PROBLEMS Problem 2-1 (IAA) maton Apathy Company provided the following pathy Apathy Campany Deposits Balance ithdrawal Date Gheck No, Withdrawal Depowts Banos ee 10,000 90,000 8 a 5,000 85,000 2 106 25,000 60,000 eo 50,000 110,000 a 10,000 120,009 8 80,0 40,000 ,000 a 08 30,000 110,000 at oe 108,000 31 Service charge DM 2,000 ‘ FIRSTBANK 100,000 | Dec. 4 CheckNo.101 5,000 = a Dea 50,000 6 Check No. 102 15,000 27 Depobit 10,000 8 CheckNo.103 40,000 31 Deposit 80,000 8 Check No. 104 — 10,000 10 Check No. 105 30,000 14 Check No. 106 — 25,000 28 CheckNo. 107 50,000 The credit made by the bank on December 29 represents the proceeds of a note received from a customer which was give to the bank for collection by the entity on December 26. Required: a. Prepare a bank reconciliati i j ot Prepare ion using adjusted balan b. Prepare adjusting entries, ‘ 58Problem 2-2 (IAA) Sensible Company provided the following ledger acoount of the cash in bank maintained with Second Bank: SECOND BANK Dec. 1 Balance 100,000 | Dec. 1 Check No. 771 20,000 6 Deposit 30,000 4 772 5,000 12 Deposit, 40,000 6 713 35,000 24 Deposit 50,000 10 774 15,000 31 Deposit 60,000 14 775 30,000 18 776 25,000 4 777 40,000 The following bank statement was received from the Second Bank by Sensible Company. Date Checks Deposits Balance Dec. 1 Balance 130,000 CheckNo. 768 10,000 1 771 20,000 4 772 5,000 6 773 35,000 30,000 12 774 15,000 40,000 12 716 52,000 4 1042 8,000 50,000 28 NSF check 10,000 45,000 CM 28 Service charge. 5,000 59Other information i i k balance o; 1. Sensible Company reconciled its ban a November 30 with two checks, No. 768 for P10,000 and No. 770 for P20,000 outstanding. 2. Check No. 1042 was drawn by Sensitive Company. The bank charged it in error to the account of Sensible Company, 3. Check No. 776 was correctly drawn for P52,000 in payment of account. The amount P25,000 was entered in the books of original entry. 4, The bank credit on December 28 represents the proceeds of a P50,000 note, less a collection fee of P5,000 collected by the bank and credited to the account. 5. The NSF check was received from a customer in payment of account. Required: a. Prepare a bank reconciliation statement on December 31. b. Prepare adjusting entries on December 31. 66Problem 2-3 (IAA) Xanthous Company provided the following bank reconciliation on January 31 of the current year: Bank balance Add Deposit in transit 00.000 Total 10,000 Deduct Outstanding checks: = No. 114 240,000 115 160,000 116 60,000 Adjusted bank balance All receipts of cash are deposited in the bank account. The bank statement for the month of February is presented below. THIRD BANK Checks Deposit Date Balance Balance forwarded Jan. 31 300,000 240,000 600,000 Feb. 1 660,000 2,000,000 3 2,660,900 200,000 5 2,460,000 900,000 400,000 7 1,960,000 160,000 9 1,800,000 1,000,000 10 2,800,000 500,000 13 2,300,000 1,200,000 16 3,500,000 1,300,000 21 4,800,000 550,000 23 4,250,000 5,000 SC 24 4,245,000 1,000,000 550,000 27 8,795,000 800,000 270,000 CM 28 3,265,000 The following information was taken from the credit memo of February 28: Face of the note 250,000 Interest on the note 30, Maturity value of the note 280,000 Collection charge 19,000 Credit to your account 270,000 61The following data were taken from the cash journals of Xanthous Company: Cash Receipt Journal Cash Disbursement Journal Date Debit Cash Check No. Credit Cash Feb. 2 2,000,000 7 200,000 6 400,000 118 900,000 9 800,000 119 800,000 10 200,000 120 500,000 15 1,200,000 121 550,000 20 1,300,000 122 180,000 24 550,000 123 1,000,000 28 450,000 124 120,000 126 250,000 6,900,000 4,500,000 Required: a. Prepare bank reconciliation on February 28, showing the book balances before and after adjustment. b. Prepare journal entries to record the adjustments that are indicated by the bank reconciliation. 62Problem 2-4 (IAA) Chivalry Company prepared the following bank reconciliation on March 31: Book balance 1,405,000 Add: March 31 deposit 750,000 Collection of note 2,500,000 Interest on note 150,000 8,400,000 Total 4,805,000 Less: Cavalry Company's deposit to our account 1,100,000 Bank service charge 5,000 1,105,000 Adjusted book balance 3,700,000 Bank balance 5,630,000 Add: Error on check No. 175 45,000 Total 5,675,000 Less: Preauthorized payment for light and water 245,000 NSF check 220,000 Outstanding checks 1,650,000 2,115,000 Adjusted bank balance 3,560,000 Check No. 175 was made for the proper amount of P249,000 in payment of account. However the check was entered in the cash disbursements journal as P294,000. Chivalry Company authorized the bank to automatically pay its light and water bills as submitted directly to the bank. Required: a. Prepare a corrected bank reconciliation. b. Prepare adjusting entries on March 31. 