Practical Accounting by Valix Practical Accounting by Valix

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Practical Accounting by Valix
Intermediate Accouting (Centro Escolar University)
StuDocu is not sponsored or endorsed by any college or university

Downloaded by Martha Nicole Maristela ([email protected])
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Problem 15-4 (AICPA Adapted)
Able Company received the bank statement for the month of March.
However, the closing balance of the account was unreadable.
Attempts to contact the bank after hours did not secure the desired
information.
February 28 book balance 1,460,000

Note collected by bank 100,000
Interest earned on note 10,000
NSF check of customer 130,000

Bank service charge on NSF check 2,000
Other bank service charges 3,000
Outstanding checks 200,000
Deposit of February 28 placed in night depository 85,000
Check issued by Axle Company charged
to Able’s account 20,000
What is the cash balance per bank statement?
a. 1,435,000
b. 1,530,000
c. 1,340,000
d. 1,550,000
Solution 15 – 4 Answer b

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February 28 book balance 1,460,000

Interest earned on note 10,000
NSF check of customer (130,000)
Bank service charges (2,000+3,000) (5,000)
Adjusted book balance 1,435,000
Balance per bank statement (SQUEEZE) 1,530,000

Deposit in transit 85,000
Bank error - erroneous charge 20,000
Outstanding checks (200,000)
Adjusted bank balance 1,435,000
The bank statement balance is “squeezed” by working back from the

adjusted balance.
Problem 15 - 5 (IAA)
Stellar Company provided the bank statement for the month of December
which included the following information:
Ending balance, December 31 2,800,000

Bank service charge for December 12,000
Interest paid by bank to Stellar Company for December 10,000

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In comparing the bank statement to its own cash records, the entity found
the following:
Deposits made but not yet recorded by the bank 350,000

Checks written and mailed but not yet
recorded by the bank 650,000
In addition, the entity discovered that it had drawn and erroneously

recorded a check for P46,000 that should have been recorded for
P64,000.
What is the cash per ledger on December 31?
a. 2,500,000
b. 2,520,000
c. 2,540,000
d. 2,800,000
Balance per book 2,800,000

Balance per ledger (SQUEEZE) 2,520,000

Interest income 10,000

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Service charge (12,000)

Book error (64,000-46,000) (18,000)
The cash balance per ledger is “squeezed” by working back from the
adjusted balance.
Letty Company provided the bank statement for the month of April which
included the following information:
Bank service charge for April 15,000

Check deposited by Letty during April was not collectible
and has been marked “NSF” by the bank and returned 40,000
In comparing the bank statement to its own records, the entity found the
following:
Deposits made but not yet recorded by bank 130,000

Checks written and mailed but not yet recorded by bank 100,000
All deposits in transit and outstanding checks have been properly

recorded in the entity’s books.

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A customer check for P35,000 payable to Letty Company had not yet been
deposited and had not been recorded by the entity.
The cash in bank account balance per ledger is P920,000.
What amount should be reported as adjusted cash in bank on April 30?
a. 900,000
b. 865,000
c. 930,000
d. 965,000
Solution 15 – 6 Answer a
Balance per ledger 920,000

Unrecorded customer check 35,000
Bank service charge (15,000)
NSF check (40,000)
Adjusted book balance 900,000
The deposits in transit and checks outstanding are ignored because

these are bank reconciling items.
Problem 15-7 (IAA)

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 Gallant Company showed a cash account balance of P4,500,000 at

the month-end.
 The bank statement did not include a deposit of P230,000 made on
the last day of the month.
 The bank statement showed a collection by the bank of P94,000 for
the depositor and a customer check of P32,000 returned because it
was NSF.
 A customer check for P45,000 was recorded by the depositor as
P54,000 and a check written for P79,000 was recorded as P97,000.
What amount should be reported as cash in bank?
a. 4,765,000
b. 4,571,000
c. 4,819,000
d. 4,801,000
Collection by bank 94,000
NSF customer check (32,000)
Book error – customer check overstated (9,000)

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Book error – check written overstated 18,000
Customer check 45,000
Recorded by depositor 54,000
Book error – overstatement of a collection 9,000
Company check 79,000
Book error – overstatement of payment 18,000
The deposit in transit of P230,000 is a bank reconciling item.
Aries Company kept all cash in a checking account. An examination of the

accounting records and bank statement for the month of June revealed
the following information:
 A cash balance per book on June 30 was P8,500,000.

 A deposit of P1,000,000 that was placed in the bank’s night
depository on June 30 did not appear on the bank statement.
 The bank statement showed that on June 30 the bank collected
note for the entity and credited the proceeds of P950,000 to the
entity’s account, net of collection charge P50,000.

