Chapter 2 Bank Reconciliation
Problem 2-1 (IAA)
1. Prepare a bank reconciliation using adjusted balance method.
Apathy Company
Bank Reconciliation
December 31, 20A
Book balance
Add: Credit memo from note collected
Total
Less: Debit memo (service charge)
Adjusted book balance
65,000
30,000
95,000
(2,000)
93,000
Bank balance
Add: Deposit in transit
Total
Less: Outstanding checks
No. 102
No.105
No. 107
Adjusted bank balance
108,000
80,000
188,000
15,000
30,000
50,000
(95,000)
93,000
2. Prepare adjusting entries.
Dec. 31
Cash in bank
Notes receivable
30,000
30,000
Bank service charge
Cash in bank
2,000
2,000
Problem 2-2 (IAA)
1. Prepare a bank reconciliation statement on December 31.
Sensible Company
Bank Reconciliation
December 31, 20A
Book balance
Add: Credit memo from note collected
Total
Less: Debit memo (service charge)
NSF Check
Book error (52,000-25,000)
Adjusted book balance
Bank balance
Add: Deposit in transit
Erroneous bank debit
Total
Less: Outstanding checks
No. 770
No. 775
110,000
45,000
95,000
(5,000)
(10,000)
(27,000)
(42,000)
113,000
135,000
60,000
8,000
4
0
(20,000)
(30,000)
68,000
203,000
4
0
No. 777
Adjusted bank balance
(40,000)
(90,000)
113,000
2. Prepare adjusting entries on December 31.
Dec. 31
Cash in bank
Bank service charge
Notes receivable
45,000
5,000
50,000
Bank service charge
Accounts receivable
Accounts payable
Cash in bank
5,000
10,000
27,000
42,000
Problem 2-3 (IAA)
1. Prepare bank reconciliation on February 28, showing theh book balance before and
after adjustment.
Xanthous Company
Bank Reconciliation
February 28, 20A
Book balance
Add: Credit memo from note collected
Total
Less: Debit memo (service charge)
Adjusted book balance
2,840,000
270,000
3,110,000
(5,000)
3,105,000
Bank balance
Add: Deposit in transit
Total
Less: Outstanding checks
No. 116
No.122
No. 124
No. 125
Adjusted bank balance
3,265,000
450,000
3,715,000
60,000
180,000
120,000
250,000
610,000
3,105,000
2. Prepare journal entries to record the adjustments that are indicated by the bank
reconciliation.
Dec. 31
Cash in bank
Bank service charge
Notes receivable
Interest income
270,000
10,000
250,000
30,000
Bank service charge
Cash in bank
5,000
5,000
4
0
4
0
Problem 2-4 (IAA)
1. Prepare a corrected bank reconciliation.
Chivalry Company
Bank Reconciliation
March 31, 20A
Book balance
Add: Collection of note
Interest on note
Book error on check no. 175
Total
Less: Bank service charge
Payment for light and water
NSF check
Adjusted book balance
1,405,000
2,500,000
150,000
45,000
5,000
245,000
220,000
Bank balance
Add: Deposit in transit
Total
Less: Bank error
Outstanding checks
Adjusted bank balance
2,695,000
4,100,000
470,000
3,630,000
5,630,000
750,000
6,380,000
1,100,000
1,650,000
2,750,000
3,630,000
2. Prepare adjusting entries on March 31.
Dec. 31
Cash in bank
Notes receivable
Interest income
Accounts payable
2,695,000
Bank service charge
Light and water
Accounts receivable
Cash in bank
5,000
245,000
220,000
2,500,000
150,000
45,000
470,000
Problem 2-5 (IAA)
1. Compute the balance in the cash account before corrections and prepare adjusting
entries.
Zodiac Company
Bank Reconciliation
March 31, 20A
Balance per book -April 30
Add: Credit memo for note collected
Outstanding checks:
No. 1331
No. 1332
No. 1334
No. 1335
Total
4
Less: Bank service charge
NSF Check
1,100,000
60,000
40,000
30,000
60,000
10,000
0
5,000
25,000
200,000
1,300,000
4
0
Undeposited collections
Adjusted balance per bank -April 30
270,000
(300,000)
1,000,000
Adjusting entries:
Dec. 31
Cash in bank
Notes receivable
60,000
Bank service charge
Accounts receivable
Cash in bank
5,000
25,000
60,000
30,000
Problem 2-6 (IAA)
1. Compute the balance in the cash account before corrections and prepare adjusting
entries.