63Problem 2-5 (IAA) Zodiac Company provided the following information: voli 800,000 Balance per book, March 31 . Cash receipts for April ad Cash disbursements for April 800,000 Outstanding checks as of April 30 of which No. 1333 had been certified 40,000 No. 1331 No. 1332 ace No. 1333 000 No, 1334 60,000 No. 1335 10,000 April debit memos were: For bank service charge 5,000 For NSF check 25,000 April credit memo for note collected by bank in the name of Zodiac Company 60,000 Undeposited collections 270,000 Balance per bank, April 30 1,000,000 Required: Prepare a bank reconciliation on April 30 following the book to bank approach and prepare adjusting entries. Problem 2-6 (IAA) Radiant Company provided the following data for the month of January: Balance per bank statement, January 31 8,500,000 Collections on January 31 but undeposited 550,000 NSF check received from a customer returned by the bank on February 5 with the January bank statement 50,000 Checks outstanding on January 31 650,000 Bank debit memo for safety deposit box rental not recorded by depositor 5,000 Acreditor’s check for P30,000 was ‘incorrectly recorded in the depositor’s book as 300,000 Acustomer's check for P200,000 was recorded by the depositor as 20,000 ‘The depositor neglected to make an entryin its books for a check drawn, in payment ofan account payable 125,000 Required: Compute the balance in the cash account before corrections and prepare adjusting entries. 64Problem 2-7 (IAA) 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 6 months 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 Erroneous 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 Required: a. Prepare a bank reconciliation using the adjusted balance approach. b. Prepare adjusting entries on December 31. 65Problem 2-8 (IAA) Alpha Company provided the following information for the month of December: Cash balance per ledger 000,000 Cash balance per bank statement 5,500,000 Proceeds of bank loan discounted on December 1 for one year at 14% 516,000 Undeposited collections on December 31 300,000 Check of Omega Company had been incorrectly deducted by bank from Alpha Company account 50,000 Check of Alpha Company in payment of an account payable had been recorded by the depositor as P20,000. The correct amount is 200,000 The ledger account for cash was the only cash account kept by the entity. It included a petty cash account comprised of the following items: Currency and coin, 4,000 Supplies 2,000 ‘Transportation 3,000 Postage 1,000 10,000 Deposit of Omega Company credited by bank to the account of Alpha Company 130,000 Deposit of December 27 omitted from bank statement 150,000 Outstanding checks 544,000 Required: a. Prepare bank reconciliation on December 31. b. Prepare one journal entry only necessary to adj account. ‘ary to adjust the cash 66Problem 2-9 (IAA) 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 40,000 163 25,000 164 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. ‘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 565 which was drawn in payment of an account payable. The payee cannot be located. Required: Prepare a bank reconciliation on August 31 using the adjusted balance method. b. Prepare adjusting entries to correct the cash in bank account on August 31. a. 67Problem 2-10 (AICPA Adapted) In preparing the bank reconciliation for the month of August, Apex Company provided the following information: Balance per bank statement 1,805,009 Deposit in transit 325,000 Return of customer check for insufficient fund 60,000 Outstanding checks 275,006 Bank service charge for August 10.009 What is the adjusted cash in bank? a. 1,855,000 b. 1,795,000 ¢. 1,785,000 d. 1,755,000 Problem 2-11 (IAA) Core Company provided the following data for the purpose of reconciling the cash balance per book with the cash balance per bank statement on December 31: Balance per book 350,000 Balance per bank statement 2,000,000 Outstanding checks, including certified check of P100,000 500,000 Deposit in transit, 200,000 December NSF checks, of which P50,000 had been redeposited and cleared on December 27 150,000 Erroneous credit to Core’s account, representing proceeds of loan granted to another ‘company 300,000 Proceeds of note collected by bank for Core, net of service charge of P20,000 750,000 What amount should be reported as cash in bank at year- end? a. 1,500,000 b. 1,400,000 ec. 1,800,000 d. 1,450,000.Problem 2-12 (AICPA Adapted) In preparing the bank reconciliation for the month of December, Case Company provided the following data: Balance per bank statement 3,800,000 Deposit in transit 520,000 Amount erroneously credited by bank to Case's account 40,000 Bank service charge for December 5,000 NSF check 50,000 Outstanding checks 675,000 What is the unadjusted cash in bank balance per book? a. 3,550,000 b. 3,660,000 c. 3,610,000 d. 3,655,000 Problem 2-13 (AICPA Adapted) 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 office hours did not secure the desired information. February 28 book balance 1,460,000 Note collected by bank 100,000 Interést earned on note 10,000 NSF check of customer 130,000 Bank service charge on NSF check 2,000 Other bank service charge 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? a. 1,435,000 b. 1,530,000 ¢. 