BANK RECONCILIATION

+Problem 1
Presented below are a series of unrelated situations:
1. The accountant of NARCISA Co. provided the following data in reconciling the April 30 cash in bank balance:
Balance per bank, April 30 P 130,350
Balance per book, April 30 85,000
Bank service charge 2,000
Deposits in transit 49,000
Outstanding checks 17,650
Notes collected by bank including P11,200 interest
(Narcisa Co. not yet informed) 136,000
Check drawn by XYZ Co. erroneously charged by
Bank to Narcisa’s Account 54,600

A transposition error was made in recording a sale and deposit in transit in the sales journal and cash receipts journal in April.
Correct amount P 13, 658
Recorded as P 16, 358

Requirement: What is the adjusted cash balance on April 30?

Solution:
Book Bank
Unadjusted balances 85,000 130,350
Bank service charge (2,000)
Deposits in Transit 49,000
Outstanding checks (17,650)
Collection of note 136,000
Erroneous bank debit 54,600
Transposition error (16,358-13,658) ( 2,700)
Adjusted balances 216,300 216,300

2. The following information is included in EMIL Corporation’s bank statement for the month of March:
A customer’s check has been marked NSF by the
Bank and returned P 13,000
Bank service charge for March 1,200

In comparing the bank statement to the company’s cash records, you found:
Outstanding checks on March 31 P 184,000
Deposits made but are not yet shown in the April bank statement 14,000

The deposits in transit and outstanding checks have been correctly taken up in the company’s books. You also found a
customer’s check for P17,400 that had not yet been deposited and had not yet been recorded in Emil’s books. Your client’s
book shows a cash balance of P36,420.

Requirement: What is Emil Corporation’s correct cash balance at March 31?

Solution:
Balance per books 36,420
Unrecorded and undeposited customer’s check 17,400
Bank service charge (1,200)
NSF Check (13,000)
Adjusted Balance 39,620

3. The following information pertains to a checking account of a company at June 30, 2014,
Balance per bank statement P 200,000
Interest earned for the second quarter 500
Outstanding checks 15,000
Customers’ checks returned for insufficient fund 5,000
Deposit in transit 25,000

Requirement: What is the adjusted cash balance at June 30, 2014?

Solution:
Balance per bank statement 200,000
Outstanding checks ( 15,000)
Deposit in transit 25,000
Interest earned (500)
NSF check 5,000
Balance per books at June 30, 2014 214,500
 BANK RECONCILIATION

4. A company is reconciling its bank statement with internal records. The cash balance per the company’s books is P45,000.
There are P5,000 of bank charges not yet recorded, P7,500 of outstanding checks, P12,500 of deposits in transit, and P15,000
of bank credits and collections not yet taken up in the company’s books.

Requirement: What is the cash balance per bank?

Solution:
Balance per books 45,000
Bank charges (5,000)
Outstanding checks 7,500
Deposits in transit (12,500)
Bank credits and collections 15,000
Balance per bank 50,000

5. A company shows a cash balance of P175,000 on its bank statement dated June 30. As of June 30, there are P55,000 of
outstanding checks and P37,500 deposits in transit.

Requirement: What is the correct cash balance on the company books as of June 30?

Solution:
Balance per bank statement 175,000
Outstanding checks (55,000)
Deposits in transit 37,500
Adjusted cash balance 157,500

6. The cash account shows a balance of P225,000 before reconciliation. The bank statement does not include a deposit of
P11,500 made on the last day of the month. The bank statement shows a collection by the bank of P4,700 and a customer’s
check for P1,600 was returned because it was NSF. A customer’s check for P2,250 was recorded on the books as 2,700 and a
check written for P395 was recorded as P485.

Requirement: What should be the correct cash balance?

Solution:
Balance per books 225,000
Bank collection 4,700
Customer’s NSF check ( 1,600)
Overstatement of cash receipt (2,700 – 2,250) ( 450)
Overstatement of cash disbursement (485 – 395) 90
Adjusted balance 227,740

7. On July 5, 2014, EMILIA Corp. received its bank statement for the month ending June 30. The statement showed a P209,500
balance while the cash account balance on June 30 was P35,000. In reconciling the balances, the auditor discovered that:
a. The June 30 collections of P176,000 were recorded on the books but were not deposited until July 1.
b. The bank service charges for the month of June totaled P3,000.
c. A paid check for P24,300 was entered incorrectly in the cash payments journal as P34,200.

