12

Fundamentals of
Accountancy, Business
and Management 2
Quarter 2 - Module
Week 3
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SCHOOLS DIVISION OF SURIGAO CITY

FABM2 - WEEK 3
First Edition, 2020

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Development Team of the Learning Activity Sheets

Writer: Kurt-Airion H. Sumaylo

Editor:
Reviewers:
Layout Artist:
Management Team:

Printed in the Philippines by ______________________________

For the learner:

Welcome to the Fundamentals of Accountancy, Business and Management 2 – Grade 12
Modular Distance Learning (MDL) Self-Learning Module on the Statement of Comprehensive
Income (SCI) of a Merchandising Business!

Writer: KURT-AIRION H. SUMAYLO

School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
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This module was designed to provide you with fun and meaningful opportunities for guided
and independent learning at your own pace and time. You will be enabled to process the
contents of the learning resource while being an active learner.

WEEK BANK RECONCILLIATION

3 STATEMENT

Name : ____________________________________________ Section : _______________

Objectives

A. Give the steps in reconciling process

B. Understand the reconciling process

C. Compute for bank and company reconciliation statements

D. Prepare a bank reconciliation statement

E. Analyze problems in preparing the bank reconciliation statement

F. Compute the Deposits in Transit, Unadjusted Balance per Book and Unadjusted Balance
per Bank using the backward method

G. Prepare a bank reconciliation statement.

What I know?
Directions: Read and analyze the statements. Write the letter of your answers before the number.

Writer: KURT-AIRION H. SUMAYLO

School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
 Page |4

1. Which action should be taken when a fee was charged by the bank for a returned check?
A. Add to Book Balance C. Deduct from Book Balance
B. Add to Bank Balance D. Deduct from Bank Balance

2. Which action should be taken when there is a Deposit in Transit?

A. Add to Book Balance C. Deduct from Book Balance
B. Add to Bank Balance D. Deduct from Bank Balance

3. Which action should be taken if the bank collects a service charge from the company?
A. Add to Book Balance C. Deduct from Book Balance
B. Add to Bank Balance D. Deduct from Bank Balance

4. Which action should be taken when the company has outstanding checks?
A. Add to Book Balance C. Deduct from Book Balance
B. Add to Bank Balance D. Deduct from Bank Balance

5. The Bank Reconciliation Statement shows a balance of P6,000.00 as per cash book, deposits are
not yet credited amounting to P3,400.00, and as per Bank Statement, it is credited as P4,000.00.
How much is the unpresented check?
A. P1,400.00 C. P6,000.00
B. P7,400.00 D. P1,200.00

Lesson

Let us recall the definition of Reconciliation. It is a process that compares and checks the two sets of
records namely the company’s record and the bank’s record if both balances are equal. In this module,
you will learn how reconciliation statements are being handled and it is simply shown in Illustration No. 1

How is reconciliation BANK RECONCILIAT

ION STATEMENT
being done?

Step 1. Adjusting the

balance per bank
The first step is on the part COMPANY BANK
of the bank. It should
adjust the
balance on the bank
statement. The company’s COMPANY’S CASH BOOK BANK STATEMENT
(General Journal & Ledger)
bank statement must reflect
the accurate recording of
the company’s bank
transactions.
Writer: KURT-AIRION H. SUMAYLO RECONCILE
School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com Illustration 1
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Illustration No. 2 shows how to adjust the balance per bank for every end of the month.

Step 2. Adjusting the

Unadjusted
Balance per Bank Statement (end of the month) Balance per Book
(Company’s Book)
Adjustments: The second step of
Add: Deposits in Transit reconciliation is on the part of
the company. It should be
Deduct: Outstanding Checks equal to the balance per bank.
Illustration no. 3 shows how
Adjusted/Corrected Balance per Bank the company makes
adjustments on its cash
account.
Illustration No. 2

Unadjusted Balance per Book (end of the month)

Adjustments:
Deduct: Bank Service Charges

Deduct: NSF Checks and Fees

Deduct: Check Printing Charges
Add: Interest Earned
Add: Notes Receivable collected by bank
Add or Deduct Errors in Company’s Cash Account

Adjusted/Corrected Balance per Books

Illustration No. 3

Step No. 3 Comparing the Adjusted Balances (Bank Statement vs. Company’s Books)

The third step is to compare the adjusted balance per bank (Step 1) and the adjusted balance of the
company’s books (Step 2). The two balances must be equal. In case the said balances are not