1,340,000 d. 1,550,000Problem 2-14 (IAA) Laconic Company received the bank statement for the month of April which included the following information: Bank service charge for April 15,000 Check deposited by Laconte during April was not collectible and has been marked "NSF" by the bank and returned 40,009 Deposits made but not yet recorded by bank 130,009 Checks written and mailed but not yet recorded by bank 100,000 The entity found a customer check for P35,000 payable to the entity that had not yet been deposited and had not been recorded. The general ledger showed a bank account balance of 920,000. What amount should be reported as adjusted cash in bank on April 30? a. 900,000 b. 865,000 c. 930,000 d. 965,000 Problem 2-15 (IAA) Sapphire Company provided the following information for the month of December: Balance per bank statement December 31 2,800,000 Bank service charge for December 12,000 Interest paid by bank to Sapphire Company for December 10,000 Deposits made but not yet recorded by the bank 350,000 Checks written but not yet recorded by the bank 650,000 The entity discovered that it had drawn and erroneously peconded ae check for P46,000 that should have been recorded for P64,000. What is the cash balance per ledger on December 31? a. 2,500,000 . b. 2,520,000 . 2,540,000 ,0 70Problem 2-16 (IAA) Adversary Company kept all cash in a checking account. An examination of the accounting records and bank statement for the month of June revealed the following information: The cash balance per book on June 30 is P8,500,000. A deposit of P1,000,000 that was placed in the bank's night depository on June 30 does not appear on the bank statement. The bank statement shows on dune 30, the bank collected note for Adversary Company and credited the proceeds of P950,000 to the entity's account. Checks outstanding on June 30 amount to P300,000. Adversary Company discovered that a check written in June for P200,000 in payment of an account payable had been recorded in the entity's records as P20,000. Included with the June bank statement was NSF check for P250,000 that Adversary Company had received from a customer on June 26, The bank statement shows a P20,000 service charge for June. What amount should be reported as cash in bank on June 30? a. 9,180,000 b. 9,360,000 c. 9,000,000 d. 3,300,000 What is the net adjustment to cash in bank on June 30? Net debit P950,000 Net credit P450,000 Net debit P500,000 Net debit P860,000 Boop 7kProblem 2-17 GAA) rovided the 7 Tuned mee = d bank account for the month of July ; r ” Cash balance per ledge! x statement Cash balance per ee nerd 5. is i July service , Debit memo for July “ied by bank unt il Deposit of July 31 not recor ‘August 1 450,000 Outstanding checks, including certified check of P50,000 ; 750,009 Proceeds of bank loan not recorded in ledger 500,000 Proceeds from customer note, face P400,000, lection fee of P15,000 435,000 collected by bank, co A creditor check had been entered in the book as P20,000 and was erroneously deducted by the bank at 200,000 A customer check was returned by bank marked DAIF 50,000 Correct cash balance 3,000,000 1. What is the cash balance per ledger? 2,120,000 3,055,000 2,555,000 2,065,000 Boge 2. What is the cash balance per bank statement? a. 3,700,000 b. 3,070,000 ©. 3,050,000 4. 2,370,000 following data relating to the |Problem 2-18 (AICPA Adapted) Jane Company provided following information at month-end: Cash in bank per bank statement Deposit in transit Outstanding checks, including certified check of P200,000 Amount erroneously credited by bank to Jane's account Note collected by bank for Jane Company, including interest of P100,000 Service charge for the current month NSF checks of customers returned by bank Error in recording a check in the book. The correct amount as paid by the bank is P100,000 instead of P200,000 as recorded in the book Saving deposit in other bank closed by BSP Currency and coins on hand Petty cash fund 8,000,000 1,200,000 1,500,000 150,000 1,100,000 20,000 500,000 100,000 1,000,000 900,000 50,000 1. What is the adjusted cash in bank at month-end? a. 7,750,000 b. 7,900,000 c. 8,050,000 d. 7,550,000 2. What is the unadjusted cash in bank per ledger at month-end? a. 7,070,000 b. 7,220,000 ¢e. 7,270,000 ~ d. 7,750,000 3. What total amount of cash should be reported as current asset? a. 8,706,000 b. 9,700,000 ¢. 