PHILIPPINE CHRISTIAN

UNIVERSITY
College of Business Administration and Accountancy

AUDITING

2. On your examination of the financial statements of heroes Group Company for the
year ended December 31, 20X7 you obtained the following information on the checking
account of the company:
The bank statement on November 30,20X7 showed a balance of P15,300.
Among the bank credits in November was customer’s note for P5,000 collected for the
account of the company which the company recognized in December among its
receipts. Including in the bank debits were cost of checkbooks amounting to P60 and a
P2,000 check which was charged by the bank in error against Heroes Group Co.
account. Also, In November you ascertained that there were deposits in transit
amounting to P4,000 and outstanding checks totaling P8,500.
The bank statement for the month of December showed total credits of P20,800
and total charges of P10,200. Company books for December showed total receipts of
P36,780 and disbursements of P20,360. Bank debit memos for December were: No.
4418 for service charges, P80 and No.4 on a customer’s returned check marked “Refer
to Drawer” to P1,200.
The bank error of P2,000 in November was corrected by the bank in December.
On December 29, 20X7 the company placed with the bank a customer’s promissory
note with a face value of P6,000 for collection. The company treated this note as part of
its receipts although the bank was able to collect on the note only in January,20X8.
A check for P198 was recorded in the company cash payments book in
December as P1,980.

Required:
1. Prepare a four (4) column bank reconciliation statement for the month of
December,20X7 for Heroes Group Co. Develop your reconciliation statement
by starting with bank balances and providing these balances per book
balances.
2. Present a computation:
a. Deposit in transit, December 31,20x7.
b. Outstanding checks, December 31, 20x7.