Two-date bank reconci

The bank reconciliation is

literally involves two dates.

The procedures followed for

same for a two-date reconcil

-{ two-date rreconciliation becor

faets or data are omitted, hencr

CHAPTER 3 But if all the facts are availai

nd1 simply be prepared as of r

-\nong others, the ornitted ir

PROOF OF CASH .ombination of the following:

?. Book balance - beginning

TECHNICAL KNOWLEDGE i, Bank balance - beginning
To be able to prepare a two-date bank reconciliation.
:. Deposits in transit - begir
i. Outstanding checks - bes
To itnow the contputation of deposits in transit, and
outstanding chechs. If the ending balances are r
rnay help.
Ta know tl'te recon,ciliation of cash receipts per ledger with
cash receipts per banlz stateruent. if beginning balances are orr
5e reversed or just work back
To lenow tlte recoruciliati,on of cash disbu,rsements per ledger
with cash d,isbursent.ents per banle statement.

To und,erstand, the nature of proof of cosh.

To be able to prepare (r reconci,liation showing proof of cash.

82
t

b
 Irr-s-d36. bank reconciliation
--. 1-ank reconciliation is so-called "tlo-date" because it
:=:ailv involves two dates.

.-= plocedures followed for a one-date reconciliation

are the
-.::.i tbr a two-date reconciliation.
- :* r-date r.econcfiation becornes complicated only when certain
:. :s :,i' data arre omitted, hence the necessrty for computing them.

: -: :- ,all the facts are available, then reconciliation staternents

-- ,.r,*rply be prepared as of the two dates required.

--j:- -:t{ others, the ornitted infolmation may be any one or a

-:-rarron of the following:
3 " k balance
- beginning and ending
- lank balance - beginning ancl ending
-reposits in transit - beginning and ending
- '-r -ir-standing checks - beginning and ending
: ::-.' ending balances are not given, the following formulas
- .. heip.

:e g:inning balances are omitted, the fo"-rlu, shouid simply

-., :=i':rsed or just work
back.

83
 Computation of book balance -: a T-account form, the de
:--:pear as follows:
Balance per book ; beginning of month xx
Add: Book debits during the month xx Cor
Total xx : ;.r.Ji debits xx
Less: Book credits during the month xx - :jance - ending xx
Balance per book - end of month _{_r Computation of deposir
Book debits refer to cash receipts or all items debited to the -
=posits in transit - beginning c
cash in bank account. --:i: Cash receipts deposited dur

Book creclits refer to cash disbursements or all items credited ,:al deposits to be acknorviedge
to the cash in bank account. -- :s: Deposits acknowledged b1-
- =:':sits in transit - end of monr
In a T-account form, the cash in bank may appear as follows:
Computation of outstar
Cash in bank
xx Booli credits xx :tstanding checks - beginrung
Balance -beginning
xx Baiance - ending xx - r1: Checks drawn by depositor
Bookdebits
, -:aj checks to be paid by bank
Computation of bank balance --s.: Checks paid by bank dulin
-.:sranding checks - end of mor
Balance per banJ< - beginning of month xx
Add: Bank credits during the month xx
Total xx
Less: Bank debits during the month xx
Balance per bank - end of month
:xx
Bank credits refer to all items credited to the account of
the depositor which include deposits acknowledged by bank
and credit memos.
In the absence of any statement to the contrary, bank credits
are assumed to be deposits acknowledged by bank'
Bank debits refer to all items debited to the account of the
depositor which include checks paid by bank and debit memos.

In the absence of any statement to the contrary, bank debits

are assumed to be checks paid by bank.

84

t --- *----.-.
 -:: a T-account form, the depositor,s account, Company X, will
::)ear as follows:

CompanyX
I .:t debits xx Balance - beginning xx
: ,--ince - ending xx Bank credits xx
ilomputation of deposits in transit

- =: :srts in transit-beginning of month xx

- :: Cash receipts deposited during the month xx
:.- ieposits to be acknowledged by bank xx
- -. Deposits acknowledged by bank during month xx
.: - s:!s in transit - end of rnonth
_I-I
- rmputation of outstanding checks
'
-: =::.nding checks - beginning of month xx
:: Checks drawn by depositor during the month x{
- :,. - :hecks to be paid by bank xx
-
. .. illecks paid by bank during the month
xx
-:.::^rding checks - end of month
l!x

85
Illustration Cornputation of book br

Balance per book - January ;1.

Cash in bank Per ledger {Cd: Book debits during Februa:
IJalance. January 31 50,000 Total
Book debits for February' including January CM i;ss: Book credits dunng Febru;
for note collected of F15,000 200.000
Book cred.its for Febrriary, including NSF check Salance per book - Februarr- 2S
of P5,000 and service charge of P 1,000 for January 180,000
Computation of bank b:
Bank statement for FebruarY
3alance per bank -Januai.r- ;11
Balance, January 31 84,000 -r jd: Bank credits duling Febr,.i:-
Bank credits for Febluary, including CiVI for
l:rai
note colleted of P20,000 and January
deposit in transit o1'P40,000 170,000 -e ss: Bank debits during Febma:
Bank debits for FebruarS" including NSF check of 3 r-lance per bank - Februarr- 2.i
P10,000 and January or-rtstandrng check of P65,000 130,000

The bank reconciliation for the month of January can easily

be prepared because ali the necessary data are available:

Ralance per book, Januai'Y 31 50.000

Note collected by bank in JanuarY 15,00q

Total 65,000
NSF check lbr JanuarY ( 5,000)
Service charge for JanuarY ( 1,000)

Adjusted book baiance -_q9499

ilalance per bank, JanuarY 31 84,000

Deposit in transit for JanuarY 40,000

Total 124,000
Outstanding check for JanuarY
(65,000)

Acljusted bank balance __[q!99

The bank reconciliation for the month of I'ebruary requires

computation of balance per book, balance per bank, deposits
in transit and outstanding checks.

