits credited by the bank but not yet recorded
by the company
b. Outstanding checks
c. Bank charges not yet recorded by the company
d. Deposits in transit
3. If the cash balance shown in a company’s accounting
records is more than the correct cash balance and
neither the company nor the bank has made any
errors, there must be
a. Deposits credited by the bank but not yet recorded
by the company
b. Deposits in transit
c. Outstanding checks
d. Bank charges not yet recorded by the company
4. If the cash balance shown in a company’s accounting
records is less than the correct cash balance and
neither the company nor the bank has made any
errors, there must be
a. Deposits credited by the bank but not yet recorded
by the company
b. Deposits in transit
c. Outstanding checks
d. Bank charges not yet recorded by the company
5. If the cash balance in a company’s bank statement is
less than the correct cash balance and neither the
company nor the bank has made any errors, there
must be
a. Deposits credited by the bank but not yet recorded
by the company
b. Outstanding checks
c. Bank charges not yet recorded by the company
d. Deposits in transit
6. The information below is from the books of the
Seminole Corporation on June 30:
Balance per bank statement
Receipts recorded but not yet deposited
in the bank
Bank charges not recorded
Note collected by bank and not
recorded on books
Outstanding checks
NSF checks - not recorded on books nor
redeposited
P11,164
a.
b.
P11,404
P12,348
c. P10,460
d. P10,220
7. The cash in bank account of S-mart, Inc. for April
showed an ending balance of P129,298. Deposits in
transit on April 30 was P18,200. Outstanding checks
as of April 30, were P59,435, including a P5,000 check
which the bank had certified on April 27. During the
month of April, the bank charged back NSF checks in
the amount of P3,435 of which P1,835 had been
redeposited by April 20. On April 23, the bank charged
S-Mart’s account for a P2,200 items which should have
been charged against K-mart, Inc., the error was not
detected by the bank. During April, the proceeds from
notes collected by the bank for S-Mart, Inc. was
P7,548 and bank charges for this service was P18.
How much is the unadjusted balance per bank on April
30?
a. P95,263
c. P173,663
b. P88,333
d. P169,263
8. The following data pertaining to the cash transactions
and bank account of Mandirigma Company for the
month of May are available to you:
Cash balance, per records, May 31
Cash balance, per bank statement, 5/31
Bank service charge for May
Debit memo for the cost of printed checks
delivered by the bank
Outstanding checks, May 31
Deposit of May 30 not recorded by bank
until June 1
Proceeds of a bank loan of May 30, net of
interest of P300
Proceeds from a customer's promissory
note, including interest of P100
Check No. 2772 issued to a supplier
entered in the accounting records at
P2,100 but deducted in the bank
statement at an erroneous amount of
Stolen check lacking an authorized
signature, deducted from Mandirigma's
account by the bank in error
Customer's check returned by the bank
marked NSF; no entry has been made
in the accounting records to record the
returned check
P17,194
31,948
109
125
6,728
4,880
5,700
8,100
1,200
What is the correct cash balance at May 31?
a. P29,200
c. P30,000
b. P30,300
d. P30,900
1,340
16
1,120
1,100
160
Assuming no errors were made, compute the cash
balance per books on June 30 before any reconciliation
adjustments.
Page 1 of 3
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FAR.16
800
760
TEAM PRTC
Use the following information for the next four questions.
Shown below is the bank reconciliation for YOUR Company
for the month of May:
Balance per bank, May 31
Add: Deposits in transit
Total
Less: Outstanding checks
Bank credit recorded in error
Cash balance per books, 5/31
P14,000
5,000
P75,000
12,000
87,000
Deposits in transit, beg
Collections this period
Total
Deposits credited by bank this period
Deposits in transit, end
19,000
P68,000
SOLUTION GUIDE #14:
The bank statement for the month of June contains the
following data:
Total deposits
Total charges, including an NSF check of
P4,000 and a service charge of P200
P55,000
48,000
All outstanding checks on May 31, including the bank
credit, were cleared in the bank in June.
There were outstanding checks of P15,000 and deposits in
transit of P19,000 on June 30.
9. Cash receipts per books in June is
a. P74,000
c. P62,000
b. P43,000
d. P48,000
P
(
P
P
(
P
xx
xx
xx
xx)
xx
xx
xx
xx
xx)
xx
Use the following information for the next two questions.
Poni Company's accountant is preparing its October bank
reconciliation and has collected the following data:
Per Books
P28,100
28,600
3,500
800
Per Bank
P26,000
27,000
4,800
500
Additionally, deposits in transit and outstanding checks on
October 31 were, P7,800 and P4,100 respectively.
11. Cash balance per books as of June 30 is
a. P82,000
c. P86,000
b. P85,200
d. P90,200
15. The deposits in transit as of September 30 is
a. P4,400
c. P 7,000
b. P5,700
d. P11,200
12. Cash balance as adjusted as of June 30 is
a. P82,000
c. P86,000
b. P85,200
d. P90,200
Use the following information for the next two questions.
