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03 PROOF OF CASH Problem Solving Section 1 Solution 3

The document shows a bank reconciliation for October and November. It lists beginning balances, receipts, disbursements and adjusted ending balances for both the company's books and the bank statements. It also notes deposit and check amounts in transit as well as bank and book errors. Adjusting entries are presented to correct the books for understated collections and payments.

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Erika Faith Hallador
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144 views

03 PROOF OF CASH Problem Solving Section 1 Solution 3

The document shows a bank reconciliation for October and November. It lists beginning balances, receipts, disbursements and adjusted ending balances for both the company's books and the bank statements. It also notes deposit and check amounts in transit as well as bank and book errors. Adjusting entries are presented to correct the books for understated collections and payments.

Uploaded by

Erika Faith Hallador
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Book Nov

Oct Receipts Disbursement Nov


Beg. Bal ( 600,000) ( 2,200,000) ( 1,800,000) ( 1,000,000)
CM - Note Collected by bank:
Oct
Nov
DM - Service Charge:
Oct
Nov
DM - NSF
Oct
Nov
Book error:
(Understatement of
recording of collection)
Oct
Nov ( 90,000) ( 90,000)
Book error:
(Understatement of
recording of payment of
accounts payable)
Oct
Nov ( 270,000) ( (270,000)
Adjusted book balance ( 600,000) ( 2,290,000) ( 2,070,000) ( 820,000)

Bank Nov
Oct Receipts Disbursement Nov
Beg. Bal ( 400,000) ( 2,500,000) ( 1,970,000) ( 930,000)
Deposits in transit:
Oct ( 300,000) ( (300,000)
Nov ( 190,000) ( 190,000)
Outstanding checks:
Oct ( (100,000) ( (100,000)
Nov ( 400,000) ( (400,000)
Bank error: (erroneously
credited to Beehive)
Oct
Nov ( (100,000) ( (100,000)
Bank error: (erroneously
debited to Beehive)
Oct
Nov ( (200,000) ( 200,000)
Adjusted bank balance ( 600,000) ( 2,290,000) ( 2,070,000) ( 820,000)
( - ) ( - ) ( - ) ( - )

Bank bal, beg (Oct) ( 400,000) Squeezed


Add:Bank credits ( 2,500,000)
Less: Bank debits ( 1,970,000)
Bank bal, end (Nov) ( 930,000)

DIT, beg (oct) ( 300,000)


Add: Total deposits (2,200,000+90000) ( 2,290,000)
Less: Deposits acknowledge by bank (2,500,000-100,000) ( 2,400,000)
DIT, ending (nov) ( 190,000)

OC, beg (oct) ( 100,000) Squeezed


Add: Total checks drawn (1,800,000+270,000) ( 2,070,000)
Less: checks paid by bank (1,970,000-200,000) ( 1,770,000)
OC, end (nov) ( 400,000)

Adjusting entries:
To record understatement
of recording of collection

Cash in bank ( 90,000)


Accounts Receivable ( 90,000)

To record understatement
of recording of payment of
accounts payable

Accounts payable ( 270,000)


Cash in bank ( 270,000)

Note:
Only book reconciling items required adjustment

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