Bank Reconciliation

Classroom Activity

Problem 1
Information from the records and bank statement and of Matrix, Inc. as of July 31, 2018 is set forth
below

Cash balance per bank, July 31, 2018 P9,610

Cash balance per general ledger, July 31, 2018 7,430
Outstanding checks at July 31, 2018 2,417
Check mailed to the bank for deposit that had not reached
the bank by July 31, 2018 500
NSF check (from a customer for a payment on account)
returned by bank 281
July interest earned per bank statement 30
Check no. 781 for supplies expense cleared the bank for P240,
but was erroneously recorded in the books at P268
Deposit by Acme Company erroneously credited by the bank to our account 486

1. What is the adjusted cash balance?

2. Prepare the necessary journal entries.

Problem 2
Prepare the bank reconciliation for Donna’s Day Care using the following information:

Cash balance per bank, June 30, 2018 P5,586

Cash balance per general ledger, June 30, 2018 5,055
Outstanding checks, June 30, 2018 1,816
Deposit in transit, June30, 2018 750
NSF check (from a customer for a payment on account) returned by bank 450
June interest earned per bank statement 15
Check no. 800 in payment of accounts payable cleared the bank for P1,100,
but was erroneously recorded in the books at P800
Deposit in amount of P6,000, recorded properly on books, erroneously credited on
bank statement as P6,200

What is the adjusted cash in bank?

Problem 3
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 desiredinformation.

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 20,000

What is the cash balance per bank statement?

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

Problem 4

Stellar Company provided the bank statement for the month of Decemberwhich 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

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?

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
Service charge (12,000)
Book error (64,000-46,000) (18,000)

Adjusted book balance 2,500,000

Problem 5

Rancor Company provided the following information for the month of December:

Balance per bank statement 4,000,000

Balance per cash 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 6months
at 12%, not recorded on company books 940,000
Customer’s check charged back by bank for absence of counter signature 50,000
Deposit of P100,000 incorrectly recorded by bank as 10,000
Check of Rancid Company charged by bank against Rancor Company account 150,000
Customer’s note collected by bank in favor of Rancor Company.
Face 400,000
Interest 40,000
Total 440,000
Collection fee 5,000 435,000

Erroreous debit memo of December 28, to charge company’s

Account with settlement of bank loan 200,000
Deposit of Rancid company credited to Rancor account 300,000

Requirement: Prepare a bank reconciliation for Rancid Company

 Book Bank
Balance per book 2,700,000 Balance per bank 4,000,000
Service Charge -10,000 Outstanding Checks -600,000
Proceeds of loan 940,000 Deposit in Transit 475,000
Check with no counter signature -50,000 Bank error - deposit 90,000
Customer's note 435,000 Bank error - check 150,000
Bank error - debit memo 200,000
Bank error - deposit (Rancid) -300,000
Adjusted cash balance 4,015,000 Adjusted cash balance 4,015,000

Problem 6

Pathetic Company revealed the following facts on August 31:

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

The bank Statement showed the following charges:

a. Service charge for August 5,000
b. NSF check received from a customer 85,000

The cashier-bookkeeper had misappropriated P30,000 and an additional P10,000 by charging sales
discounts and crediting accounts receivable.

The stub for check number 765 and the invoice relating thereto show that it was for P50,000. ok

The check was recorded incorrectly in the cash disbursements journal as P70,000. The 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.

Required: Prepare a bank reconciliation on August 31.

Pathetic Company revealed the following facts on August 31:

Balance of cash in bank account 1,300,000

Balance of bank statement 1,200,000
Outstanding checks, August 31:
Number 555 10,000 = 0
761 55,000
762 40,000
763 25,000
764 65,000
765 70,000 – 20,000 = 50,000 = 235,000 (bank -)
Receipts of August 31, deposited September 1 275,000 (DIT – bank +)

The bank Statement showed the following charges:

c. Service charge for August 5,000 (book -)
d. NSF check received from a customer 85,000 (book -)
The cashier-bookkeeper had misappropriated P30,000 and an additional P10,000 by charging sales
discounts and crediting accounts receivable.

The stub for check number 765 and the invoice relating thereto show that it was for P50,000. ok

The check was recorded incorrectly in the cash disbursements journal as P70,000. The check was
drawn in payment of an account payable. Dr. CIB Cr. AP = 20,000 (book +)

Payment has been stopped on check number 555 which was drawn in payment of an account payable.
The payee cannot be located. Dr. CIB Cr. AP = 10,000 (book +)

Required: Prepare a bank reconciliation on August 31.

Book Bank
Balance per book 1,300,000 Balance per bank 1,200,000
Service Charge -5,000 Outstanding Checks -235,000
NSF -85,000 Deposit in Transit 275,000
Book error 20,000
Check 555 - stop payment 10,000
Adjusted cash balance 1,240,000 Adjusted cash balance 1,240,000