86 8
 1- :,mputation of book balance
: ,.- i r. --i-per book - January B 1
-.: : 3 50,000
ok debits during Februarv
200,000
.-:.
250,000
-. - = 3.-'ck credits during February
_lqqp@
: '.-,-. -e pei'book - Fehruarv 2g
lq{99
- :rnputation of bank balance
: '-.:.:: per.bank
-January 31 84,000
- : : l:nk credits duringFebruary
i70,000
254,00a
-, ". B:rk debits dr.rring February
: ' . --- -: r.- l. hank Febniary _1!g{00
- 2g
t14!9

87
 I omputation of outstan(
Computation of deposits in transit
40,000 - ::'anding checks -Januarl' 31
Deposits in transit - JanuarY 31 . .-. Checks drawn by depositor d
Add: Cash receipts deposited during February: Rook credits
Book debits 200,000
collected 15,000 185,000 Less: Januar5, DN{s
Less: JanuarY CMfor note
225;000
Total
Less: Deposits acknowledged by bank in February: -..: Checks paid by bank dunng
Ba^nk credits , 170,000 Bank debits
Less: February CM for note coilected 20'000 r50,000 Less: February NSF

Deposits in transit - FebruarY 28 _iE!!g :.:anciing checks - Febluarl- 2'

The January CM of P15,000 is d'educted from the book

debits --.= Janttary DMs of P6.00i
of P200,000 because this item is a cash receipt not . ir:s. because thel' ai'
representing deposit for: the month of February" -- -';senting checks.

All itents Cebited' io tlrc caslt in

-rupr:nsnnt
banh occotntt u'lticlt do not :;ots not reprPsettting c;:.
d.eposits should' be derlu'cted front' the booh d'e'bi'ts '.t'.t should be dedncted. ,it'c
titol to orril,e at the cctsh receipts deposited' :'c c:hecks dratL:n b1' tl;e dt

In the absence of any starement to the contt'aly' book clebirs - as a rule. ail book ci'ed1rs
are assunled. to be cash r:eceipts deposited' ' '.: eontt'ai']- are assun)e-

The lrebruary CNI of P20 000 for uote collected' is derducted' - = febluarl- DII for \SF :
frorn the bank creclits because this is not a deposit' -i,lebits because thrs
, :':ieotirrg a check Paii.
All itents creclited to t,he d,epositor's o'ccount wh'ich do n'ot
'ripr:nrn,rt
d.eposits shoul'cl be d'eclucted front' the' ban'k uedits :.r|s debited to the occo;i.!:
ti d,eternti,ti th,e d,eposi,ts acknoutled'ged by ban'h' ---- ,roid sitould be deciliti
-: ot the checks poid b^, t
Bank credits are assumed to be deposits acknowledged by
bank in the absence of any statement to the contrary' - - ..-> all bank debi:s
a rttle.
,-.= ccntrar} are assumei

88

L.
a7 E---
.:rf utation of outstanding checks
-' , -:.-:rg checks-January 31 65,000
.-
= -"
Jrawn by depositor during February:
s
r,: _k credits 180,000
-
:!s: .January DMs 6-000 174,000

239,000
--.:is paid by bank during FebruarY
I :.i Jebits 130,000
10,000 120,000
=..: February NSF
- -- ir:r: checks
- February 28 !9{A
::..,r?l']' DMs of P6,000 are deducted from the book
.: hecause they are cash disbursements not
r:1:rng checks.

- - : 'r ot representirr,g checks credited to t,he cosh in, bonle

' .: utld be detlucted front th,e boole credits totol to atiue
' .,:izs
dyautrt by th,e d,epositor.

:: all book credits in the absence of any statement

-'-r1€.
: -:rl'&rv are assumed to be checks issued.
, :r-'i.nr'\' DM for NSF of P10,000 is deducted from the
-. '-=ttts because this is not a bank disbursement
: ::t-iiilg a check paid.

:ieisited to the occoun t of the depositor not representin g

,
: .' ..' (j sirould be ded,ucted, front' t'he banh debits total to
':,p cltecks poid b.v bonk.

- : r''-rl€. all bank d.ebits in the absence of any statement

: - irir'&lrt are assumed to be checks paid by bank.

89
 CompanyX : *:i]nlar]'
Bank Reconciliation
Februar.y 28 : - -:.r' bcok
-...-=:.r'birnk
Balance lrer bool< 7Cr,000 :- 1: ' -i.-i
Note collected by trank in February
_4,09q .. -: L:
Total 90,000
NSF' checli for February ( 10,000) - - --: : :: :n tlansft
-.:-,i.r:.g checks
Adjusted book balance - r--'- :.i
_lqp99 - a 1|op

Balance per bank

' -,::ted b1'banli
124.000
Deposits rn tr.ansit for.February 75,000
lfotal 199,000
.-latruar!' ale not listed an
Otitstanding checks for February (119,000)
:::ii']-.
Adjusted bank balance ,-rl of cash Pertains to ti
80,000
' ,.r
-: current month of Febr
Proof of cash
-- t- Llsted balance method
A proof of cosh is an expanded reconciliation in that it CO}IP.1
inciudes pr.oof of receipts and disbursements. PROOF O
For the ulonth
This approach be usefui in discovering possible
ma.,.-
discrepancies in iiandling
cash particularl5, g,hen cash Januarl'31 J

receipts have been recorded but have not been deposited. 50,000
. ... - per book :

- - llrcted:
There are three forrns of proof of cash, narnejy: - l'.rar'1' 15,000
-: a ltiar]-
- r -::eck:
a. Adjustecl baiance methorl : :l''Ia i')' ( 5,000)
b. Book to bank method j---:
rrta r-V

c. Bank to book method - : :}'.arge:

