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BANK Reconciliation TEST BANK
Bachelor of science civil engineering (University of Cebu)
Studocu is not sponsored or endorsed by any college or university
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Junior Philippine Institute of Accountants
University of Cebu – Banilad Chapter
BANK RECONCILIATION TEST BANK
I.
True or False
_____1. A debit balance in Bank account in the Cash book appears as a credit
balance in the Bank statement.
_____2. A Bank reconciliation statement is not part of the double entry system.
_____3. An overdraft in the bank statement is included in the balance sheet as a
current asset.
_____4. If the bank reconciliation starts with a debit balance from the Bank account
in the Cash book the bank charges appearing in the Bank statement would be added.
_____5. A credit entry in pass book means a credit entry in cash book.
_____6. A reconciliation statement is prepared because the Bank account in the
cash book is always correct and the bank statement is not.
_____7. Bank Reconciliation Statement is a statement prepared by a bank.
_____8. Cheques deposited in to bank are recorded on debit side of the bank
column of Cash book.
_____9. Direct deposits in the bank by a customer would increase the balance
shown by the pass book.
_____10. Savings account is an account where a passbook is required in making
deposits and withdrawals.
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II.
Multiple Choice
1. Which of the following is an appropriate reconciling item to the balance per bank
in a bank reconciliation?
a.
Bank service charge.
b.
Deposit in transit.
c.
Bank interest.
d.
Chargeback for NSF check.
2. The journal entries for a bank reconciliation
a.
b.
c.
d.
are taken from the "balance per bank" section only.
may include a debit to Office Expense for bank service charges.
may include a credit to Accounts Receivable for an NSF check.
may include a debit to Accounts Payable for an NSF check.
3. When preparing a bank reconciliation, bank credits are
a.
b.
c.
d.
added to the bank statement balance.
deducted from the bank statement balance.
added to the balance per books.
deducted from the balance per books.
4. If the month-end bank statement shows a balance of $72,000, outstanding
checks are $24,000, a deposit of $8,000 was in transit at month end, and a check
for $1,000 was erroneously charged by the bank against the account, the correct
balance in the bank account at month end is
a.
$55,000.
b.
$57,000.
c.
$41,000.
d.
$87,000.
5. In preparing its bank reconciliation for the month of April 2012, Henke, Inc. has
available the following information.
Balance per bank statement, 4/30/12
NSF check returned with 4/30/12 bank statement
Deposits in transit, 4/30/12
Outstanding checks, 4/30/
Bank service charges for April
What should be the correct balance of cash at April 30, 2012?
a.
$34,370
b.
$33,940
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$34,140
450
5,000
125,200
20
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c.
d.
$33,490
$33,470
6. Finley, Inc.’s checkbook balance on December 31, 2012 was $42,400. In addition,
Finley held the following items in its safe on December 31.
(1)
A check for $900 from Peters, Inc. received December 30, 2012, which
was not included in the checkbook balance.
(2)
An NSF check from Garner Company in the amount of $1,800 that had
been deposited at the bank, but was returned for lack of sufficient funds on
December 29. The check was to be redeposited on January 3, 2013. The original
deposit has been included in the December 31 checkbook balance.
(3)
Coin and currency on hand amounted to $2,900.
The proper amount to be reported on Finley's balance sheet for cash at December
31, 2012 is
a.
$42,600.
b.
$40,800.
c.
$44,400.
d.
$43,550.
7. The cash account shows a balance of $90,000 before reconciliation. The bank
statement does not include a deposit of $4,600 made on the last day of the
month. The bank statement shows a collection by the bank of $1,880 and a
customer's check for $640 was returned because it was NSF. A customer's check
for $900 was recorded on the books as $1,080, and a check written for $158 was
recorded as $194. The correct balance in the cash account was
a.
$91,024.
b.
$91,096.
c.
$91,456.
d.
$95,696.
8. In preparing its May 31, 2012 bank reconciliation, Catt Co. has the following
information available:
Balance per bank statement, 5/31/12
Deposit in transit, 5/31/12
Outstanding checks, 5/31/12
Note collected by bank in May
$35,000
5,400
4,900
1,250
The correct balance of cash at May 31, 2012 is
a.
