Bank Reconciliation

The bank statement for the current account of IAN Co. showed a December 31, 2018, balance of

P585,284. Information that might be useful in preparing a bank reconciliation is as follows:

a) Outstanding checks were P52,810.

b) b) The December 31, 2018, cash receipts of P23,000 were not deposited in the bank until
January 2,
c) 2019.
d) c) recorded One check by written the bank in but payment was recorded of rent by P8,940 Ian
Co. was
e) as a correctlyP9,840 disbursement.
f) d) In accordance with prior authorization, the bank withdrew P18,OOO directly from the current
g) account as payment on a mortgage note payable. The interest portion of that payment was
p14,OOO.
h) Ian Co. has made no entry to record the automatic payment.
i) e) Bank service charges of P 740 were listed on the bank statement.
j) f) A deposit of P35,000 was recorded by the bank on December 12, but it did not belong to Ian
Co.
k) g) The bank statement included a charge of P 3,400 for a notsufficient-fund check. The company
will
l) seek payment from the customer.
m) h) Ian Co. maintains an P8,000 petty cash fund that was appropriately reimbursed at the end of
n) December.
o) i) According to instructions from Ian Co. on December 301 the bank withdrew P40,000 from the
account
p) and purchased treasury bills for Ian Co. The company recorded the transaction in its books on
December
q) 31 when it received notice from the bank. Half of the treasury bills mature in three months and
the
r) other half in six months.
s) 1. What is the cash in bank balance per books on December 31, 2018?
t) A. P549,714 C. P534,914
u) B. P543,514 D. P541,714
v) 2. What is the adjusted cash in bank balance on December 31, 2018?
w) A. P520,474 C. P518,674
x) B. P527,274 D. P520,154
y) 3. What amount of cash and cash equivalents should be shown under current assets on
December 31,
z) 2018?
aa) A. P928,474 C. P720,474
bb) B. P728,474 D. P735,274
cc) SOLUTION 1-1 3
dd) 1. Balance per bank statement P585,284
ee) Outstanding checks (52,810)
ff) Undeposited collections 23,000
gg) Error in recording rent check (P9,840 -- P8,940) (900)
hh) Automatic mortgage payment 18,000
ii) Bank service charges 740
jj) Bank error — deposit incorrectly credited to Ian Co. (35,000)
kk) NSF check 3,400
ll) Balance per books P541,714
mm) Answer: D
nn) 2. Book Bank
oo) Unadjusted balances P541,714 P585,284
pp) Outstanding checks (52,810)
qq) Undeposited collections 23,000
rr) Error in recording rent check 900
ss) Automatic mortgage payment (18,000)
tt) Bank service charges (740)
uu) Bank error — deposit incorrectly credited
vv) to Ian Co. account (35,000)
ww) NSF check (3,400)
xx) Adjusted balances P520,474 P520,474
yy) Answer: A
zz) 3.
aaa) Current account balance P520,474
bbb) Petty cash 8,000
ccc)Treasury bills (P400,OOO x 1/2) 200,000
ddd) Total cash and cash equivalents P728,474