. ruai'1- ( 1.000)

in all the three forms, a four-column worksheet is necessary, ..:,i1 book balance !9!!9
although under the adjusted balance method, an g-column ' .-::l: Per bank 8.1,000
worksheet may be required. -- ..ts in transit:
', lnuary 40,000
- a'b.-uarY
For our illustration, let us summarize the data used in the :.'-ancling checks
two-date reconciliation. , ar-rUaly (65,000)
February
- ..:ied bank baiance 59,000

90 I

L
'_ :-,114I'\'
January 31 February 28
.. . l-i ^.,t/h
.l- 50,000 70,000
-l
: I:l !.111I( 84,000 124,000
. ': 200,000
, _
...:: 180,000
:i 130,000
170,000
40,000 75,000
65,000 119,000
--- :-- 5,000 10,000
,..
. : '. 1,000
'ra
-,. -i;(i bi'bank 15,000 20,000

.,. ,iebrts and credits, and the bank debits and credits
- nlrarl' al'e not listed anymore because they are not

: ,,f cash pertains to the receipts and disbursements

cr-rrrent month of February.
:.- -sred balance method
COMP.A,NY X
PROOF OF CASH
For the month of February
Disburse-
January 31 Receipts ments February 28
-, per book
t.
50,000 200,000 180,000 70,000

15,000 ( 15,000)
20,000 20,000

( 5,000) ( 5,000)
10,000 ( 10,000)

( 1,000) L-L999)
!9,000 39!g -1!4,ooo
80 000

. per bank 84,000 170,000 130,000 124,000

- : -rr tIansit:
40,000 ( 40,000)
- -.-:l\- 75,000 75,000
'. .-:rs checks:
. r:l\' (65,000) ( 65,000)
. ir'\' ,. i19,000 (119,000)
. - :ank balance _q9,099 205.000 lg4,99p 80 000

91
General comments
a. The January 31 and February 28 columns require no further
explanation. They represent the usual reconciliations
discussed eariier.
b. The receipts and disbursements columns pertain to the
current month of February. Actually, the proof of cash is a
reconciliation of the recei,pts ond disbursements for the
current peri,od.
c. The proof of cash, following the adjusted balance method,
means that the book receipts and disbursements, and the
bank receipts and disbursements for the current month
are adjusted to equai the correct receipts and
disbursements for the current month.

Comments on the book items

a. Credit memos of the previous month do not affect the bank
receipts for the current month but increased the book receipts
for the current rnonth because the credit mernos for the previous
month are recorded only by the depositor dunng the current
month.
.Consequently, the book receipts for the current month are
overstated in i'elation to the correct receipts for the crur.ent'
month. Hence, credit melnos of the previous rnonth are
deducted from the book receipts for rhe current month.

Thus, the January note collected arnounting to P15,000, is

deducted from the February book receipts. '1-::.:.trs on the bank ite
b. Credit memos of the current month already inereased - .: i-i: .-: :.'aisii ,:,i prer-i
the bank receipts for the current month but have no effect
on the book receipts for the current month because the
credit memos of the current month are not yet recorded by
the depositor during the current month.
:: --,.::li.\-. bank r'=,:=-;
Consequently, the book receipts for the current month are
understated in relation to the correct receipts for the .:ated,it relatrol :; ::-.
current month. Hence, credit memos of the current month
:- i=n:e. deposits l:-
are added to the book receipts for the current month.
.:. Ceducted from the br

Thus, the February note collected, amounting to P20,000, is

added to the February book receipts.

92 I
- ri rrerros of the previous month do not affect the bank
: r
--:4,,.lr'sements for the current month but increased the
- r drsbursements for the current month because the debit
r,::roS of the previous month are recorded only by the
,:; -Sltor during the current rnonth.
,:-scQu€ntly,.the book disbursements for the current
,---::ih are overstated in relation to the correct
---::il'sements for the current month. Hence, debit memos
- :::e previous month are deducted from the book
.: -ilsements for the current month.

--,-.. the January NSF of P5,000 and January sen'ice charge

- f i ,iC0 ale deducted from the Februarv book disbursements.

- : r -i nl€rros of the current rnonth already increased bank

for the current rnonth but have no effect on
--.:,.i'selrleirts
= r -rrk disbursements for the current month because the
'::
-: rnemos of the current rntinth are not yet recorded by
' ..:pOSIIOI.

r-.:.quently, the book disbursements for the current

-r r are understated in relation to the correct
:r'-.1'Se lr€nts for the current month. Hence, debit memos
' ,::= ciillent month are added to the book disbursements
::r. Current mOnth.
-., -- rire February NSF of P10,000 is add.ed to the February
..; :Lrsbursements.

::ments on the bank items

-:: -sits in transit of previous rnonth do not affect book
: -:-r-,rS for the current month but increased bank receipts
- :::- current month because the deposits are recorded
:--. tv the bank during the current month.

,:-.=:quently, bank receipts for the current month are

-'.'erstated in relation to the correct receipts for the current
-. :--:h. Hence, deposits in transit of the previous month
,"= deducted from the bank receipts for the current
--,:--:h.

, , -s. January deposit in transit of P40,000 is deducted from

. lebluary bank receipts.
93

-
b. Deposits in transit of the current month already : ,ok to bank method
increased book receipts buf ^^ave no effect on the bank
receipts for the current month becattse the deposits are not COMP.
yet recorded by the bank during the current rnonth. PROOF (
For the montl
Consequently, the bank receipts for the current month are
understated in relation to the correct receipts for the
current rnonth. Hence, deposits in transit of the cirrrent JanuarySl Re
rnonth are added to the bank receipts of the curlent month. . -= per book 50,000 2t
--.,.t-.1 .

