The Professional CPA Review School

Main: 3F C. Villaroman Bldg. 873 P. Campa St. cor Espana, Sampaloc, Manila
( (02) 8735 8901 / 0917-1332365
email add: [email protected]/[email protected]
Baguio Davao
DE GUZMAN Bldg. 18 Legarda Road, Baguio City 3/F GCAM Bldg. Monteverde St. Davao City
( 0921-7566143 ( 0917-1332365
FINANCIAL ACCOUNTING & REPORTING (Problems) PROF. MICHAEL TIU
WEEK 3
CASH - BANK RECONCILIATION

1. Information in relation to Green Company’s bank reconciliation for July

Deposits recorded by bank in July P 1,920,000
Deposits made by Green Company in July 1,850,000
Deposit in transit, June 30, 2022 320,000
Credit memo – loan proceeds in June 90,000
Credit memo – loan proceeds in July 120,000

The amount of deposits in transit at July 30, 2022 is 250,000

2. The following were provided by Purple Company for the month of June
• Total debits to Cash in all journals during June, P770,000
• Deposits and credit memos recorded by the bank in June, including interest of P8,000;
P855,000
• Deposit in transit as of May 31, P180,000
• Loan proceeds reflected in the May bank statement recorded only in the books in
June, P60,000
• Direct payment to the bank by Purple Company’s customers. Purple Company was
not informed of the said payment as of June 30, P35,000
The deposit in transit at June 30 is 78,000

3. The following were provided by Dixie Company for the month of October
• Total bank credits for the month of October P575,000
• Total book debits for the month of October P510,000
• Interest income for the month of October, P8,000 has not been recorded in the books
• October deposits for P92,000 was recorded in the books as P29,000
• A deposit in October by Dixie Company for P20,000 was recorded by the bank in
another account
• Credit memo for the month of September, P16,000 was recorded by Dixie Company
only in October
• Deposit in transit at October 30, P40,000
The deposit in transit at the beginning of October is 70,000

4. Upon inspection of Billy Company’s cash in bank –BPI account and the corresponding bank
statement for the month of November 2022, the following were identified:
• Total book debits for November, P840,000
• Total bank credits for November, P610,000
• Deposit in transit, October 31, P45,000
• CM – loan proceeds for the month of October P75,000
• CM – deposit directly made by customer in November, P40,000
• Deposit of P12,000 in November was recorded in the books only at P1,200
• Deposit to Daimien Company was recorded to Billy Company’s account erroneously
by the bank in November, P22,000.

The deposit in transit at November 30 is 272,800

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5. The following were provided by Emily Company related to December

Checks paid by the bank in December P 1,650,000
Checks issued by Emily Company in December 1,430,000
Outstanding checks, November 30, 2022 410,000
Debit memo – NSF checks in December 35,000
Debit memo – NSF checks in November 43,000

The amount of outstanding checks at December 31, 2022 is 190,000

6. The following were provided by Kaye Company related to August

• Total book credits for the month of August, P710,000
• Total bank debits for the month of August, P830,000
• Debit memo – July service charges/NSF checks, P21,000
• Debit memo – August service charges/NSF checks, P14,000
• Outstanding checks at July 31, P160,000

The amount of outstanding checks at August 31, 2022 is 33,000

7. Upon inspection of Camille Company’s cash in bank –BPI account and the corresponding
bank statement for the month of November 2022, the following were identified:
• Total bank debits for November, P1,100,000
• Total book credits for November, P1,245,000
• Outstanding checks, October 31, P125,000
• DM – NSF checks October P40,000
• DM – NSF checks November, P65,000
• A check amounting to P122,000 in November was recorded in the books at P212,000
• Deposit to Camillee Company was recorded to Camille Company’s account
erroneously by the bank in November, P22,000.
outstanding checks
The deposit in transit at November 30 is 205,000

8. The following were provided by Mary Company for the month of June.
• Checks & charges recorded by the bank in June, including a June service charge of
P6,000; P875,300
• Total credits to Cash in all journals during June, P911,000
• May bank charges, recorded on the books only in June, P8,500
• Customer’s NSF check returned as a bank charges in June (no entry made on books),
P25,000
• Customer’s NSF check returned in May and re-deposited in June (no entry made in
books in either May or June), P12,000
• Outstanding checks as of June 30, P95,000
• Deposit in transit as of June 30, P60,000
• Checks against Marye Company was charged to Mary Company by the bank in June,
P35,000. No corrections were yet made as of June 30
• Check for P73,000 written in June 28, was recorded in the disbursements journal as
P37,000
• Check for P3,800 written on June 30, was recorded in the disbursements journal as
P38,000