Balance per bank statement, January 31
Add: Collections on Jan 31 but undeposited
NSF check received from a customer
Bank debit memo for safety deposit box
Omitted check payment
Sub total
Less: Erroneous recording of creditor’s check
Erroneous recording of customer’s checks
Checks outstanding on January 31
Balance per book, Jan 31
3,500,000
550,000
50,000
5,000
125,000
4,230,000
270,000
180,000
650,000
3,130,000
Adjusting Entries:
Accounts receivable
Cash
50,000
Miscellaneous expense
Cash
5,000
Cash
270,000
50,000
5,000
Accounts payable
270,000
Cash
180,000
Accounts receivable
180,000
Accounts payable
Cash
125,000
125,000
Problem 2-7 (IAA)
1. Prepare a bank reconciliation using the adjusted balance approach.
Rancor Company
Bank Reconciliation
December 31, 20A
Balance per book
Add: Proceeds of bank loan
Note collected by bank
Total
2,700,000
4
0
940,000
435,000
1,375,000
4,075,000
4
0
Less: Service charge
Customer’s check charged back
Adjusted book balance
10,000
50,000
Balance per bank
Add: Deposit in transit
Incorrect deposit
Erroneous bank charge
Erroneous debit memo
Total
Less: Outstanding checks
Erroneous bank credit
Adjusted bank balance
60,000
4,015,000
4,000,000
475,000
90,000
150,000
200,000
600,000
300,000
915,000
4,915,000
900,000
4,015,000
2. Prepare adjusting entries on December 31.
Dec. 31
Cash
Discount on Notes Payable
Notes Payable
940,000
60,000
Cash
Collection Fee
Notes Receivable
Interest Revenue
435,000
5,000
Accounts Receivable
Cash
50,000
Bank Service Charge
Cash
10,000
1,000,000
400,000
40,000
50,000
10,000
Problem 2-8 (IAA)
1. Prepare bank reconciliation on December 31.
Alpha Company
Bank Reconciliation Statement
For the month ended December 31
Cash balance per ledger
Add: Proceeds of bank loan discounted
Sub-total
Less: Correction of error
Adjusted cash balance per ledger
4,990,000
516,000
5,506,000
180,000
5,326,000
Cash balance per bank
Add: Undeposited collections on December 31
Correction of error arising from charging
Omega company check against Alpha Company
Sub-total
Less: Correction of error arising from crediting Omega Company
Outstanding checks
Adjusted cash balance per bank
5,500,000
300,000
50,000
150,000
6,000,000
130,000
544,000
5,326,000
2. Prepare one journal entry only necessary to adjust the cash account.
4
Cash
0
516,000
4
0
Discount on notes payable
Notes payable
84,000
Accounts payable
Cash
180,000
600,000
180,000
Problem 2-9 (IAA)
1. Prepare a bank reconciliation on August 31 using the adjusted balance method.
Balance per book
Add: Overstatement of check no. 765
Check no. 555 stopped for payment
Total
Less: Service charge
NSF Check
Adjusted book balance
1,300,000
20,000
10,000
1,330,000
5,000
85,000
1,240,000
Balance per bank
Add: Undeposited collections
Total
Less: Outstanding checks:
No. 761
No. 762
No. 763
No. 764
No. 765
Adjusted bank balance
1,200,000
275,000
1,475,000
55,000
40,000
25,000
65,000
50,000
1,240,000
2. Prepare adjusted entries to correct the cash in bank account on August 31.
Aug 31
Accounts receivable
Loss on cashier
Sales
Sales discount
Misappropriation on cashier
30,000
10,000
Cash in bank
Accounts payable
Overstatement in check #765
20,000
Cash in bank
Accounts payable
Payment stopped
10,000
Accounts receivable
Cash in bank
NSF Check
85,000
Bank service charge
Cash in bank
Service change from bank
5,000
4
30,000
10,000
20,000
10,000
85,000
0
5,000