Thus, the February deposit in transit of P75,000 is added to F ', l, ltl:

15,000
the February trank receipts. - r a l",laly
- ^ .t,.
--tLA_
c. Outstanding checks of the previous month do not affect i :l l;1i'V ( 5,000)
the book disbursements but increased the bank : I I".i3.I')'
disbursements for the current month because the ,
-- :harge:
outstanding checks of the previqus month are paid only '_ i q ).1t (1,000)
by the bank during the current month. . :. in [ransit:
.-: I I r\t (40,000)
Consequentiy, the bank disbursements for the current - :1I'UQl'! {

rnonth are overstated in relation to the correct ---,-,:dingchecks:

disbursements for the current month. Hence, or.rtstanding ,:1 laI.\- 65.000
checks of the previous month are deducted from the - : ll l'Ua1'V

bank disbursernents for the current month. ,r----. per bank 8.1,000
:t;
Thus, the January outstanding check of P65,000 is deducted , ::unents
from tlie February bank disbursements.
..l= book reconciling items -
d. Outstanding checks of the current month increased the
-rllge - are treated in the
book disbursements for the current rnonth but have no effect
,-.-usted balance method.
on the bank disbursernents for the current month because
the checks are not yet paid by the bank during the current -:., bank reconciling iten
month.
-.::tanding check - are trea
Consequently, the bank disbursements for the current
-::r' book to bank proof of cas
month are understated in relation to the correct .:C disbursements are aCjus
disbursements for the current month. Hence, outstanding
checks of the current month are added to the bank
.:.i disbursements.
disbursements for the cunent month.
- =posits in transit of prer.iou
Thus, the February outstanding check of P119,000 is added -=:eipts for the current mc
to the February bank disbursenlents. -=:eipts for the current mon

94 I5
,- o. :,-I bank method
COMPAI{YX
PROOF OF CASH
For the month of February

Disburse-
"Ianuary 31 Receipts ments l'ebruary 28
, ;er book 50,000 200,000 180,000 20,000
:
.--],
15,000 ( 15,000)
- ,-l'
. 20,o00 20.000
-a-a:

-- . :-l ( 5,000) ( 5,000)

10,000 ( 10,000)
j-
- .-, ic
(1,000) ( 1,000)
- --.:--:t'lnsit:
(,10,000) 40,000
- :.t !' ( 75,000) ( 75,000)
- - --.- r, --^. ^t-^.
r1rLA5-

65,000 65,000
: - (119,000)
- lr'\,' 119,000
- per bank 84,000 170,000 130,000 124,000

:t-ilents
. . : :,rk reconciling items - note collected, NSF and seryice
-

. r-::- - are treated in the same manner following the

-- -.:icd balance method.
- . i:,ank reconciling items * deposit in transit and
, .:anding check - are treated in the "reverse."
- -. t- ,,,k to
bilnk pr.oof of cash means that the book receipts
.-.1 ,-lisbursements are adjusted to equal the bank receipts
-.
- :lr.bursements.
-":: -,sits in transit of previous lnonth do not affect the book
":,:1pts for the current month but increased the bank
. -:ipts for the current month.

95
 Consequently, the book receipts for the current month are
understated in relation to the bank receipts for the current tsank to book rnethod
month. Hence, deposits in transit of the previous month COMP.
are added to the book receipts for the current month. PROOF C
For the montt
Thus, the January deposit in transit of P40,000 is added to
the Februaiy book receipts.
January3l Rr
e. Deposits in transit of the current month incr.eased the book : per bank
.--ance 84,000 :

receipts for the current month.but have no effect on the - .;osits in transit:
bank receipts for the current month. Consequently, the book January 40,000 ,

receipts for the current month are overstated in relation February

to the bank receipts for the current month. Hence, deposits -.:.tanding checks:
January ( 65,000)
in transit of the current month are deducted from tire book February
receipts fot the culrent month. . :: collected:
January ( 15,000)
Thus, the Febmary deposit in transit of P75,000 is deducted February
from the February book receipts. :: Check:
january 5,000
f. Outstanding checks of the previous month do not affect the February
-:,'.,'lce charge:
book disbursements for tire current month but increased the .january i,000
bank disbursements for the cui:rent month. Consequently, the
book disbursements for the current month are understated ,- ance per book 50,000
in relation to the bank disbur.sements foi the current month.
Hence, outstanding checks of the previous month are added to r- omments
the book disbursements for the current month.
The bank reconciling ite
Thus, the January outstanding check of P65,000 is added to outstanding check - ale
the February book disbursements. rollowing the adjusted bala

g. Outstancling checks of the curlent month increased the book The book reconci-ling items -
disbursements fbr the current month but have no effect yet charge - are treated in the
on the bank disbursements for the current month.
The banli to book proof of ca
Consequently, the book disbursernents for rhe current and disbursements for the cu
rnonth are overstated in relation to the bank disbursernents the book receipts and disbur:
for the current month. Hence, outstanding checks of the
current month are deducted from the'book disbursements Credit memos of previous
for the cunent month. receipts for the current n
receipts for the current m
Thus, the February outstanding check of P119,000 is receipts for the current mor
deducted from the February book disbursements. to the book receipts for the
96 I
br..-
Bank to book method
COMPANYX
PROOF OF CASH
For the month of February
Disburse-
January 31 Receipts 'ments February 28
.---.rce per bank 84,000 170,000 130,000 n4,400
.: : -.its in transit:
,ianuary 40,000 ( 40,000)
: =bruary 75,000 75,000
-:.:anding checks
,L:nuaty ( 65,000) ( 65,000)
: =bluary 119,000 (i19,000)
:-:-.llecterl:
. : itualv ( 15,000) 15,000
: f t'Uafy (,20,000) ( 20,000)
: - =Ireck:
. :-:t'lalv 5,000 5,000
,- .".rar;l
=
f ( 10,000) 10,000
- - - -: ,-hryoo'
.^:ltiaf'f' i,000 __1_.0!q
-:--
...-: per book _qepqq jgglqq _E98qs _ZqE!
nrxlents

-:e bank reconciling items - deposit in transit and

,.-:tanding check - are treated in the same manner
, ''ru'ing the adjusted baiance method.
..-= book reconcjling items - note collected, NSF and service
,:-11'ge- are treated in the "reverse".
.:= L',ant to book proof of cash means that the bank receipts
.: i Csbursements for the crrrent month are adjusted to equal
::-= >cok receipts and. disbwsements for the current month.