$40,400.
b.
$34,250.
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c.
d.
$35,500.
$36,750.
9. In preparing its August 31, 2012 bank reconciliation, Bing Corp. has available the
following information:
Balance per bank statement, 8/31/12
Deposit in transit, 8/31/12
Return of customer’s check for insufficient funds, 8/30/12
Outstanding checks, 8/31/12
Bank service charges for August
$18,650
3,900
600
2,750
100
At August 31, 2012, Bing's correct cash balance is
a. $19,800.
b. $19,200.
c. $19,100.
d. $17,500.
10.
Tresh, Inc. had the following bank reconciliation at March 31, 2012:
Balance per bank statement, 3/31/12
$37,200
Add: Deposit in transit
10,300
47,500
Less: Outstanding checks
12,600
Balance per books, 3/31/12
$34,900
Data per bank for the month of April 2012 follow:
Deposits
$43,700
Disbursements
49,700
All reconciling items at March 31, 2012 cleared the bank in April. Outstanding checks
at April 30, 2012 totalled $6,000. There were no deposits in transit at April 30, 2012.
What is the cash balance per books at April 30, 2012?
a. $25,200
b. $28,900
c. $31,200
d. $35,500
11. If the balance shown on a company's bank statement is less than the correct cash
a.
b.
c.
d.
balance, and neither the company nor the bank has made any errors, there must
be
deposits credited by the bank but not yet recorded by the company.
outstanding checks.
bank charges not yet recorded by the company.
deposits in transit.
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12. If the cash balance shown in a company's accounting records is less than the
a.
b.
c.
d.
correct cash balance, and neither the company nor the bank has made any errors,
there must be
deposits credited by the bank but not yet recorded by the company.
deposits in transit.
outstanding checks.
bank charges not yet recorded by the company.
13. Bank statements provide information about all of the following except
a.
b.
c.
d.
checks cleared during the period.
NSF checks.
bank charges for the period.
errors made by the company.
14. Which of the following items would be added to the book balance on a bank
reconciliation?
a.
b.
c.
d.
15.
Outstanding checks
A check written for $63 entered as $36 in the accounting records
Interest paid by the bank
Deposits in transit
In preparing a bank reconciliation, interest paid by the bank on the account is
a. added to the bank balance.
b. subtracted from the bank balance.
c. added to the book balance.
d. subtracted from the book balance.
16.
In preparing a monthly bank reconciliation, which of the following items would
be added to the balance reported on the bank statement to arrive at the correct
cash balance?
a. Outstanding checks
b. Bank service charge
c. Deposits in transit
d. customer's note collected by the bank on behalf of the depositor
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17.
Bank reconciliations are normally prepared on a monthly basis to identify
adjustments needed in the depositor's records and to identify bank errors.
Adjustments should be recorded for
a. bank errors, outstanding checks, and deposits in transit.
b. all items except bank errors, outstanding checks, and deposits in transit.
c. book errors, bank errors, deposits in transit, and outstanding checks.
d. outstanding checks and deposits in transit.
18. Assume the following facts for Kurt Company: The month-end bank statement
shows a balance of $40,000; outstanding checks total $2,000; a deposit of
$8,000 is in transit at month-end; and a check for $400 was erroneously charged
against the account by the bank. What is the correct cash balance at the end of
the month?
a. $33,600
b. $34,400
c. $45,600
d. $46,400
19. In preparing the bank reconciliation of Crews Company for the month of July, the
following information is available:
Balance per bank statement, 7/31 .....................
Deposits in transit, 7/31 ............................
Outstanding checks, 7/31 .............................
Deposit erroneously recorded by bank to Crews
account, 7/18 ......................................
Bank service charges for July ........................
What is the correct cash balance at July 31?
a.
b.
c.
d.
$52,875
$54,375
$54,450
$54,825
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$54,075
9,375
8,625
375
75
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20. The August 31 bank statement of Kelvin Inc. showed a balance of $113,000.