Writer: KURT-AIRION H. SUMAYLO

School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
 Page |6

The bank statement for January 2020 shows an ending balance of the same, the process is
Item #1 done repeatedly until
P34,097.00
both balances are equal.
The bank statement under January indicates the P1,500.00
Item #2 The balances must state
service charge for maintaining the company’s checking account.
the true and correct figure
On the bank statement under January 28 shows a return check of of cash as per the date
P150.00 plus a related bank fee of P150.00. The returned item is stated on the bank
Item #3 reconciliation statement.
the customer check. It was returned because of NSF and was
marked “do not deposit.”
Step 4. Preparing
The bank statement under January 20 shows a charge of P800.00
Item #4 Journal Entries
for the printing of the check.
The last step to be done is
On the bank statement under January 31 shows an interest of on the part of the
Item #5 company where
P800.00 added to the company’s checking account.
adjustments in the
The bank statement shows the bank collected a note receivable of
Journal entries must be
P21,000.00 on January 29 and was deposited into the company's
prepared. This is part of
Item #6 account. On the same day, the bank charge P1,000.00 as a fee for
the balance per book
collecting the note receivable and withdrew the P1,000.00 from
(Step
the company's account.
2).
On the company's Cash account at the end of January shows a Illustrated Problem:
Item #7
balance of P10,097.00. Read and analyze the
bank transactions for
During January, the company wrote checks with a total of more
January 31, 2020.
than P60,000.00. As of January 31, P5,210.00 of the checks
Item #8 Where each transaction
written in January had not yet cleared the bank and P5,000.00 of
should be recorded to be
checks written in January had not yet cleared the bank.
able to prepare bank
The company received cash on January 31 and was recorded on reconciliation?
the company's books as of January 31. However, the P4,500.00 of Table 1
Item #9
cash receipts was deposited at the bank on the morning of
February 3. Solutions:
Following Step No. 1 –
On January 29, the company's Cash account shows cash sales of Adjusted Balance per
P540.00, but the bank statement shows the amount deposited was Bank
Item #10
P450.00. Upon review, the company found out that P450.00 was Observed that the amount
the correct amount. indicated in table no. 3
were from the given transactions in Table No. 4.
Unadjusted Balance per Bank Statement (end of the
month)
Item No. 1 P34,097.00
Adjustments:
Add: Deposits in Transit Item No. 9
4,500.00
Deduct: Outstanding Checks Item No. 8
10,210.00
Adjusted/Corrected Balance per Bank P28,387.00

Table 3

Writer: KURT-AIRION H. SUMAYLO

School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
 Page |7

Following Step No. 2 – Adjusted Balance per Books

The source of the figures shown in table no. 4 were from the items given in Table No. 4.
Unadjusted Balance per Book (end of the month) Item No. 7
P10,097.00
Adjustments:
Deduct: Bank Service Charges Item No. 2
1,500.00
Deduct: NSF Checks and Fees Item No. 3
300.00
Deduct: Check Printing Charges Item No. 4
800.00

Add: Interest Earned Item No. 5

800.00
Add: Notes Receivable collected by bank Item No. 6
20,000.00
Add or Deduct Errors in Company’s Cash Account Item No. 10 90.00 Adjusted/Corrected
Balance per Books P28,387.00

Table 4

Following Step No. 3 – Compare Adjusted Balance per and Adjusted Balance per Book of Company.
Observed the balances in Table 3 and Table 4 are equal.
Following Step No. 4 – Preparing Journal Entries is in the part of the company.
Step No. 2 are balanced from the company’s cash account found in the general ledger. Remember that
any adjustment needed by the company on its cash account must be recorded in the general journal. The
adjustments to the books are the results of the amount found on the bank statement but not yet recorded in
the company’s cash account.
Item No. 2, Bank Service Charges

Date Account Title Debit Credit

January 31 Bank Service Charge Expense P1,500.00
Cash P1,500.00
Item No. 3, NSF and other fees
Date Account Title/Name Debit Credit
January 28 Accounts Receivable P300.00
Cash P300.00

Item No. 4, Check Printing Charges

Date Account Title/Name Debit Credit

January 20 Supplies P800.00
Cash P800.00

Item No. 5, Interest Earned

Date Account Title/Name Debit Credit

January 31 Cash P800.00
Interest Income P800.00
Item No. 6, Notes Receivable
Date Account Title/Name Debit Credit

Writer: KURT-AIRION H. SUMAYLO

School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
 Page |8

January 29 Cash P21,000.00

Bank Service Charge Expense 1,000.00
Notes Receivable P20,000.00
Item No. 10, Company Error
Date Account Title/Name Debit Credit
January 29 Cash P450.00
Revenue P450.00

In preparing the adjusted balances, some items will be asked concerning the bank reconciliation
statement.
Illustrative Problem No. 1
An event management company reported its unadjusted book balance which contains the following
details: Unadjusted Book Balance of P242,000.00; Bank Statement amounting to P332,000.00; granted a
bank loan of P50,000.00; charged of P2,000.00 penalty by the bank; and with a total of P33,000.00
outstanding checks.

Compute for adjusted balance per book and the Deposits in Transit (DIT).
P242,000.00 + DIT – P33,000.00
DIT = P380,000 – P242,000.00 + 33,000.00
DIT = P171,000.00

Remember: Before you get the Adjusted Balance per Book you need first to find the DIT

Book Bank

Unadjusted Balance per Book Unadjusted Balance per Bank P332,000.00

P242,000.00
DIT 171,000.00 Credit Memo (Loan) 50,000.00
Outstanding Checks 33,000.00 Bank Charges 2,000.00
Adjusted/Corrected Balance Adjusted/Corrected Balance
per Book P380,000.00 per Bank P380,000.00

Table No. 1 shows the adjusted balances

both
Balance per Book and Balance per Bank

Writer: KURT-AIRION H. SUMAYLO

School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
 Page |9

Activity

The accounting records of BEE Company show the summary data of its cash receipts and
payments for November 2019. Its November Cash Balance has P42,130.00; its Total Cash Receipts is
P40,000.00, Total Checks issued is P25,000.00. The company received its Bank Statement indicating a
balance of P82,000.00. The following reconciling items were discovered.

