BANK RECONCILIATION

Multiple Choice:

1. All of the following may be included under the heading of “cash” except
a. Currency.
b. Money market funds.
c. Checking account balance.
d. Savings account balance

2. In which accounts are post-dated checks received classified?

a. Receivables.
b. Prepaid expenses.
c. Cash.
d. Payables.

3. In which account are postage stamps classified?

a. Cash.
b. Office supplies.
c. Receivables.
d. Inventory.

Skill-building Activities
PROBLEM SOLVING. PROVIDE WHAT IS ASKED IN EACH ITEM.
1. ABC Co. receives its July 1, 20x1 bank statement and immediately prepares its July 20x1 bank
reconciliation. Relevant information follows:
a. Cash balance per books – P300,000
b. Cash balance shown in the bank statement – P430,000
c. Credit memo – P190,000
d. Debit memo – P30,000
e. Deposit in transit – P50,000
f. Outstanding checks – P25,000 (including certified checks of P5,000)

Requirement: Prepare the bank reconciliation.

ABC CO.
Bank Reconciliation- (Landbank Checking account # 10009087)
July 31, 20x1
Balance per books, end. 300,000 Balance per banks, end. 430,000
Add: Credit memos (CM) 190,000 Add: Deposit in transit (DIT) 50,000
Less: Debit memos (DM) (30,000) Less: Outstanding checks (OC) (20,000)
Adjusted balance 460,000 Adjusted balance 460,000

2. You received your August 20x1 bank statement. The August 31, 20x1 cash balance in your
accounting books is P520,000 while the cash balance shown on the bank statement is P410,000.
You determined the following information:
a. Check No. 2345 for P45,000, issued to a supplier, is not yet presented to the bank for
payment.
b. A P205,000 check deposit, with deposit slip no. 0989, is not yet credited to your account.
c. A customer deposited P60,000 to your bank account. You have not recorded this collection
of account receivable in your accounting books.
d.The bank P10,000 monthly mobile phone charges directly out of your bank account.

Requirements:
(a) Prepare the bank reconciliation.
Bank Reconciliation
August 20x1
Balance per books, end. P520,000 Balance per banks, end. P410,000
Add: Credit memos (CM) 60,000 Add: Deposit in transit (DIT) 205,000
Less: Debit memos (DM) (10,000) Less: Outstanding checks (OC) (45,000)
Adjusted balance 570,000 Adjusted balance 570,000

(b) Prepare the adjusting (reconciling) entries.

AJE – c Cash in bank 60,000
Accounts receivable 60,000
to record the collection of accounts receivable

AJE - d Communications expense 10,000

Cash in bank 10,000
to record the mobile phone charges for the month
3. ABC Co. is preparing its September 30, 20x1 bank reconciliation. The following information was
determined:
a. Balance per bank statement, September 30, 20x1 – P180,000.
b. Deposit in transit, September 30, 20x1 – P32,000.
c. Return of customer’s check for insufficiency of funds, September 30, 20x1 – P60,000.
d. Balance per books, September 30, 20x1 – P143,000.
e. Outstanding checks, September 30, 20x1 – P27,000.
f. A collection of P320,000 was recorded in the books as P230,000. The bank statement shows
the correct amount of P320,000.
g. The bank erroneously credited a P12,000 deposit of Eye Busy Co. to ABC’s account.

Requirement: Prepare the bank reconciliation.

ABC Co.
Bank Reconciliation
September 30, 20x1
Balance per books, end. P143,000 Balance per banks, end. P180,000
Add: Credit memos (CM) - Add: Deposit in transit (DIT) 32,000
Less: Debit memos (DM) (NSF check) (60,000) Less: Outstanding checks (OC) (27,000)
Add/Less: Book errors: Add/Less: Book errors:
 Understatement 90,000 Overstatement (12,000)
Adjusted balance P173,000 Adjusted balance P173,000

Check for Understanding (Graded Quiz)

PROBLEM SOLVING. PROVIDE WHAT IS ASKED IN EACH ITEM.
1. Entity A is preparing its February 28, 20x1 bank reconciliation statement. The following information
was determined:
Cash balance per accounting books, Feb. 28, 20x1 ₱260,000
Cash balance per bank statement, Feb. 28, 20x1 ₱205,000

When investigating the difference, the accountant determined the following:

1. A customer deposited ₱30,000 to Entity A’s bank account as payment for an account receivable. This
is not yet recorded in the books of accounts.
2. A ₱102,500 check deposited by Entity A during the month is not yet credited to Entity A’s account.
3. A check drawn in the amount of ₱22,500 is not yet presented to the bank for payment.
4. The bank returned a check deposit amounting to ₱5,000 because of insufficiency in the funds of the
drawer. The check was received from a customer as payment for accounts receivable.
Requirements:
(a) Prepare the bank reconciliation.
ENTITY A
Bank Reconciliation
February 28, 20x1
Balance per books, end. P260,000 Balance per banks, end. P205,000
Add: Credit memos (CM) 30,000 Add: Deposit in transit (DIT) 102,500
Less: Debit memos (DM) (NSF check) (5,000) Less: Outstanding checks (OC) (22,500)
Adjusted balance P285,000 Adjusted balance P285,000
(b)Prepare the adjusting (reconciling) entries.

AJE-(1) Cash in bank 30,000

Accounts receivable 30,000
To record the collection of accounts receivable
AJE-(4) Accounts Receivable 5,000
Cash in bank 5,000
To record the NSF received from a customer

2. XYZ Co. receives its July 1, 20x1 bank statement and immediately prepares its July 20x1 bank
reconciliation. Relevant information follows:
a. Cash balance per books – P200,000
b. Cash balance shown in the bank statement – P137,000
c. Credit memo – P90,000
d. Debit memo – P30,000
e. Deposit in transit – P150,000
f. Outstanding checks – P27,000
Requirement: Prepare the bank reconciliation.
 XYZ Co.
Bank Reconciliation
July 20x1
Balance per books, end. P200,000 Balance per banks, end. P137,000
Add: Credit memos (CM) 90,000 Add: Deposit in transit (DIT) 150,000
Less: Debit memos (DM) (NSF check) (30,000) Less: Outstanding checks (OC) (27,000)
Adjusted balance P260,000 Adjusted balance P260,000