8,020,000 d. 8,850,000 ‘ 18Problem 2-19 (AICPA Adapted) Pearl Company maintains a checking account at the City Bank. The bank provides a bank statement along with canceled checks on the last day of each month. The July bank statement included the following information: Balance, July 1 550,000 Deposits 1,800,000 Checks processed 1,400,000 Service charge 30,000 NSF check 120,000 Monthly loan payment deducted by bank from account ‘100,000 Deposits outstanding totaled P100,000 and all checks written by the depositor were processed by the bank except for check of P150,000. A P200,000 July deposit from a credit customer was recorded as P20,000 debit cash and credit accounts receivable. A check correctly recorded by the entity as P30,000 disbursement was incorrectly processed by the bank as P300,000 disbursement. 1. What is the balance per bank on July 31? a. 700,000 b. 550,000 c. 800,000 d. 950,000 2. What amount should be reported as cash in bank on July 31? a, 650,000 b. 920,000 cc. 380,000 d. 970,000 3. What is the cash in bank balance per ledger on July 31? a. 1,350,000 b. 1,170,000 c. 990,000 d. 890,000 74Problwm 2-20 Multiple choice (IAA) 1. A bank reconciliation is a. b. e da. A financial statement that lists all of the bank account balances of an entity. A merger of two banks that previously were competitors. es statement sent by the bank to depositor on a monthly asis, A schedule that accounts for the differences between cash balance shown on the bank statement and the cash balance shown on the general ledger. 2. Which of the following items must be added to the cash balance per ledger in preparing a bank reconciliation which ends with adjusted cash balance? a. b. c d. Note receivable collected by bank in favor of the depositor and credited to the account of the depositor NSF customer check Service charge Erroneous bank debit 3. Which of the following would be added to the balance per bank statement to arrive at the correct cash balance? a, b. c. d. Outstanding check Bank service charge Deposit in transit |. A customer note collected by the bank on behalf of the depositor 4, Which of the following must be deducted from the bank statement balance in preparing a bank reconciliation which ends with adjusted cash balance? peop Deposit in transit Outstanding check Reduction of loan charged to the account of the depositor Certified check 755. If the balance shawn in the bank statement is less than the correct cash balance and neither the entity nor the bank has made any errors, there must be ° a. b. c da. Deposits credited by the bank but not yet recorded by the depositor Outstanding checks Deposits in transit Bank charges not yet recorded by the depositor If the cash balance shown in the accounting record is less than the correct cash balance and neither the entity nor the bank has made any errors, there must be a. b. & da. Deposits credited by the bank but not yet recorded by the depositor Deposits in transit Outstanding checks Bank charges not yet recorded by the depositor . Bank reconciliations are normally prepared on a monthly basis to identify adjustments needed ‘in the depositor’s records and to identify bank errors. Adjustments on the part of the depositor should be recorded for &. a a. Bank errors, outstanding checks and deposits in transit. b. All items except bank errors, outstanding checks and deposits in transit. Book errors, bank errors, deposits in transit and outstanding checks. Outstanding checks and deposits in transit, . Bank statements provide information about all of the following, except a. b. Checks cleared during the period NSF checks ¢. Bank charges for the period d. Errors made:by the depositor 769. Which statement in relation to a certified check is not true? a. A certified check is a liability of the bank certifying it. b. A certified check will be accepted by many persons who would not otherwise accept a personal check. ¢. A certified check is one drawn by a bank upon itself. d. A certified check should not be included in the outstanding checks. 10. Which statement in relation to bank reconciliation is true? a. Bank service charge will cause the cash balance per ledger to be higher than that reported by the bank, all other things being equal. b. Credit memos will cause the cash balance per ledger to be higher than that reported by the bank, all other things being equal. c. Outstanding checks will cause the cash balance per ledger to be greater than the balance reported by the bank, all other things being equal. d. The cash amount reported in the statement of financial position must be the balance reported in the bank statement. 17