.'= j:t rnemos of previous

month do not affect the bank
"-:-..pts for the current month but increased the book
r:::ipts for the curuent month. Consequently, the bank
r.-:ipLs for the current month.are understated in relatio'n
-, :re book receipts for the current month.

97
 Hence, the credit memos of the previous month are added 'dLTSTIONS:
to the bank receipts for the current rnonth.

Thus, the January note collected of P15,00O is added to the

February bank receipts. - Erpiain a two-date bank n
e. Credit rnernos of the cument rnonth increased the bank - frplain book debits'
receipts for the current month but have no effect yet on the
book receipts for the current rnonth. : Erpiain book credits.
Consequently, the bank receipts of the current month are I Erplain bank debits.
overstated in relation to the book receipts of the current
rnonth. Hence, the crefit mernot of the eurrent sronth are : Expiain bank credits.
deducted from the bank receipts for the current month"
: \\hat is the formula in the <

Thus, the February note coLlected of P20,000 is deducted

from the Fobruary bank receipts.' - ll'hat is the formula in the t
f. Debit rnemos of previous rnonth do not affect the bank
: \\hat is the formula in t
disbursements for the current rnonth but increased the
book disbursements for the current month. :ransit?

ConsequentLy, the bank disbursements for the current r \lhat is the formula in t
month are understated in the reLation to the book checks?
disbursements for the current manth. Hence, the debit
memos of previous month are added to the bank - - Expiain a Proof of cash.
disbursements for the current month.

Thus, the January NSF of P5,000 and the January service

charge of P1,000 are added to the February bank
disbursements.

g. Debit memos of current month increased the bank

disbursements for the current month but have no effect yet on
the book fisbursements for the current rnonth.

Consequenttry, the bank disbursements for the crur€rrt month

ate overstated in relation to the book disbursements for the
cu:rrent month. Henoe, the debit memos of current rnonth are
deducted fi:om the bank disbursements for the currrent month.

Thus, the February NSF of P10,000 is dedtrcted from the

February bank disbursements for the euruent month"

98
_* LESTION";

- ;:rriain a two-date bank reconci.liation.

- k-iain book debits.

r a-r.ciam book credits.
- :-rplain bank debits.

, ;-xplarn bank credits.

; '[]at is the forrnula in the cornputation of balance per book?

- 'l-hat is the formula in the cbmputation of balance per bank?
: ilhat is the formula in the computation of deposits in
:::nsit?
- :,\hat is the formula in the computation of outstanding
,:r+cks?

irriair: a proof of cash.

9S
 Problem 3-3 (IAA)
PROBLEMS J.: -rlous Company provided
-:::: On JUly 31:
Problem 3-1 (ACP)
Checks drawn
Sassy Company provided the following data for the month of
July: \-.. 101 600,000
)ir.102 700,000
Cash in bank per ledger
\c. 103 300,000
Balance June 30 1,000,000
).:. 104 400,000
Booi< debits for July including June CM
4,000,000 )r:.105 450,000
for note collected, P300,000
Book credits for July including June !!SF ).:. 106 600,000
of P100,000 and service charge of P4,000 3,600,000 lir.107 650,000
Bank statement for JulY
\:. i08 500,000

Balance June 30 1,650,000

Bank debits for July including service
: .'-:.:lce of cash per book on J'
charge ofPL,000 and June outstanding ::r l?Sh book for the month t
checks ofP854,000 2,500,000
Bank credits for July including CM for - .=:ks paid by bank includ
bank loan ofP500,000 and June deposit in
transit of P400,000 a,500,000 ::::h of Juiy except No. 107

Required: , -- .Tul,v 31 cash received but r

Prepare bank reconciliation on June 30 and July 31, and
adjusting entries on JulY 31. P.equired:
Froblem S-2 (ACP)
, Prepare bank reconciliatir
Beehive Company provided. the following information:
Balance per book October 31 600,000 - Prepare adjusting entries
Receipts per book for November (collection from
customer, P100,000 recorded as P10,000) 2,200,000
Disbursements per book for November
(check for P300,000 in payment of account
recorded as P30,000) 1,800,000
Balance per bank statement November 30 930,000
Deoosit in transit October 31 " '300,000
400,000
Outstanding checks November 30
Bank receipls for November inciuding an
erroneous credit of P100,000 which should have
been credited to Beeline ComPanY 2,500,000
Bank disbursements for November including
check of Beeline CompanY, P200,000 1,970,000

Required:
Prepare bank reconciliation on October 31 and November
30, and adjusting entries on November 30. I
100
-- : - :nem 3-3 (IAA)
i. r ---:s Company provided the following data concerning
.-- .:- .Julr' 31:
Checks drawn Bank statement
- -r 1 600,000 Balance, July 31 2,700,000
. .,: 700,000 Charges:
-r,,j 300,000 Checks paid 4,000,000
- t_'-l 400,000 Service charge 20,000
- t-'5 450,000 Credits:
-1_6 600,000 Deposits 3,500,000
.1_ ; 650,000 Note coilected 1;500,000
-i-S 500,000

: .- . :-- ; rf cash per book on July L, PL,27 0,000. Cash receipts

. -: ;:: book for the month of July P3,400,000.
-=-..s paid by bank include all checks issued during the
- :.:: :f July except No. 107 and No. 108.
- .r'--1- 31 cash received but not deposited in bank, P400,000

: = quired:
?:epare bank reconciliation on July 1 and July 31

i:=pare adjusting entries on July 31.