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 Checks outstanding on June 30 amounted to P300,000 including

certified check of P100,000.
 The entity discovered that a check written in June for P200,000 in
payment of an account payable had been recorded in the entity’s
records as P20,000.
 Included with the June bank statement was NSF check for
P250,000 received from a customer on June 26.
 The bank statement showed a P20,000 service charge for June.
1. What amount should be reported as cash in bank on June 30?

a. 9,000,000
b. 8,300,000
c. 9,360,000
d. 9,180,000
2. What is the balance per bank statement on June 30?

a. 8,300,000
b. 9,700,000
c. 8,660,000
d. 8,200,000
3. What is the net adjustment to cash in bank on June 30?

a. Net debit P950,000
b. Net credit P450,000
c. Net debit P500,000
d. Net debit P860,000

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Solution 15 - 8
Question 1 Answer a
Total 9,450,000
Book error (200,000–20,000) (180,000)
NSF check (250,000)
Question 2 Answer d
Balance per bank (SQUEEZE) 8,200,000
Deposit in transit 1,000,000
Outstanding checks (300,000–200,000 certified check) (200,000)
Question 3 Answer c
Cash in bank 950,000
Service charge 50,000

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Note receivable 1,000,000
Accounts payable 180,000
Accounts receivable 250,000
The two entries can be compounded and the net effect is a debit to cash
in bank of P500,000.
Problem 15 - 9 (PHILCPA Adapted)
 Boracay Company kept all cash in checking account. An

examination of the bank statement for the month of December
revealed a bank statement balance of P8,470,000.
 A deposit of P950,000 placed in the bank’s night depository on
December 29 does not appear on the bank statement.
 Checks outstanding on December 31 amount to P270,000.
 The bank statement showed that on December 25 the bank
collected a note for Boracay Company and credited the proceeds of
P935,000 to the entity’s account which included P35,000 interest.
 Boracay Company discovered that a check written in December for
P183,000 in payment of an account had been recorded as
P138,000.

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 Included with the December 31 bank statement was an NSF check

for P250,000 that Boracay Company had received from a customer
on December 20.
 The bank statement showed a P15,000 service charge for
December.
1. What is the adjusted cash in bank on December 31?

a. 9,150,000
b. 9,240,000
c. 9,195,000
d. 9,215,000
2. What is the unadjusted balance per book on December 31?

a. 8,480,000
b. 8,525,000
c. 8,435,000
d. 8,510,000
3. What is the net adjustment to cash in bank on December 31?

a. Net debit P935,000
b. Net credit P310,000
c. Net debit P625,000
d. Net credit P625,000
Solution 15 - 9
Question 1 Answer a

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Balance per bank 8,470,000
Checks outstanding (270,000)
Question 2 Answer b
Balance per book (SQUEEZE) 8,525,000
Note collected by bank for the depositor 935,000
Book error in recording check (183,000-138,000) (45,000)
NSF check (250,000)
Question 3 Answer c
Note receivable 950,000
Accounts payable 45,000
Accounts receivable 250,000

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The two entries can be compounded and the net effect is a debit to cash
in bank of P625,000.
Problem 16-3 (IAA)
In reconciling the cash balance on December 31 with that shown in the

bank statement, Sam Company provided the following information:
Balance per bank statement 4,000,000
Proceeds of bank loan, December 1,

discounted for 6 months at 12%, not
recorded on Sam Company’s books 940,000
Customer check 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

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Customer note collected by bank in favor of Sam Company.
Face 400,000
Interest 40,000
Total 440,000
Collection fee 5,000
Total 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 amount should be reported as adjusted cash in bank on December

31?
a. 4,315,000
b. 3,925,000
c. 3,075,000
d. 4,015,000
Solution 16 – 3 Answer d

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Add: Proceeds of bank loan 940,000
Customer note collected 435,000 1,375,000
Total 4,075,000
Less: Service charge 10,000
Customer check charged back 50,000 60,000
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
Susan Company showed the following information on August 31:

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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 1 275,000
Service charge for August 5,000
NSF check received from a customer 85,000
 The cashier book-keeper had misappropriated P30,000 and an

additional
 P 10,000 by charging sales discounts and crediting accounts
receivable.
 The stub for check number 765 and the invoice relating thereto
showed that it was for P50,000. It was recorded incorrectly in the
cash disbursements 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.

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What is the adjusted cash in bank on August 31?
a. 1,240,000
b. 1,230,000
c. 1,210,000
d. 1,200,000

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
Company check number 765 50,000
Overstatement of payment 20,000

Add: Undeposited collections 275,000
Total 1,475,000
Less: Outstanding checks:
Number 761 55,000

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762 40,000
763 25,000
764 65,000
765 50,000 235,000
Problem 16 – 5 (PHILCPA Adapted)
Mcbride Company provided the following data pertaining to the cash

transactions and bank account for the month of May:
Cash balance per accounting period 1,719,000
Cash balance per bank statement 3,195,000
Bank service charge 10,000
Debit memo for the cost of printed checks delivered
by the bank; the charge has not been recorded
in the accounting record 12,000
Deposit of May 30 not recorded by bank until June 1 500,000
Proceeds of a bank loan on May 30, not recorded in
the accounting record, net of interest of P30,000 570,000
Proceeds from a customer promissory note, principal

