AUDIT PREPARATION- BANK RECONCILIATION
Problem 1
Cash data related to Ron Company for the month of January of the current year are as
... [Show More] follows:
Balance per book, January 31 3,130,000
Balance per bank statement, January 31 3,500,000
Collections on January 31 but undeposited 550,000
NSF check received from a customer returned by the bank on Feb. 5 with the January banks statement 50,000
Checks outstanding on January 31 650,000
Bank debit memo for safety deposit box rental not recorded by depositor 5,000
A creditor's check for P30,000 was incorrectly recorded in the depositor's book as 300,000
A customer's check for P200,000 was recorded by the depositor as 20,000
The depositor neglected to make an entry in its books for a check drawn in payment of an account payable 125,000
What is the adjusted cash in bank on January 31? a. 3,130,000
b. 3,500,000
c. 3,400,000
d. 2,950,000
Answer:
Balance per book 3,130,000
Overstatement of creditor check 270,000
Understatement of customer check 180,000
NSF check ( 50,000)
Bank debit memo for safety deposit box ( 5,000)
Unrecorded check ( 125,000)
Adjusted book balance 3,400,000
Balance per bank 3,500,000
Undeposited collections 550,000
Checks outstanding ( 650,000)
Adjusted bank balance 3,400,000
Problem 2
In reconciling the cash balance on Decmber 31,2011 with that shown in the bank statement, the following facts are gathered from the records of Sam Company:
Balance per bank statement 4,000,000
Balance per book 2,700,000
Outstanding checks 600,000
Deposit in transit 475,000
Service charge 10,000
Proceeds of bank loan, December 1, discounted for 6 months at 12% not recorded on Sam Company's books 940,000
Customer's checks charged back by bank for absence of counter signature 50,000
Deposit of P100,000 incorrectly recorded by bank as 10,000
Check of Sim Company charged by bank against Sam account 150,000
Customer's note collected by bank in favor of Sam Company. Face 400,000
Interest 40,000
Total 440,000
Collection fee 5,000 435,000
Erroneous debit memo of December 28, to charge Sam account
with settlement of bank loan 200,000
Deposit of Sim Company credited to Sam account 300,000
What is the adjusted cash in bank on December 31,2011? a. 4,315,000
b. 3,925,000
c. 3,075,000
d. 4,015,000
Answer:
Balance per book 2,700,000
Add: Proceeds of bank loan 940,000
Note collected by bank 435,000 1,375,000
Total 4,075,000
Less: Service charge 10,000
Customer's check charged back 50,000 60,000
Adjusted book balance 4,015,000
Balance per bank 4,000,000
Add: Deposit in transit 475,000
Incorrect deposit 90,000
Erroneous bank charge 150,000
Erroneous debit memo 200,000 915,000
Total 4,915,000
Less: Outstanding checks 600,000
Erroneous bank credit 300,000 900,000
Adjusted bank balance 4,015,000
Problem 3 The accounts of Susan Company showed the following facts on August 31,2011:
Balance of cash in bank account 1,300,000
Balance of bank statement 1,200,000
Outstanding checks, August 31:
Number 555 10,000
761 55,000
762 40,000
763 25,000
764 65,000
765 70,000
Receipts of August 31, deposited September 1 27,500
Service charge for August 5,000
NSF check received from a customer 85,000
The cashier-bookkeeper had misappropriated P30,000 and an additional P10,000 by charging sales discounts
and crediting accounts receivable.
The sub for check number 765 and the invoice relating thereto show that it was for P50,000. It was recorded
incorrectly in the cash disbursement journal as P70,000. This check was drawn in payment of an account payable.
Payment has been stopped on check number 555 which was drawn in payment of an account payable.
The payee cannot be located.
What is the adjusted cash in bank on August 31,2011?
a. 1,240,000
b. 1,230,000
c. 1,210,000
d. 1,200,000
Answer:
Balance per book 1,300,000
Add: Overstatement of check number 765 20,000
Check number 555 stopped for payment 10,000 30,000
Total 1,330,000
Less: Service charge 5,000
NSF check 85,000 90,000
Adjusted book balance 1,240,000
Balance per bank 1,200,000
Add: Undeposited collections 275,000
Total 1,475,000
Less: Outstanding checks:
Number 761 55,000
762 40,000
763 25,000
764 65,000
765 50,000 235,000
Adjusted bank balance 1,240,000
Problem 5
The cash account in the ledger of Kate Company shows a balance of P1,652,000 at December 31. The bank statement, however, shows a balance of P2,090,000 at the same date. The only reconciling items consist of a bank service charge of P2,000, a large number of outstanding checks totaling P590,000 and a deposit in transit. What is the deposit in transit in the December 31 bank reconciliation?
a. 150,000
b. 440,000
c. 154,000
d. 592,000
Answer:
Balance per book 1,652,000
Service charge ( 2,000)
Adjusted book balance 1,650,000
Balance per bank 2,090,000
Deposit in transit (SQUEEZE) 150,000
Total 2,240,000
Outstanding checks ( 590,000)
Adjusted bank balance 1,650,000
The deposit in transit is "squeezed" by working back from the adjusted balance.