Requirement: What is the total outstanding checks at June 30, 2014

Solution:
Balance per books, June 30, 2014 35,000
Bank service charge ( 3,000)
Overstatement of disbursement (34,200 – 24,300) 9,900
Adjusted cash balance 41,900

Balance per bank, June 30, 2014 209,500

Add: Undeposited collections 176,000
Total 385,500
Less: Adjusted cash balance 41,900
Outstanding checks, June 30,2014 343,600

Problem 2:
The bank statement for the current account of Ian Co. showed a December 31, 2014, balance of P585,284. Information that might be
useful in preparing the bank reconciliation is as follows:

a. Outstanding checks were P52,810

b. The December 31, 2014 cash receipts of P23,000 were not deposited in the bank until January 2, 2015.
c. One check written in payment of rent P8,940 was correctly recorded by the bank but was recorded by Ian Co. as P9,840
disbursement.
d. In accordance with prior authorization, the bank withdrew P18,000 directly from the current account as payment on a
mortgage note payable. The interest portion of that payment was P14,000. Ian Co. has made no entry to record the automatic
payment.
e. Bank service charges of P740 were listed on the bank statement.
 BANK RECONCILIATION

f. A deposit of P35,000 was recorded by the bank on December 12, but it did not belong to Ian Co.
g. The bank statement included a charge of P3,400 for a not-sufficient-fund checl. The company will seek payment form the
customer.
h. Ian Co. maintains an P8,000 petty cash fund that was appropriately reimbursed at the end of December.
i. According to instructions from Ian Co. on December 30, the bank withdrew P40,000 from the account and purchased
treasury bills for Ian Co. The company recorded the transactions in its books on December 31 when it received notice from
the bank. Half of the treasury bills mature in three months and other half in six months.

1. What is the cash in bank balance per books on December 31, 2014?
a. P549,714 b. P543,514 c. P534,914 d. P541,714

Solution:
Balance per bank statement 585,284
Outstanding checks ( 52,810)
Undeposited collections 23,000
Error in recording the rent check (9,840-8,940) (900)
Automatic mortgage payment 18,000
Bank service charges 740
Bank error-deposit incorrectly credited to Ian Co. (35,000)
NSK check 3,400
Balance per books 541,714

2. What is the adjusted cash in bank balance on December 31, 2014?

a. P520,474 b. P527,274 c. P518,674 d. P520,154

Solution:
Book Bank
Unadjusted balances 541,714 585,284
Outstanding checks (52,810)
Undeposited collections 23,000
Error in recording the rent check (9,840-8,940) 900
Automatic mortgage payment (18,000)
Bank service charges (740)
Bank error-deposit incorrectly credited to Ian Co. (35,000)
NSK check ( 3,400)
Adjusted balances 520,474 520,474

3. What amount would Ian Co. report as cash and cash equivalents in the current assets sections of the December 31, 2014,
statement of financial position?
a. P928,474 b. 728,474 c. P720,474 c. P735,274

Solution:
Current account balance 520, 474
Petty cash 8,000
Treasury Bills (400,000 x 1/2) 200,000
Total cash and cash equivalents 728,474

Problem 3:
The following data were taken from Garay’s check register for the month of April. Garay’s bank reconciliation for March showed one
outstanding check, check No. 178 for P2,150 (written on March 20) and one deposit in transit for P4,350 (made of March 31).