Deducted in arriving at this amount was a customer's NSF check for $2,400 that
had been returned. Kelvin had received no prior notice concerning this check. In
addition to the bank statement, other records showed there were deposits in
transit totaling $17,200 and that outstanding checks totaled $10,800. What is the
cash balance per books at August 31 (prior to adjustments)?
a. $121,800
b. $119,400
c. $117,000
d. $115,400
21.
In preparing its bank reconciliation for the month of February, James Company
has available the following information:
Balance per bank statement, February 28 .................
Deposit in transit, February 28 .........................
Outstanding checks, February 28 .........................
Check erroneously deducted by bank from James' account,
February 10 ...........................................
Bank service charges for February .......................
$18,025
3,125
2,875
125
25
What is the corrected cash balance at February 28?
a.
b.
c.
d.
22.
$18,125
$18,150
$18,275
$18,400
Ramos Company had the following bank reconciliation at March 31:
Balance per bank statement, 3/31 ........................
Add: Deposit in transit .................................
Less: Outstanding checks ................................
Balance per books, 3/31 .................................
$ 93,000
20,600
$113,600
(25,200)
$ 88,400
Data per bank statement for the month of April follow:
Deposits ..............................................
Disbursements .........................................
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$116,800
99,400
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All reconciliation items at March 31 cleared through the bank in April. Outstanding
checks at April 30 totaled $15,000. What is the amount of cash disbursements per books
in April?
a.
b.
c.
d.
$89,200
$99,400
$109,600
$114,400
III.
Problems
1. The information below is from the books of the Seminole Corporation on June
30:
Balance per bank statement ..............................
$11,164
Receipts recorded but not yet deposited in the bank .....
Bank charges not recorded ...............................
1,340
16
Note collected by bank and not recorded on books ........
1,120
Outstanding checks ......................................
1,100
NSF checks--not recorded on books nor redeposited .....
160
Assuming no errors were made, compute the cash balance per books on June 30 before
any reconciliation adjustments.
2.
The books of Steve's Service, Inc. disclosed a cash balance of $68,757 on June
30. The bank statement as of June 30 showed a balance of $54,780. Additional
information that might be useful in reconciling the two balances follows:
(a) Check number 748 for $3,000 was originally recorded on the books
as $4,500.
(b) A customer's note dated March 25 was discounted on April 12. The
note was dishonored on June 29 (maturity date). The bank charged
Steve's account for $14,265, including a protest fee of $42.
(c) The deposit of June 24 was recorded on the books as $2,895, but it
was actually a deposit of $2,700.
(d) Outstanding checks totaled $9,885 as of June 30.
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(e) There were bank service charges for June of $210 not yet recorded on
the books.
(f)
Steve's account had been charged on June 26 for a customer's NSF
check for $1,296.
(g) Steve properly deposited $600 on June 3 that was not recorded by
the bank.
(h) Receipts of June 30 for $13,425 were recorded by the bank on July 2.
(i)
A bank memo stated that a customer's note for $4,500 and interest of
$165 had been collected on June 27, and the bank charged a $36
collection fee.
Prepare a bank reconciliation statement, using the form reconciling bank and book
balances to the correct cash balance.
3.
The Eric Manufacturing Company received its bank statement for the month
ending May 31. The bank statement indicates a balance of $32,400. The cash
account as of the close of business on May 31 has a balance of $8,350. In
reconciling the balances, the following items are discovered.
(a) Collection by bank of note for $1,500 less collection fees of $250.
(b) Deposits in transit, $51,000.
(c) The bank charged the depositor $800 for overdrafts.
(d) Checks outstanding on May 31, $79,100.
(e) A canceled check issued to Scott Corp. for $4,500 was not recorded
on Eric Company's books.
Prepare a bank reconciliation statement. (Use the format of reconciling bank and
depositor figures to corrected cash balance.)
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4.
The accountant for the Goshen Company assembled the following data:
June 30
July 31
Cash account balance ........................
$ 15,822
$ 39,745
Bank statement balance ......................
107,082
137,817
8,201
12,880
27,718
30,112
Deposits in transit .........................
