Sample Problem: Bank Reconciliation

The cash records of Company X show the following for the month of January.

Cash Receipts Cash Disbursements

Jan. 5 60,000 Jan. 6 Check No. 721 5,000

13 20,000 7 Check No. 722 10,000
25 30,000 10 Check No. 723 18,000
31 40,000 14 Check No. 724 2,000
150,000 28 Check No. 725 37,000
31 Check No. 726 28,000
100,000

The balance of the Cash in Bank of the depositor’s book is Php 50,000.

Bank Statement

The following is the bank statement for January received from the First Bank:

In account with No. 775

Company X FIRST BANK
Quezon City Manila, Philippines

Date Check No. Withdrawals Deposits Balance

Jan. 6 60,000 60,000

8 721 5,000 55,000
11 722 10,000 45,000
12 723 18,000 27,000
14 20,000 47,000
17 724 2,000 45,000
26 30,000 75,000
26 15,000 CM 90,000
30 5,000 RT 85,000
30 1,000 SC 84,000

Code: CM- Credit Memo SC- Service Charge

DM- Debit Memo RT- Returned Check

The following data are gathered in connection with the CM and DM appearing on the bank statement:

a. The CM of Php 15,000 on January 26 represents proceeds of note collected by the bank in favor
of the company.
 b. The RT of Php 5,000 represents check of customer deposited previously but returned by the bank
because of “No Sufficient Fund” or NSF.

Solution:

Balance per Book 50,000

Add: Note collected by bank 15,000
Total 65,000
Less: NSF Customer Check 5,000
Service Charge 1,000 6,000
Adjusted Book Balance 59,000

Balance per Bank 84,000

Add: Deposit in Transit 40,000
Total 124,000
Less: Outstanding Checks:
Check No. 725 37,000
Check No. 726 28,000 65,000
Adjusted Bank Balance 59,000

Adjusting Entries:

a. To record the note collected by bank:

Cash in Bank 15,000

Notes Receivable 15,000

b. To record the NSF customer check:

Accounts Receivable 5,000

Cash in Bank 5,000

c. To record the bank service charge:

Bank Service Charge 1,000

Cash in Bank 1,000