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    Lazy Leath
    The document provides details from a bank reconciliation for Hector Company for December 2018. It lists 14 items that require adjustments to reconcile the bank balance per statement to the balance per the company's books. Key details include: (1) The principal amount of a loan obtained in December was P50,000. (2) Prepaid interest as of December 31, 2018 was P1,875. (3) A collection fee of P625 was charged on a note collected by the bank. (4) After all adjustments, the adjusted cash in bank balance as of December 31, 2018 was P14,344.

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    Uploaded by

    Lazy Leath
    21 views4 pages
    The document provides details from a bank reconciliation for Hector Company for December 2018. It lists 14 items that require adjustments to reconcile the bank balance per statement to the balance per the company's books. Key details include: (1) The principal amount of a loan obtained in December was P50,000. (2) Prepaid interest as of December 31, 2018 was P1,875. (3) A collection fee of P625 was charged on a note collected by the bank. (4) After all adjustments, the adjusted cash in bank balance as of December 31, 2018 was P14,344.

    Original Description:

    some notes in accounting

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    The document provides details from a bank reconciliation for Hector Company for December 2018. It lists 14 items that require adjustments to reconcile the bank balance per statement to the balance per the company's books. Key details include: (1) The principal amount of a loan obtained in December was P50,000. (2) Prepaid interest as of December 31, 2018 was P1,875. (3) A collection fee of P625 was charged on a note collected by the bank. (4) After all adjustments, the adjusted cash in bank balance as of December 31, 2018 was P14,344.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    21 views4 pages

    2

    Uploaded by

    Lazy Leath
    The document provides details from a bank reconciliation for Hector Company for December 2018. It lists 14 items that require adjustments to reconcile the bank balance per statement to the balance per the company's books. Key details include: (1) The principal amount of a loan obtained in December was P50,000. (2) Prepaid interest as of December 31, 2018 was P1,875. (3) A collection fee of P625 was charged on a note collected by the bank. (4) After all adjustments, the adjusted cash in bank balance as of December 31, 2018 was P14,344.

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    You are on page 1of 4

    Bank Reconciliation:

    Unadjusted to Adjusted Balances Format

    In auditing the HECTOR COMPANY, you obtained the bank statement, canceled checks, and
    other

    memoranda which relate to the company’s bank account for December 2018. In reconciling the
    bank

    balance with that shown on the company's books, you observed the facts set forth below;

    (1) Balance per bank statement, Dec. 31, 2018 P47,174

    (2) Balance per books, Dec. 31, 2018 19,289

    (3) Outstanding checks, Dec. 31, 2018 63,000

    (4) Receipts of Dec. 31, 2018, deposited Jan. 2, 2019 6,260

    (5) Service charge for November, per bank

    memo of Dec. 15, 2018 1,000

    (6) Proceeds of bank loan, Dec, 15, 2018,

    discounted for 3 months at 18% per

    annum, omitted from company books 47,750

    (7) Deposit of Dec. 22,2018, omitted from

    Bank statement 9,170

    (8) Check of Milano company, returned on

    Dec. 21, 2018, for absence of counter-signature

    and redeposited with complete signature on

    Jan. 3, 2019, no entry on the books having been

    made for the return or redeposit 77,320

    (9) Error on bank statement in entering deposit

    of Dec. 18, 2018:

    Correct amount PI,600

    Entered in statement 160 1,440


    (10) Check No. 021261 of Yek Company,

    charged by bank in error to

    company's account 13,600

    (11) Proceeds of note of Harthur Co.,

    collected by bank, Dec. 10, 2018, not

    entered in cash book (principal amount of

    P25,OOO plus interest of P 1,125

    less collection fee) 25,625

    (12) Erroneous debit memo of Dec. 28, 2018,

    to charge companys account with

    settlement of bank loan which was paid by

    check no. 112170 on same date 5,000

    (13) Error on bank statement in entering

    deposit of Dec. 4, 2018:

    Entered as P14,200.62

    Correct amount 12,400.62 1,800

    (14) Deposit of Bunso Co. of Dec. 2,

    credited in error to this company 3,500

    1. What is the principal amount of the loan obtained from bank in December?

    A. P50,OOO C. P48,125

    B. P47,750 D. P49,625

    2. What amount of prepaid interest should on Hectors December 31, 2018, statement

    A. P2,250 C. P375

    B. P0 D. P1,875

    3. The amount of collection fee

    A. P625 C. P500
    B. P1,625 D. P0

    4. What is the adjusted Cash in bank balance as of December 31, 2018?

    A. P14,344 C. PI 7,944

    B. P11,464 D. P9,344

    5. The Cash in bank per ledger as of December 31, 2018, should be increased (decreased) by

    A. P4,945 C. P(4,945)

    B. P5,945 D. P(5,945)

    SOLUTION 1-23

    1. Proceeds = Principal -Interest

    47,750=P - (Px180/0 x 3/12)

    47,750=P - 0.045P

    47/750=0.955 P

    P= 47,750 + 0.955

    P= P50,000

    Answer: A

    2. Prepaid interest, Dec.31 (2/250 x 2.5/3) PI ,875

    3. Principal

    Interest income

    Maturity value

    Proceeds

    Answer: C

    4. Book Bank

    Unadjusted balances P19,289 P47,174

    Outstanding checks (63,000)

    Receipts of 12/31/18, deposited 1/02/19 6,260


    Service charge for November (1,000)

    Proceeds ofbank loan 47,750

    Deposit of 12/22/18, omitted from bank

    Statement 9,170

    Check of Milano Company, charged back (77,320)

    Error in entering deposit of 12/18/18 1,440

    Check of Yek Company charged in

    error to Hector Company 13,600

    Proceeds of note of Harthur Co. 25,625

    Erroneous debit memo of 12/28/18,

    charged by bank in settlement

    of loan paid by check no. 112170 5,000

    Error in entering deposit of 12/04/18 (1,800)

    Deposit of Bunso Co., credited in error

    to Hector Company _________ (3,500)

    ADJUSTED BALANCES P14,344 P14,344

    Answer: A

    5. Adjusted Cash in bank balance (see no, 4) P14,344

    Cash in bank balance per ledger 19,289

    Net credit adjustment— decrease P 4,945

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