Outstanding checks ..........................
Bank service charge* ........................
72
60
Customer's check deposited July 10, returned
8,250
by bank on July 16 marked NSF, and
redeposited immediately; no entry made on
books for return or redeposit ..............
Collection by bank of company's notes
71,815
80,900
receivable .................................
* (Recorded on books in month following charge or
collection) ...........................
The bank statements and the company's cash records show these totals:
Disbursements in July per bank statement ................
$218,373
Cash receipts in July per Goshen's books ................
236,452
Checks written in July per Goshen's books ...............
212,529
Receipts in July per bank statement .....................
249,108
Prepare a 4-column bank reconciliation as of July 31, using the form that reconciles both
the book and bank balances to a correct cash amount.
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ANSWERS:
I.
True or False
1. True
2. False
3. False
4. False
5. False
6. False
7. False
8. True
9. True
10. True
II.
Multiple Choice
1. B
2. B
3. C
4. B
(72,000 – 24,000 + 8,000 + 1, 000 = 57,000)
5. B
(34,140 + 5,000 – 5,200 = 33,940)
6. C
(42,400 + 900 – 1,800 +2,900 = 44,400)
7. B
(90,000 + 1,880 – 640 – 180 + 36 = 91,096)
8. C
(35,000 + 5,400 – 4,900 = 35,500)
9. A
(18,650 + 3,900 – 2,750 = 19,800
10. A
(37,200 + 43,700 – 49,700 = 31,200 (4/30 balance per bank)
31,200 – 6,000 = 25,200)
11. D
12. A
13. D
14. C
15. C
16. C
17. B
18. D
19. C
20. A
21. D
22. A
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III.
Problems
Problem #1
Balance per bank statement, June 30 .....................
Add:
$11,164
Receipts not yet deposited .....................
1,340
Bank charges ...................................
16
NSF checks .....................................
160
$12,680
Deduct:
Note collected by bank .........................
1,120
Outstanding checks .............................
1,100
Balance per books before reconciliation adjustments .....
$10,460
Problem #2
Balance per bank statement, June 30 .........
Add:
$54,780
Deposits in transit ................
$13,425
Bank error--deposit not recorded ............
600
14,025
$68,805
Deduct:
Outstanding checks .................
9,885
Corrected bank balance ......................
$58,920
Balance per books, June 30 ..................
$68,757
Add:
$ 1,500
Book error--Check No. 748 ..........
Customer note collected by bank .............
4,629
6,129
$74,886
Deduct:
Dishonored note ....................
Book error--improperly recorded deposit .....
NSF check ...................................
Bank service charges ........................
$14,265
195
1,296
210
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15,966
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Corrected book balance ......................
$58,920
Problem #3
Balance per bank statement ..................
$32,400
Add deposits in transit .....................
51,000
$83,400
Deduct outstanding checks ...................
79,100
Corrected balance ...........................
$ 4,300
Balance per depositor's records .............
$ 8,350
Add note receivable collected by bank .......
1,250
$ 9,600
Deduct:
Overdrafts ................................
Book error--unrecorded check ..............
$ 800
4,500
Corrected balance ...........................
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5,300
$ 4,300
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Problem #4
Beginning
Ending
Reconciliation
Reconciliation
June 30
Receipts
Disbursement
s
July 31
$107,082
$249,108
$218,373
$137,817
Balance per bank
statement .......
Deposits in
transit:
June 30 ..........
8,201
July 31 ..........
(8,201)
12,880
12,880
Outstanding
checks:
June 30 ..........
(27,718)
(27,718)
July 31 ..........
30,112
(30,112)
NSF check
redeposited .....
(8,250)
(8,250)
Corrected bank
balance .........
$ 87,565
$245,537
$212,517
$120,585
Balance per books
$ 15,822
$236,452
$212,529
$ 39,745
Bank service
charge:
June .............
July .............
(72)
(72)
60
Collection of
notes receivable:
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(60)
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June .............
71,815
July .............
(71,815)
80,900
80,900
Corrected book
balance .........
$ 87,565
$245,537
$212,517
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$120,585