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amount P800,000 collected by the bank not taken
up in the accounting record with interest 810,000
Check No. 1086 issued to a supplier entered in the
accounting record as P210,000 but deducted in
the bank statement at an erroneous amount of 120,000
Stolen check lacking an authorized signature deducted
from Mcbride’s account by the bank in error 80,000
Customer check returned by the bank marked NSF,
indicating that the customer balance was not
adequate to cover the check; no entry has been
made in the accounting record to record the
returned check 77,000
What is the adjusted cash in bank?
a. 3,000,000
b. 2,910,000
c. 3,080,000
d. 2,990,000

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Debit memo for printed checks (12,000)
Proceeds of bank loan 570,000
Proceeds of customer note 810,000
Bank error in recording check (90,000)
Stolen check deducted by bank in error 80,000
Problem 16 – 6 (AICPA Adapted)
Carefree Company prepared the following bank reconciliation on March

31:

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Book balance 1,405,000
Add: Deposit in transit 750,000
Collection of note 2,500,000
Interest on note 150,000 3,400,000
Total 4,805,000
Less: Careless Company deposit
credited to our account 1,100,000
Bank service charge 45,000 1,145,000
Bank balance 5,630,000
Add: Error by depositor on recording check 45,000
Total 5,675,000
Less: Preauthorized payment for water bills 205,000
NSF customer check 220,000
Outstanding checks 1,650,000 2,075,000
The check erroneously recorded by the depositor was made for the proper
amount of P249,000 in payment of account. However it was entered in the
cash payments journal as P294,000.

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The entity authorized the bank to automatically pay its water bills as
submitted directly to the bank.
What amount should be reported as cash in bank on March 31?
a. 3,660,000
b. 3,600,000
c. 3,630,000
d. 2,880,000
Solution 16 – 6 Answer c
Book balance 1,405,000
Collection of note 2,500,000
Interest on note 150,000
Book error on recording check 45,000
Bank service charge (45,000)
Water bills paid directly by bank (201,000)
Company check 249,000

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Book error – overstatement of a payment 45,000
Bank balance 5,630,000
Outstanding checks (1,650,000)
Bank error - Careless Company deposit
erroneously credited (1,100,000)

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What is the cash balance per bank statement in Problem 15-4?

What is the cash balance per bank statement in Problem 15-4?

What is the cash per ledger on December 31 in Problem 15-5?

What is the cash per ledger on December 31 in Problem 15-5?

lOMoARcPSD|7074505

Practical Accounting by Valix

Intermediate Accouting (Centro Escolar University)

StuDocu is not sponsored or endorsed by any college or university

Problem 15-4 (AICPA Adapted)

February 28 book balance 1,460,000

NSF check of customer 130,000

to Able’s account 20,000

What is the cash balance per bank statement?

Downloaded by Martha Nicole Maristela ([email protected])

February 28 book balance 1,460,000

Adjusted book balance 1,435,000

Balance per bank statement (SQUEEZE) 1,530,000

Adjusted bank balance 1,435,000

The bank statement balance is “squeezed” by working back from the

Ending balance, December 31 2,800,000

Downloaded by Martha Nicole Maristela ([email protected])

Deposits made but not yet recorded by the bank 350,000

recorded by the bank 650,000

In addition, the entity discovered that it had drawn and erroneously

What is the cash per ledger on December 31?

Balance per book 2,800,000

Adjusted bank balance 2,500,000

Balance per ledger (SQUEEZE) 2,520,000

Downloaded by Martha Nicole Maristela ([email protected])

Service charge (12,000)

Adjusted book balance 2,500,000

Bank service charge for April 15,000

Deposits made but not yet recorded by bank 130,000

All deposits in transit and outstanding checks have been properly

Downloaded by Martha Nicole Maristela ([email protected])

The cash in bank account balance per ledger is P920,000.

What amount should be reported as adjusted cash in bank on April 30?

Balance per ledger 920,000

Adjusted book balance 900,000

The deposits in transit and checks outstanding are ignored because

Problem 15-7 (IAA)

Downloaded by Martha Nicole Maristela ([email protected])

 Gallant Company showed a cash account balance of P4,500,000 at

What amount should be reported as cash in bank?

Balance per book 4,500,000

Collection by bank 94,000

NSF customer check (32,000)

Book error – customer check overstated (9,000)

Downloaded by Martha Nicole Maristela ([email protected])

Book error – check written overstated 18,000

Adjusted book balance 4,571,000

Customer check 45,000

Recorded by depositor 54,000

Book error – overstatement of a collection 9,000

Company check 79,000

Recorded by depositor 97,000

Book error – overstatement of payment 18,000

The deposit in transit of P230,000 is a bank reconciling item.

Aries Company kept all cash in a checking account. An examination of the