Item No. 1 – A deposit of cash receipts P3,000.00 of November 30 is too late to include in the bank
statement.

Item No. 2 – Outstanding checks were: No. 1234-P2,652.00; No. 1235-P6,557.00; No. 1236-P6,095.00.

Item No. 3 – The bank collected a note left for collection amounting to P20,000.00 plus a service charge
of P600.00.

Item No. 4-Check No. 1237-P P690.00 was incorrectly charged by the bank as P960.00

Item No. 5-Check No. 1238-P cleared by the bank with P4,200.00 has been recorded in the company’s
book as P2,400.00. This was for the payment of the creditor’s account.

Item No. 6-The customer returned the check for NSF, P7,800.00.

Item No. 7-The bank service charges for the month are P1,864.00.
Note: To compute for Balance per Book is: Add Cash Balance and Total Cash Receipts less the Total
Checks Issued
How much is the Balance per Book?_________________

Activity 1: Present the Reconciliation per Bank Statement

Activity 2: Present the Reconciliation per Company’s Book

Writer: KURT-AIRION H. SUMAYLO

School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
 P a g e | 10

Activity 3: Presents the adjusted journal of the computed reconciliation.

Generalization

BRS is prepared on a periodical basis for checking that bank related transactions are recorded
properly in cash book's bank column and also by the bank in their books. BRS helps to detect errors in
recording transactions and determining the exact bank balance as on a specified date.

Post-test

A. Directions: Read and analyze the statement. Write TRUE if the statement is correct and FALSE if
the statement is wrong. Write your answers before the number.

Writer: KURT-AIRION H. SUMAYLO

School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
 P a g e | 11

1. When a fee was charged by the bank for returned check, it is recorded as a deduction from
Book Balance.

2. A deposit in Transit is recorded as an addition to the Bank Balance.

3. When the bank collected a service charge from the company, it is a deduction from Book
Balance.
4. Outstanding checks of the company are recorded as a deduction from the Bank Balance.

5. Jonathan paid his supplier P12,000.00 in check. His supplier did not encash the check. The
P12,000.00 is to be added from the balance of the bank statement.

B. Directions: Choose the correct answer. Write the letter of your answer before the number.
1. What formula is used in computing DIT?
A. DIT = Unadjusted Balance per Bank – Unadjusted Balance per Book +
Outstanding Checks
B. DIT = Unadjusted Balance per Bank + Unadjusted Balance per Book +
Outstanding Checks
C. DIT = Adjusted Balance per Bank – Unadjusted Balance per Book + Outstanding
Checks
D. DIT = Adjusted Balance per Bank + Unadjusted Balance per Book + Outstanding
Checks

4. How much are the adjusted cash balance and unadjusted bank balance for the month if the
company has: DIT P16,000.00; Outstanding Checks P8,000.00; received Bank Statement that
states Interest Income P4,000.00; Bank Charges P800; Unadjusted Bank Balance P100,00.00?
A. Adjusted Cash Balances P108,000.00
Unadjusted Bank Balance P104,800.00
B. Adjusted Cash Balances P108,000.00
Unadjusted Bank Balance P105,800.00
C. Adjusted Cash Balances P109,000.00
Unadjusted Bank Balance P104,800.00
D. Adjusted Cash Balances P109,000.00
Unadjusted Bank Balance P105,800.00

5. How much are the adjusted cash balance and unadjusted book balance for the month if the
company received its monthly statement from the bank that contains Unadjusted Bank Balance of
P98,000.00; Demit Memo (DM) P9,000.00; Credit Memo (CM) P80,000.00; DIT P4,000.00; and
Outstanding Checks (CM) P4,300.00?
A. Adjusted Cash Balances, P169,000.00
Unadjusted Book Balance, P168,700.00
B. Adjusted Cash Balances, P169,000.00
Unadjusted Book Balance, P167,700.00
C. Adjusted Cash Balances, P169,000.00
Unadjusted Book Balance, P168,00.00
D. Adjusted Cash Balances, P169,000.00
Unadjusted Book Balance, P167,00.00
Writer: KURT-AIRION H. SUMAYLO
School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
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References:

Licuanan P. (2016). Teaching Guide for Senior High School

Fundamentals of Accountancy, Business and Management
1
Specialized Subject I ACADEMIC – ABM
Published by the Commission on Higher Education,

Accountingtheory(n.d) Retrieved from http://accountingtheory.weebly.com/nature-

and-scope-of-accounting

Writer: KURT-AIRION H. SUMAYLO

School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com