Problem 6
Information pertaining to Grass Company is as follows:
Balance per bank statement July 31 1,240,000
Balance per ledger, July 31 750,000
Deposit of July 30 not recorded by bank 280,000
Debit memo - service charges 10,000
Credit memo - collection of note by bank for Grass 300,000
Outstanding checks ?
An analysis of the canceled checks returned with the bank statements reveals the following:
* Checking for purchase of supplies was drawn for P60,000 but was recorded as P90,000.
* The manager wrote a check for traveling expenses of P100,000 while out of town.
The check was not recorded.
What is the amount of outstanding checks in July 31?
a. 970,000
b. 270,000
c. 550,000
d. 610,000
Answer:
Balance per ledger 750,000
Service charges (10,000)
Collection of note 300,000
Book error (90,000-60,000) 30,000
Unrecorded check for traveling expenses ( 100,000)
Adjusted book balance 970,000
Balance per bank 1,240,000
Deposit in transit 280,000
Total 1,520,000
Outstanding checks (SQUEEZE) ( 550,000)
Adjusted bank balance 970,000
The amount of outstanding checks is "squeezed" by working back from the adjusted bank
balance.
Problem 7 Reconciliation of Jan Company's bank account on May 31 is:
Balance per bank statement 210,000
Deposits outstanding 300,000
Checks outstanding (30,000)
Correct cash balance 2,370,000
Balance per book 2,372,000
Bank service charge (2,000)
Correct cash balance 2,370,000
June data are as follows:
Bank Book Checks recorded 2,300,000 2,360,000
Deposits recorded 1,620,000 1,800,000
Collection by bank (P400,000 note plus interest) 420,000 --
NSF check returned with June 30 statement 10,000
Balances 1,830,000 1,810,000
1. What is the amount of checks outstanding on June 30?
a. 30,000
b. 90,000
c. 60,000
d. 0
Answer:
Checks outstanding - May 31 30,000
Checks recorded by book in June 2,360,000
Total 2,390,000
Checks recorded by bank in June (2,300,000)
Checks outstanding - June 30 90,000
2. What is the amount of deposit in transit on June 30?
a. 480,000
b. 120,000
c. 180,000
d. 680,000
Answer:
Deposits in transit - May 31 300,000
Deposits recorded by book - June 1,800,000
Total 2,100,000
Deposits recorded by bank - June (1,620,000)
Deposits in transit-June 30 480,000
3. What is the adjusted cash in bank on June 30?
a. 1,810,000
b. 2,220,000
c. 2,240,000
d. 2,780,000
Answer:
Balance per bank - June 30 1,830,000
Deposits in transit - June 30 480,000
Outstanding checks - June 30 (90,000)
Adjusted bank balance 2,220,000
Balance per book 1,810,000
Note collected by bank 420,000
NSF check ( 10,000)
Adjusted book balance 2,220,000
Problem 8
Lazer Company had the following bank reconciliation June 30,2011:
Balance per bank statement, June 30 3,000,000
Deposit in Transit 400,000
Total 3,400,000
Outstanding checks (900,000)
Balance per book, June 30 2,500,000
The bank statement for the month of July showed the following:
Deposits ( including P200,000 note collected for Lazer)
Disbursements ( Including P140,000 NSF check and P10,000 service charge)
All reconciling items on June 30 cleared through the bank in July. The outstanding checks totaled P600,000 and the deposit in transit amounted to P1,000,000 on July 31.
1. What is the cash balance per book on July 31?
a. 5,400,000
b. 5, 350,000
c. 5,550,000
d. 4,500,000
Answer:
Balance per bank - June 30 3,000,000
July bank deposits 9,000,000
July bank disbursements ( 7,000,000)
Balance per bank - July 31 5,000,000
July deposit in transit 1,000,000
July outstanding checks ( 600,000)
Adjusted bank balance 5,400,000
Balance per book - July 31 (SQUEEZE) 5,350,000
Note collected by bank in July 200,000
NSF check in July (140,000)
Service charge in July (10,000)
Adjusted book balance 5,400,000
The balance per book on July 31 is "squeezed" by working back from the adjusted balance.
2. What is the amount of cash receipts per book in July?
a. 9,400,000
b. 9,600,000
c. 8,600,000
d. 9,800,000
Answer:
Deposits per bank statement for July 9,000,000
Note collected by bank in July (200,000)
Deposit in transit-June 30 ' (400,000)
Deposit in transit - July 31 1,000,000
Cash receipts per book for July 9,400,000
3. What is the amount of cash receipts per book in July?
a. 6,550,000
b. 6,700,000
c. 7,300,000
d. 6,850,000
Answer:
Disbursements per bank statement for July 7,000,000
NSF check in July ( 140,000)
Service charge in July (10,000)
Outstanding checks - June 30 (900,000)
Outstanding checks - July 31 600,000
Cash disbursements per book for July 6,550,000
Proof of the cash balance per book - July 31
Balance per book - June 30 2,500,000
Book receipts for July 9, 400,000
Book disbursements for July (6,550,000)
Balance per book - July 31 5,350,000 [Show Less]