The amount of outstanding checks at the beginning of June 0

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9. Glenn Company has gathered the following information in relation to its checking account in BDO
for the month of April
§ Balance per books April 30, P833,000; per bank statement April 30, P791,000
§ Deposits still in transit at April 30 was P150,000
§ NSF checks returned by the bank in April was P50,000 and April charges amounted to P9,000
§ Checks issued but have not yet cleared by April 30 was P95,000
§ Proceeds from loan directly credited to Glenn Company’s account amounted to P65,000,
while interest on deposits amounted to P7,000

The adjusted cash in bank balance is 846,000

10. Denmark Company has gathered the following information in relation to its current account in BPI
for the month of June
• Cash in bank – BPI, P752,200; BPI bank statement balance, P716,400
• Proceeds of note sent by Denmark Company to BPI for collection, P75,000. No entry has
been made when the note was sent for collection.
• Outstanding checks at the end of June, P156,000
• Customers’ checks totaling P33,000, deposited in June 26 were returned marked as “Drawn
Against Unfunded Deposits”
• A deposit of Denmark Company for P16,500 was recorded by the bank in another account; in
addition the bank erroneously recorded a deposit for P11,700 of Jamie Company to Denmark
Company’s account
• Deposits in June 25 for P31,000 was recorded at P13,000; deposits in June 18 for P26,000 was
recorded at P62,000
• Deposit in transit at the end of June, P215,000
• Checks written and issued in June 27 for P1,600 was recorded at P16,000; while checks written
and issued in June 28 for P52,000 was recorded at P25,000
• Check issued by Denmark Company for P12,000 was charged erroneously by the bank against
Jamee Company
• Interest income for the month of June P12,000; service charges for the month of June P7,400

The adjusted cash in bank balance to be reported in the balance sheet is 768,200

11. The cash account of Kearl Company disclosed a balance of P1,128,240 on October 31, while the
bank statement showed a balance of P1,470,300. Comparing the statement with the cash records,
the following facts were developed
• Customer’s note discounted on October 12; dishonored October 26 and the bank charge Kearl
Company, P305,000 which included a service charge of P5,000
• Customer’s check for P90,000 erroneously credited by the bank in another account. Kearl
Company correctly recorded this payment by the customer
• Check drawn against Kearl Company dated October 1 for P79,500 was erroneously debited by
the bank as P97,500.
• Receipts of October 31 for P685,000 were deposited in the night depository box of the bank. It
was not recorded by the bank until November 1
• Check drawn against Kearl Company dated October 12 for P27,000 was erroneously debited by
the bank as P2,700
• A bank memo stated that a customer’s note for P250,000 and interest of P6,250 had been
collected on October 29, and the bank charged P1,250 as service fee. No entry was made on the
books when the note was sent to the bank for collection
• Check number 5566 for P124,250 was entered in the cash disbursements journal at P122,450
• Bank charges of P3,000 in October, not yet recorded on the books
• Kearl Company’s account was charged on October 26 for a customer’s uncollectible check
amounting to P114,300
• Check number 5599 for P3,290 was entered as P32,900.
 Page 4

• Customer’s check for P12,500 was entered as P1,250 by both the depositor and the bank. The
bank has corrected the error by the end of October
• Outstanding checks during October amounted to, P1,239,000

The adjusted cash in bank balance reported in the balance sheet is 1,000,000

12. The following were provided by Orange Company for the month of August.
• Cash balance per bank statement , August 31, P611,750
• Note collected by the bank not yet recorded by Orange Company, P74,500, including interest
of P5,500
• NSF check returned with the bank statement P48,500
• Outstanding checks at the end of August, P87,000
• Bank service charge for August, P6,000
• Deposit in transit, August 31, P46,500

Unadjusted cash in bank balance (per ledger) is 551,250

13. The following were provided by Maxx Company for the month of August.
• Cash balance per ledger, August 31; P726,400
• Check to suppliers for P23,000 was recorded in the books as P2,300
• Note including interest of P5,300 collected by the bank and not yet taken up in the books;
P29,000
• NSF check returned with the bank statement; P26,500
• Customers’ deposits as reflected in the bank statement P12,000 was recorded in the books as
P21,000
• Deposit in transit as of August 31, 2022; P75,000
• Check drawn against the account of Marj Company was erroneously debited against Maxx
Company’s account by the bank; P16,500
• Outstanding checks as of August 31, 2022; P44,000
• Bank service charge for August 2022; P8,000
• Deposit made by Maxx Company’s collector was erroneously credited to Mirage Company
by the bank; P12,500

The unadjusted cash balance per bank statement on August 31 is 631,200

14. The following format was to be used in preparing of the two-date bank reconciliation for Noreen
Company.

Balance December December Balance

Nov. 30 receipts disbursements Dec. 31
Balance per bank statement xx xx xx Xx
Items to be added: (a) (b) (c) (d)
Items to be deducted: (e) (f) (g) (h)
Adjusted bank balance xx xx xx xx