101
Problem 3-4 (ACP) Froblem 3-5 (ACP)
Flarnboyant Cornpany prepared the following bank Ettcient CompanY showed t
reconciliation on October 31:
- :sh in bank balance, IVIarch 31
Cash account balance 990,000 3:ok credits forApril
Less: Bank service charge 5,000 l;:ck debits forAPrii
Deposit outstanding 45,000
Chech crroneously charged by
-a:rl< statement. balance,
March I

bank against entity's account 10,000 60,000 :,:n-k debits

Balance 930,000
: '::k credits
Add: Checksoutstanding 125,000
Unrecorded collections l'" -.re collected bY bank:
45,000 170,000
\1arch
Bank staternent balance _ugq,mq -{pril

October 31 balance per book 990,000 J.r',rce charge

Book credits 1,200,000 \Ialch
Book debits 710,000 -{pril

October Sl balance per bank statement 1,100,000 :;SF check:

Bani< credits 500,000 \Iarch
Bank debits 1,000,000 -\prr1

Debit memo for service charge in November 10,000 - =posit in transit

Debit memo for a customer's NSF check in November b0,000 \Iarch 31
-{pril30
During the month of November, the bank corrected the
P10,000 error committed in prior month. - ;r-.tanding checks
\Ialch 31

The entity recorded as cash receipt a customer note -{pi'ii 30

receivable of P100,000 piaced with the bank for collection
on Novernber 30. The note was not collected until the Requirecl:
subsequent month.
?tepare a proof of cash for
':":ck to bank" method.
Required:
a. Prepare bank reconciliation statement on November 30
showing adjusted balances.

b. Prepare one adjusting entry only on November 30.

ro2
 Problem 3-5 (ACP)
Efficient Company showed the foilowing information:

Cash in bank balance, IVIarch 3tr 200,000

Book credits forApril 72O,OAO
800,000

Bank statement balance, March 31 330,000

debits
Bank 53o,ooo
Bankcredits 700,000

\ote collected by banh:

llarch 60,000
April 100,000

Serr-ice charge:
lvlarch ' 8,000
April 2,000

\SF check:
jVlarch 20,000
April 30,000

)eposit in transit:
March 31 80,000
April S0 220,000

Outstanding checks;
March 31 178,000
Aprii 30 372,000

Required:
Prepare a proof of cash for the month of April following the
"book to bank" method.

103

E_
 Problem 3-6 (IAA) Froblem 3-7 (IAA)
Bigotry Cornpany provided the following information: :,:dlam Companl' Proriried I
: December:
Balance per book, August 31 2,000,000
Receipts per book for August 4.400,000
Disbursements per book for August 3,600,000 l:shln bank account balance
:',;:; statement balance
Balance per bank, August 31 1,860,000 :.rj debits
Bank receipts for August 5,000,000 : .:ik credits
Banh disbursements for August 3,940,000 l-- -; debits
:.- li credrts
August collection of P200,000 recorded by entity as 20,000 -:
-'::,.tanding checks
August check in payment of account - =;osit in transit
payable for P600,000 recordedby entity as 60,000 ::ck elroneouslY charged bi'
'rank against entitl'"s accc'-ir
Deposit of Bigot Company and corrected in subseque::
erroneously credited by bank to Bigotry Company 200,000 ::rk service charge
August check of Bigot Company I ' - i= r'ecorded as cash receipl o1'
' erroneously charged by bank to Bigotry Company 400,000 ;ntity when Placed rr-rth ba:
i:r collection and note is a::
NSF check: :ollected bY bank in subse':,'-
July 100,000 month and credited b1'ban.
August 50,000 entity's account in same n-

Note collected by bank for Bigotry Company: Required:

July 200,000
August 300,000 Prepare a four-column
balances.
Deposit in transit:
Juiy 31 600,000 Prepare one adjusting €
August 31 480,000

Outstanding checks:
July 31 100,000
August 31 650,000

Required:
Prepare a proof of cash for the month of August following
the "book to bank" method.

L04

!_
?::,blem 3-7 (IAA)
: -' :-:r Company provided the following data for the month
- = -.nber:
November 30 December 31
-can-k
=
. --. -:- account balance 2,032,000 3,tr60,000
: -- - .:..tement balance 1,890,000 2,900,000
- : - ' : -;-.. -:irlLs 1,080,000
,)
' ---.. -:= f ttS
I _ i - ^.-^
IL-\ ?
-:.
: i -::!;.t-" 1,440,000
- .-':..;:i:ng checks 180,000 592,000
, - - ..-: -r: rransit 80,000 498,000
'.
=::oneously charged by
, -:

,
'::-; against entity's account
..:,i :,rrected in subsequent month 40,000 50,000
: . - .- ==:-'ice charge 2,000 4,000
. :.::,:Ced as cash receipt by
.'-:::'.- -*hen placed withbank
: , : -: Lection and note is actually
'
=:ted by bank in subsequent
: .:::il and credited by bank to
:.-:-:i' s account in same month 200,000 300,000

"- = ; uired:

- :=pare a four-column reconciliation showing adjusted

- ranceS.

, :=rare one adjusting entry only on December 31

105
Problem 3-8 (IAA) Pr,rhlem 3-9 (IAA)
:.- C,:mpany provided th=
Jargon Company provid.ed the following data concerning the -=nber
cash records for the months of Septernber and October:
-. 31:

l --= '': :nemo for November record.