Date (2014) Item Checks Deposits Balance

April 1 Beginning balance 6, 150
1 deposit 26,167 32,317
1 Check No. 179 250 32,567
4 Check No. 180 10,673 21,898
27 Deposit 11,774 33,672
29 Check No. 181 13,217 20,490

The following is from Garay’s bank statement for April:

Date (2014) Item Checks Deposits Balance

April 1 Beginning balance 3,950
3 Check No. 179 250 3,700
3 Deposit 4,350 8,050
5 Check No. 180 10,673 ( 2,623)
5 Automatic Loan 8,150 5,527
5 Deposit 26,417 31,944
20 NSF Check 1,000 30,944
20 Service charge 600 30,344
30 interest 82 30,426

Assume that any errors or discrepancised you find are Garay’s, not the bank’s.
 BANK RECONCILIATION

What is the adjusted cash balance as of April 30?

a. P26,833 b. P26,838 c. P30,426 d. P26,872

Solution:
Book Bank
Unadjusted balances 20,490 30,426
Outstanding checks:
Check no. 178 2, 150
Check no. 181 13,217 (15,367)
Deposit in transit 11,774
Error in recording deposit (26,417 – 26,167) 250
Automatic loan 8,150
Interest 82
NSF check (1,000)
Bank service charge ( 600)
Arithmetic error for:
Check no. 179 (32,567 – 32,067) (500)
Check no. 180 (21,898 – 21,894) ( 4)
Check no. 181 (20,490 – 20,455) (35)
Adjusted balances 26,833 26,833

Problem 4: Bank reconciliation: Unadjusted to adjusted balances

The following information pertains to FLINT Coro.;
Flint Corp.
BANK RECONCILIATION
November 30,2014
Balance per bank statement 435,000
Less: Outstanding checks
No. 4321 6,000
No. 4329 15,000
No. 4340 1,700
No. 4341 4,675 27,375
407,625
Add: Deposit in transit 16,200
Balance per books 423,825

CHECK REGISTER
December 2014

Vouchers
Date Payee No. Payable Discount Cash
Dec. 1 San Beda, Inc. 4342 10,000 500 9,500
Dec. 3 Miriam Corp. 4343 4,200 - 4,200
Dec. 7 UE Enterprises 4344 3,755 - 3,755
Dec. 12 PSBA Corp. 4345 12,000 120 11,880
Dec. 15 Payroll 4346 96,000 - 96,000
Dec. 16 BU, Inc. 4347 6,300 - 6,300
Dec. 18 New Era Co. 4348 14,200 142 14,058
Dec. 21 UST, Inc. 4349 7,000 - 7,000
Dec. 22 Petty cash fund 4350 10,000 - 10,000
Dec. 28 Payroll 4351 98,000 - 98,000
261,455 762 260,693

BANK STATEMENT

Bankable Bank page 1 of 1

Period: November 30,2014 – December 31,2014
No.: 001-43-44

Date Description Check No. Debit Credit Balance

Balance last statement 435,000
Dec. 1 Cash Deposit 16,200 451,200
Dec. 1 Check issued 4329 15,000 436,200
Dec. 4 Check issued 4342 9,500 426,700
Dec. 4 Check issued 4341 4,675 - 422,025
Dec. 5 Check deposit 49,000 471,025
Dec. 6 Check issued 4343 4,200 466,825
Dec. 8 Check deposit 14,000 480,825
Dec. 10 Check issued 4344 3,755 477,070
Dec. 15 Encashment 4346 96,000 - 381,070
Dec. 22 Encashment 4350 10,000 - 371,070
 BANK RECONCILIATION

Dec. 28 Encashment 4351 98,000 - 273,070

Dec. 29 Debit memo – service charge 1,000 272,070
Dec. 29 Credit memo - interest 1,550 273,620

Deposit in transit at December 31 totaled P49,000.

1. What is the total book receipt for December?

a. 113,550 b. 80,750 c. 63,000 d. 112,000

SOLUTION:
December 5 Deposit 49,000
December 8 Deposit 14.000
December 31 Deposit in transit 49,000
Total collection/book receipts 11200

2. What is the cash balance per books on December 31, 2014?

a. 275,132 b. 226,132 c. 291,332 d. 274,370

3. What is the total outstanding check on December 31, 2014?

a. 68,313 b. 39,238 c. 46,938 d. 40,938

4. What is the adjusted cash balance on November 30,2014?

a. 446,385 b. 417,825 c. 423,825 d. 435,000

5. What is the adjusted cash balance on December 31, 2014?

a. 281,682 b. 275,682 c. 226,682 d. 274,920