Balance per books xx xx xx xx

Items to be added: (i) (j) (k) (l)
Items to be deducted: (m) (n) (o) (p)
Adjusted book balance xx xx xx xx
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Indicate in which the reconciling items would appear:

__
a __
f 1. Deposits of P1,000 in November recorded by the bank in December
__
b __
d 2. Deposits in transit at December 31, P2,000
__
e __
g 3. P3,000 checks written in November that cleared the bank in December
__
c __
h 4. Outstanding checks at December 31, P4,000
__
i __
n 5. Proceeds of a bank loan of P5,000 was credited by the bank to Noreen
Company’s account in November but recorded by Noreen Company only in
December.
__ __ 6. Proceeds of a bank loan of P6,000 was credited by the bank to Noreen
j l
Company’s account in December.
__
m __ o 7. Customer’s NSF check of P7,000 was returned by the bank in November and
recorded by Noreen Company in December
k p
__ __ 8. Bank service charges for December, P8,000

15. The following format was to be used in preparing of the two-date bank reconciliation for Oreo
Company.
Balance December December Balance
Nov. 30 receipts disbursements Dec. 31
Balance per bank statement xx xx xx xx
Items to be added: (a) (b) (c) (d)
Items to be deducted: (e) (f) (g) (h)
Adjusted bank balance xx xx xx xx

Balance per books xx xx xx xx

Items to be added: (i) (j) (k) (l)
Items to be deducted: (m) (n) (o) (p)
Adjusted book balance xx xx xx xx

Indicate in which the reconciling items would appear:

__
a __
f 1. Erroneous bank debit of P1,000 in November was corrected by the bank in
December
__ g __
d 2. In December, checks amounting to P2,000 of another company was erroneously
debited against Oreo Company’s bank balance
__
e __g 3. Erroneous bank credit of P3,000 in November was corrected by the bank in
December
__
f __
h 4. The bank credited Oreo Company’s account for P4,000 in December for a deposit
of another company
__ __ 5. Oreo Company’s checks of P5,000 issued and cleared in November was
e g
erroneously debited to another company. Corrections were made by the bank in
23,400 December
m p
__ __ 6. Check drawn in November in payment of accounts payable cleared in December
amounting to P26,000 was recorded by the bookkeeper as P2,600. e and g for bank - 26,000
__ __ 7. Check drawn in December in payment of accounts payable for P35,000 was
k p
15,300 recorded in the disbursements journal as P3,500
__
m __ o 8. Customers checks for P1,700 deposited and cleared in November was erroneously
recorded by the bookkeeper as P17,000. Corrections were made in December
__ f __
g 9. Erroneous bank debit of P55,000 in December was corrected by the bank in
December
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16. You have been hired as the new assistant controller of Eagles Inc. and assigned the task of proving
the cash account balance. As of December 31, 2022, you have obtained the following information
relative to the December cash operations.

A Balance per bank Balance per books

November 30, 2022 P138,300 November 30, 2022 P 101,162
December 31, 2022 115,716 December 31, 2022 105,046

B. Receipts for the month of December 2022

Per bank P 714,330 Per book 742,415

C. Outstanding Checks
November 30, 2022 P 37,958 December 31, 2022 P 45,297

D. Dishonored checks returned by the bank and recorded by Eagle Inc. amounted to P3,125
during the month of December 2022; according to the books P2,500 was redeposited.
Dishonored checks, recorded on the bank statement but not on the books until the following
months, amounted to P820 at November 30, 2022, and P1,150 at December 31, 2022.
E. On December 31, 2022, a P1,162 check of the Dove Company was charged to Eagle Inc.
account by the bank in error.
F. Proceeds of a note of Maya Company collected by the bank for Eagle on December 10, 2022,
were not entered on the books, P2,065
G. Interest on a bank loan for the month of December charged by the bank but not recorded on
the books amounted to P 4,230
H. Deposit in transit: December 31, 2022, P 30,150

Prepare a 4-column bank reconciliation arriving at the adjusted book and bank balances
Per bank Beginning Receipts Disbursements Ending
744,480 743,091 101,731
100,342

Per books Beginning Receipts Disbursements Ending

100,342 744,480 743,091 101,731

17. The following information for the month of February was provided to you in your attempt to
determine an apparent shortage
Cash balance per books, 02/01/2022 P 2,200,000
Cash balance per bank, 02/28/2022 1,600,000
Receipts for Feb, per books 1,200,000
Disbursements for Feb, per books 1,400,000
Deposit in transit, 02/28/2022 400,000
Outstanding checks, 02/28/2022 100,000
Bank charges for February 20,000

The amount of the suspected cash shortage is 80,000

/mft