30 Oetober 3t
September I r=;': meno for December no! ]-et l
- =: : =it rn transit - November 3[t
Book halance 1,900,000 ? i bank charge in Decenb.
=-::=,r'.rs
Total cash receipts per book 1,4m,gm :'.' ranli in December
Total cash disbursements Per book
. 2,400,000 i.-:- :---us receipt by Ba,v ComPani
:- -,t corrected until the follor+'rn
2,100,000 I .: .. :rmpany receipts for' Decem'c
Bankbalance I - --".' banli credits in December
Total charges in bank statement 2,mo,000
Total credits in bank statement 1,200,000
i:-at amount should be repo
--rrcember 31?
NSF check 60,000 40,000
Collections of accounts receivable . i 9ffi.000
not recorded by entitY and : i.300,000
corrected in subsequent month 30,000 50,000 : i 500,000
Overstatement of check in : 1.20O,000
payment of salaries corrected
in subsequent month 90,000 120,000
?:oblem 3-10 (IAA)
Deposit in transit 130,000 260,000
Outstanding checks 270,000 30,000
- ::v
Company provided th
- -:.:ber and November.
Required:
- :=:ks and charges recorded bY br
:ncluding a November sen-ice
a. Prepare a four-eolumn reconciliation showing adjusted a.nd NSF check of P20,000
balances. -i.nce charge made by bank in Or
i:- depositor in November
b. Prepare adjusting entries on October 31 I ::al Gedits to cash n all journals
- :-.i,lErer NSF check returned in I

redeposited in November but r

iepositor in either October or I
-
--:-.mding checks on October 31 tb

l,:at amount was reporter

:':i'ember 30?
,. 275,000
: 300,000
: 315,000
: 290,000

106 I
:-: -,hlem 3-9 (IAA)
- . iil,:,mpany provided the following information on
- = -=rber 31:
- *= t
: for November recorded in December
=emo
600,000
-:,--: Eemo for December not yet recorded 800,000
- : r'- -.ri ilL transit - November 30 700,000
; -:-- - -us bank charge in December corrected
=':
-.- ank in December 200,000
: -:- :;:,is receipt by Bay Company in December
:,: r corrected until the following year 300,000
- -.: -':upanyreceiptsforDecember 8,500,000
- . --.- :an-}< credits in December 8,000,000

-.:; amount should be reported as deposit in transit on

*"ecernber 31?
- 9rn.000
. i{10.000
- ;8r.000
: 2tlg.6tgg

l: oblem 3-10 (IAA)

::;i. Company provided the following information for
.
.;.-i:er and November.
: ==S 3rrd charges recorded by bank in November
:. duding a November service charge of P5,000
arci \SF check of P20,000 550,000
:':-.::e charge nnade by bank in October and recorded
:" iepositor in November 10,000
- - --.. journals during November
=edits to cash n all
620,000
-.:.:ner NSF check returned in October and
re,leposited in November but no entry made by
:epositor in either October or November 40,000
-:---:ding checks on Oetober 31 that cleraed in November 230,000

r,:,at amount was reported as outstanding cheeks on

" : 'ernber 30?
. :i5.000
: :'-il-].000
r 15.000
_ -90.000
107
Problem 3-11 (PHILCPA AdaPted)
Problem 3-12 (AICPA Adt
Humanizer Company provided the foliowing information:
Cool Company prepared the
Balance per bank statement- MaY 31 2,600,000 ilrr the month of November:
Deposits outstanding 300,000 Balance per bank statement. \ove
Checks outstanding (199,099) ld: Deposit in transit
.{

Correct bank balance - May 31 3400{00

-ss: Outstanding checks
Bank credit recorded irl err
Balance per book-May 31 2,810,000 3 aiance per book, November 30
Bank service charge 10,000)
Jata per bank statement lo.
Correct book balance - May 31 3400!00 l, : :ember deposits, including note
collected of P1,000,000 for Cc.;,
June data are as follows: Bank Book -i cember disbursements. includ;:
=
P350,000 and serrice charge P
recorded
Checks 2,200,000 2,500,000
recorded
Deposits , 1,600,000 1,800,000 :l items that were outstan,
Servicechargesrecorded 50,000 :::rough the bank in Decenabe
Note collected by bank, P500,000 plus interest 550,000 -: addition, checks of P5ttt
NSF check returned with June 30 statement 100,000 i:posits of P700,000 were ur
Balances 2,400,000 2,100,000 \Lhat amount should be re1
on December 31?
1. What amount should be reported as outstanding checks a. 4,700,000
on June 30? b. 4,900,000
a. 300,000
c. 4,500,000
b. 400,000
d. 3,200,000
c. 200,000 - \\hat amount was report€
d. 100,000 on December 31?
2. What amount should be reported as deposits in transit a. 4,100,000
b. 4,900,000
on June 30? c. 4,700,000
a. 300,000
d. 4,300,000
b. 100,000 \\hat amount should be .ep*
c. 200,000 rn December?
d. 500,000 a. 5,400,000
'b. 4,400,000
3. What amount should be reported as adjusted cash in bank c. 5,500,000
on June 30? d. 6,400,000
a. 2,500,000 - \\hat amount should be repo
book in December?
b. 2,400,000 a. 3,700,000
c. 2,100,000 b. 3,300,000
d. 2,800,000 r 3,100,000
108 d. 3,500,000
1
 : : biem 3-12 (AICPA Adapted)
'., ,l-rnpany prepared the following bank reconciliation
: :---= nonth of November:
:. . -:'= :er bank statement, November 30 3,600,000
- :: -'=i:-rit rntransit 800,000
4,400,000
- r: 1,,:tsianding checks 1,200,000
E a:rk credit recorded in error 200,000 1,400,000
: . . - -= ; =r book, November 30 3,000,000

- . .. :=r bank statement for the month of December:

- -i. - :.r deposits, including note receivable
: -' . ::eC of P1,000,000 for CooI Company 5,500,000
- ,=- :-:r iisbursements, including NSF check
: = : [tC0 and service charge P50,000
--
4,400,000
-- -:::3s that were outstanding on Novernber 30 cleared
' :-
-i:. rhe bank in December, including the bank credit.
- .ii:tion, checks of P500,000 were outstanding and
-;:,::-:s of P700,000 were in transit on December 31.
*:at amount should be reported as adjusted cash in bank
-:- December 31?
, f . i00,000
: {.900,000
. +.500.000
: :.200,000
'J1at
- amount was reported as cash in bank per ledger
:- December 31?
i.r
._ 1100.000
: 1.900,000
1.;00.000
: I :300,000
"'1at amount should be reported as cash receipts per book
-:, lecember?
, 5.{00,000
&
t -1.100,000
_ 5.500,000
: d.{00,000
- ''='-.:at
'nrrck amount should. be reporbed as cash disbursements
per
rn December?
,.i 00,000
_1.3 00,000
.1. 1 00,000
:j.5 00,000

109
Problem 3-13 (AICPA AdaPted) Problem 3-1.1 (AICPA Ada
Lovabie Company prepared the following bank reconciliation
on June 30: - -:-uacious Companl- PreI
:':- - rlcilistion on June 30.
Balance perbank statement, June 30 3,m0,0O0
beposit in transit 400'0OO
:. -;..nce per bank
Total 3'1qg'000
( - r,:stt in transit
*=

Oltst.^firgchecks 90o,Oq0)
_-_'*tanding checks
Balance perbook, June 30 2.qqP,0O0
:aialce per book
The bank statement for the month of July showed' the were total dePosits of
following: l:;ie
'rsbursements of P9.000,O00 fr
Deposits. includins P200,000 note collected for Lovable 9,000,000
Disbtrrsements, iniluding P140,000 NSF check and ; reconciiiation items on Jur:
P10,000 service charge 7,000,000 r i Deposit in transit tot
- *l..randing arnounted to P1.0r
All reconciling items on June 30 cleared through the bank in
July. - ilhat amount should be r,
The outstandins checks totaled P600,000 and the deposit in bank on July 31?
transit amountdd to P1,000,000 on July 31-
1. What amount should be reported as adjusted cash in bank a. 7,300,000
on July 31?
b. 7,900,000
c. 6,900,000
a. 5,000,000 d. 6,300,000
b. 5,200,000
c. 5,550,000 - \l:hat amount was repori€
d. 5,400,000 per book on July 31?
2. What amount was reported as pash in bank balance a. 6,900,000
per book on JuIy 31? b. 7,300,000
a. 5,400,000 c. 6,300,000
b. 5,350,000 d. 8,800,000
c. 5,550,000
d. 4,500,000 :. trhat amount should be rt
book in July?
3. What amount should be reported as cash receipts per
book in Juiy? a. 6,700,000
a. 9,400,000 b. 6,500,000
b. 9,600,000 c. 6,800,000
c. 8,600,000 d. 7,100,000
d. 9,800,000 I What amount should be rePcl
4, What amount should be reporbed as cash disbursements per -
book in.IulY?
book in &r{v? a. 8,600,000
a. 6,550.t11i0 b. 7,600,000
b. 6,700,000 c. 9,400,000
;:
d.
i:Boolooo
6,850,000
d. 8,400,000
1
110
:: rhlem 3-14 (AICPA Adapted)

- :.,racious Company preparecl the following bank

:=" ,rcfiation on June 30.
-..---uce per bank 9,800,000
-.=:.-stt rn transit 400,000
---<andrng checks (1,400,000)

:*=:,ect per bOOk

_q499,000

I-=ie were total deposits of P6,500,000 and charges for

- -.b'.rsements of P9,000,000 for JuIy per bank statement.
-* :econciliation items on June 30 cleared the bank on July
, i Deposit in transit totaled P600,000 and checks
,-randing amounted to P1,000,000 on July 31.
i\hat amount should be reported as adjusted cash in
bank on July 31?
e 7,300,000
b. ?,900,000
:. 6,900,000
d 6,300,000
ithat amount was reported as cash in bank balance
per book on JuIy 31?
a. 6,900,000
b. 7,300,000
c. 6,300,000
i 8,800,000
amount should be reported as cash receipts per
H-i-rat
book in July?

'3 6,500,000
c. 6,300,000
l. 7,100,000
\*trat amount should be reported as cash disbursements per
book in July?
a. 8,600,000
t. 7,600,000
c. 9,400,000
c. 8,400,000
111
Problem 3-15 (AICPA AdaPted)
Opaque Company prepared the following bank reconciliation
on March 31:

Balance per bank statement, March 31 4,650,000

Deposit in transit 1,000,000
Total 5,650,000
Outstanding checks G,2!9.qgg)
Balance per book, March 31 4,400,000

Data per bank statement for the month of April follow:

CHAPTER 4
Deposits 6,000,000
Disbursements 5,000,000

All reconciliation items on March 31 cieared through the bank ACCOUNTS RE

in April.
Outstandins checks on April 30 totaled P750,000 and deposits
in transit airounted to P1,500,000.
1. What amount should be reported as adjusted eash in bank TECHNICAL KI{O'|'LEL
on April 30?
a. 5,650, 000 To know the classification c
b. 7,150,000
c. 4,650,000
d. 6,400, 000 To hnow the initial onci
accourtts receiuable.
2. Srhat amount was reported as cash in bank balance per
ledger on April 30?
a. 6,400,000
!c identify tl'r: r,tdjttstmenr
b. 5,650,000 net realizable ualtte oi a
c. 4,900,000
d. 4,650,000
To u,nderstand the gross
3 What amount should be reported as cash receipts per book recordin g credit sales.
in April?
a. 5,000,000 To know the accounting fo
b. 6,500,000
c. 7,500,000 accounts writtelL off on-t
d. 5,500,000 off.
4. What amount shouid be reported as cash disbursements
per book in April?
a. 5,000,000
b. 5,5 00,000
C. 4,5 00,000
d. 5,7 50,000
LL2