12

Fundamentals of
Accountancy, Business
and Management 2
Quarter 2 - Module
Week 2

SCHOOLS DIVISION OF SURIGAO CITY

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FABM2 - WEEK 2
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!

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.

Writer: KURT-AIRION H. SUMAYLO

School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
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WEEK Effects of the Identified Reconciling

2 Items

Name : ____________________________________________ Section : _______________

Objectives

A. Analyze the effects of the identified reconciling items

B. Determine the reconciling items needed in the preparation of Balance per

Book of the company

C. Illustrate the content of Balance per Book of the company

D. Analyze the effects of the identified reconciling items

E. Determine the reconciling items needed in the preparation of Balance per

Bank Statement

F. Illustrate the content of Balance per Bank Statement

What I know?
Directions: Identify the effects of the Reconciling Items/Terms in the adjustment of Balance per
Book by writing a / (check) inside the box that corresponds to your answers.

Reconciling Items Effects to adjustments

Deduction from Balance per Book
1. Check Printing Charges
Addition from Balance per Book
Deduction from Balance per Book
2. Interest Earned
Addition from Balance per Book

Writer: KURT-AIRION H. SUMAYLO

School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
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Deduction from Balance per Book

3. Notes Receivable Addition from Balance per Book

Deduction from Balance per Book

4. No Sufficient Funds and
Fees Addition from Balance per Book

Deduction from Balance per Book

5. Bank Service Charge
Addition from Balance per Book

Lesson

1. Effects of the Identified Reconciling Items

For the company to reconcile its records, it should compare its details between the bank and
the company’s records. For us to better understand how reconciliation is being done, let us apply the
method used in preparing the bank reconciliation statement, the book adjusted method. Let us assume
that both the company and the bank are conducting reconciliation separately.

A Debit memorandum or Debit memo

 is a document informing the depositor of debit adjustments made to their bank account.
 these are charges made by the bank to the account of the depositor, an example of this is a
service charge.

A Credit memorandum or Credit memo

 these are the collections made by the bank and credited to the company’s account;
 sometimes, they are loan proceeds which the bank credits to the bank account of the
company.

Bank Service Charges

 fees deducted from the bank statement for the bank’s processing of the checking account activity.

NSF (No Sufficient Funds)

 a written check that was not accepted by the bank of the person or a company because the account
does not have sufficient balance.

Check Printing Charges

 occur when a company arranges for its bank to handle the recording of its checks.
Writer: KURT-AIRION H. SUMAYLO
School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
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 the cost of the printed checks will be automatically deducted from the company’s checking
account.
 there is no adjustment to the balance per bank.

Interest earned

 will appear on the bank statement when a bank gives a company interest on its account
balances; the amount is added to the checking account balance and is automatically on the
bank statement;
 amount of interest earned will increase the balance in the company’s cash account on its
books.

Notes Receivable

 assets of a company
 when notes due, the company might ask its bank to collect notes receivable (for this service
the bank will charge a fee)
The bank will increase the company’s checking account for the amount it collected (principal and
interest) and will decrease by the collection fee it charges. Since these amounts are already on the
bank statement, the company must be certain that the amounts appear on the company’s books in its
cash account.

Errors
 the company’s Cash account results from the company entering an incorrect amount, entering a
transaction that does not belong in the account, or omitting a transaction that should be in the
account.

What is the effect of the inaccurate recording of figures on the part of the company?
If the company made the errors, the correction of the error will be either an increase or a decrease to
the balance in the Cash account of the company’s book.
The table shows how an Unadjusted Balance per Book is prepared.

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

Table 1
Writer: KURT-AIRION H. SUMAYLO
School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
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Deposits in Transit (DIT)/Undeposited Collections

 amounts already received and recorded by the company, but not yet recorded by the bank;
 are on the company’s books, but they are not on the bank statement.

Illustrative Example No. 1:

A hardware store received a check from customers amounting to P25,000.00 on August 30 and
was recorded in the company’s books and deposited to the bank on the 1st day of September.
P25,000.00 is DIT because it was received but not yet deposited.

Remember: If the errors are on the part of the bank, no charges are being collected to the company.
The illustration shows how the Balance per Bank Statement is being presented.

Unadjusted Balance per Bank Statement (end of the month)

Adjustments:
Add: Deposits in Transit
Deduct: Outstanding Checks
Adjusted/Corrected Balance per Bank

Activity

Activity 1
Directions: Determine the effects of the Reconciling Item Balance as per Book.

Reconciling Term/Item
1. No Sufficient Funds
2. Notes Receivable
3. Debit Memo
4. Credit Memo
5. Interest Earned

Activity 2:
Writer: KURT-AIRION H. SUMAYLO
School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
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Illustrate the Bank Reconciliation Statement per Book.

Generalization
In bookkeeping, a bank reconciliation is the process by which the bank account balance in an
entity's books of account is reconciled to the balance reported by the financial institution in the most
recent bank statement. Any difference between the two figures needs to be examined and, if
appropriate, rectified.

Post-test

Writer: KURT-AIRION H. SUMAYLO

School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
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A. Directions: Identify the effects of the following transactions in the Balance per Book. Put an X
mark to your answer, where is an addition, and is a deduction to the Balance per Book.

Transactions Effects on Balance per Book

Add or Deduct

1. In reconciling the balance from the bank statement to the cash

book of the company, do you add or deduct receipts that are
not yet deposited?

2. In reconciling the balance from bank statement to the cash book

of the company, do you add or deduct bank printing charges?

3. In reconciling the balance from bank statement to the cash book

of the company, do you add or deduct payment recorded to the
cash book which is an error during recording?

4. In reconciling the balance from bank statement to the cash book

of the company, do you add or deduct interest earned?

5. In reconciling the balance from the bank statement to the cash

of the company, do you add or deduct fees for NSF?

B. Directions: Identify the following by writing a / (check) inside the box that corresponds to your
answers.

Set A Contains the Reconciling Items/Titles used in preparing the Bank Reconciliation Statement
(BRS) and their effects in adjustments.

Reconciling Items Effects to adjustments

Deductions from Balance per Bank Statement
1. Deposits in Transit
Additions from Balance per Bank Statement
Deductions from Balance per Bank Statement
2. Bank Charges
Additions from Balance per Bank Statement

Deductions from Balance per Bank Statement

3. Outstanding Checks Additions from Balance per Bank Statement

Set B Arrange the parts according to their arrangement in the preparation of BRS. Use numbers 1, 2,
and 3.

Writer: KURT-AIRION H. SUMAYLO

School/Station: CARAGA REGIONAL SCIENCE HIGH SCHOOL
Division: Surigao City
Email Address: kurtairionsumaylo1981@gmail.com
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___ Adjustments
___ Adjusted/Corrected Balance per Bank
___ Balance per Bank Statement (end of the month)

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