Banaue Company deposits all receipts and makes all
payments by check. The following information is available
from the cash records:
Month of June Results
Balance June 30
June deposits
June checks
June note collected (not
included in June deposits)
June bank service charge
June NSF check of a customer
returned by the bank
(recorded by bank as a
charge)
Outstanding checks, beg
Checks issued this period
Total
Checks paid by bank this period
Outstanding checks, end
Oct. receipts
Oct. disbursements
Note collected by bank
Service charge
10. Cash disbursements per books in June is
a. P90,200
c. P44,800
b. P42,800
d. P39,800
May 31 Bank Reconciliation
Balance per bank
Add: Deposits in transit
Deduct: Outstanding checks
Balance per books
SOLUTION GUIDE #13:
P262,460
21,000
( 38,000)
P245,460
16. The outstanding checks as of September 30 is
a. P2,200
c. P2,800
b. P2,500
d. P5,400
SOLUTION GUIDE #15:
Deposits in transit, beg
Collections this period
Total
Deposits credited by bank this period
Deposits in transit, end
P
(
P
xx
xx
xx
xx)
xx
SOLUTION GUIDE #16:
Per Bank
P279,950
107,840
111,000
Per Books
P303,550
158,890
100,800
30,000
350
-0-0-
9,000
-0-
Outstanding checks, beg
Checks issued this period
Total
Checks paid by bank this period
Outstanding checks, end
P
(
P
xx
xx
xx
xx)
xx
13. The deposits in transit as of June 30 is
a. P72,050
c. P51,050
b. P70,250
d. P42,050
14. The outstanding checks as of June 30 is
a. P27,800
c. P37,150
b. P28,700
d. P31,750
- done -
Page 2 of 3
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FAR.16
TEAM PRTC
ILLUSTRATIVE PROBLEM
The Cash in Bank account of Dollar Company disclosed a
balance of P203,000 as of December 31.
The bank
statement as of December 31 showed a balance of
P106,000. Upon comparing the bank statement with cash
records, the following facts were developed:
f) CM – Note collected, net
h) Outstanding checks
( 35,000)
a.
i) Erroneous bank credit
( 20,000)
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
The company’s account was charged on December 26
for a customer’s uncollectible check amounting to
P30,000.
A two-month, 17% P60,000 customer’s note dated
October 25, discounted on November 25, was
dishonored on December 25, and the bank charged the
company P62,000, which included a protest fee of
P2,000.
A customer’s check for P15,400 was entered as
P14,500 by both the depositor and the bank but was
later corrected by the bank.
Check no. 142 for P12,425 was entered in the cash
disbursements journal at P12,245 and check no. 156
for P3,290 was entered as P32,900.
Bank service charges of P1,830 for December were not
yet recorded on the books.
A bank memo stated that a customer’s note for
P25,000 and interest of P1,000 had been collected on
December 28; and the bank charged P500. (No entry
was made on the books when the note was sent to the
bank for collection).
Receipts on December 31 for P24,000 were deposited
on January 2.
The following checks were outstanding on Dec. 31:
No. 123
P3,000
No. 154
P4,000
143 *
2,000
157
6,000
144
7,000
159
7,000
147
3,000
169
5,000
* Certified by the bank in December
A deposit of P20,000 was recorded by the bank on
December 5, but it should have been recorded for
Dolor Company rather than Dollar Company.
Petty cash of P10,000 was included in the Cash in Bank
balance.
Proceeds from cash sales of P60,000 for December 18
were stolen. The company expects to recover this
amount from the insurance company.
The cash
receipts were recorded in the books, but no entry was
made for the loss.
The December 21 deposit included a check for P20,000
that had been returned on December 15 marked NSF.
Dollar Company had made no entry upon return of the
check. The redeposit of the check on December 21
was recorded in the cash receipts journal of Dollar
Company as a collection on account.
g) Deposits in transit
10,000
k) Stolen receipts
60,000
l) Double counted deposit
20,000
Balance per book, 12/31
Balance per book, 12/31
P203,000
a) DM – Customer’s uncoll. check
( 30,000)
b) DM – Dishonored disc. NR
( 62,000)
c) Error – Understated collections
900
d) Error – Overstated payments
29,430
e) DM – service charge
(
f) CM – Note collected, net
1,830)
25,500
g) Deposits in transit
( 24,000)
h) Outstanding checks
35,000
i) Erroneous bank credit
20,000
j) Petty cash fund
( 10,000)
k) Stolen receipts
( 60,000)
l) Double counted deposit
( 20,000)
Balance per bank, 12/31
P106,000
SOLUTION (Adjusted Balance Method):
Bank
Unadjusted balance, 12/31
P106,000
b) DM – Dishonored disc. NR
(62,000)
c) Error – Understated collections
900
29,430
( 1,830)
f) CM – Note collected, net
g) Deposits in transit
P106,000
a) DM – Customer’s uncoll. check
30,000
b) DM – Dishonored disc. NR
62,000
c) Error – Understated collections
(
900)
d) Error – Overstated payments
( 29,430)
P203,000
(30,000)
e) DM – service charge
SOLUTION (Bank to Book):
Books
a) DM – Customer’s uncoll. check
Prepare a bank reconciliation using:
a) Bank to book method;
b) Book to bank method; and
c) Adjusted balance method
Page 3 of 3
P203,000
SOLUTION (Book to Bank):
d) Error – Overstated payments
e) DM – service charge
24,000
j) Petty cash fund
REQUIRED:
Balance per bank, 12/31
( 25,500)
25,500
24,000
h) Outstanding checks
( 35,000)
i) Erroneous bank credit
( 20,000)
j) Petty cash fund
(10,000)
k) Stolen receipts
(60,000)
l) Double counted deposit
(20,000)
Adjusted balance, 12/31
1,830
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P75,000
P75,000
J - end of FAR.16 - J
FAR.16