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Chapter 3
Bank Reconciliation

PROBLEM 1: TRUE OR FALSE

1. FALSE
2. FALSE
3. FALSE – debit memo
4. TRUE - bank memorandums (debit memos and credit memos)
require reconciling entries in the depositor’s books
5. TRUE
6. FALSE – 100 + 20 CM – 5 NSF = 115
7. TRUE
8. FALSE – 30 + 5 -3 = 32
9. FALSE – as a deduction
10. TRUE

PROBLEM 2: MULTIPLE CHOICE – THEORY

1. D
2. B
3. D
4. D
5. D
6. C
7. D
8. B – choice (d) is incorrect – “payee” not “drawee”
9. C
10. C
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PROBLEM 3: EXERCISES
1. Solutions:
Requirement (a): Bank reconciliation
The bank reconciliation is prepared as follows:
ABC Co.
Bank reconciliation - Bank XYZ (Checking account # 10009087)
September 30, 20x1
Balance per books, Sept. 30 5,313 Bal. per bank statement, Sept. 30 6,200
Credit memo : Deposits in transit 2,418
Collection on note by bank 3,565  
Debit memos: Outstanding checks (3,100 - 310) (2,790)
NSF check (1,860)  
Bank service charge (62)  
Book error: Bank error:
Overstatement of collection
(198) Erroneous debit to ABC account 930
(1,593 – 1,395)
Adjusted balance 6,758 Adjusted balance 6,758
       

Requirement (b): Adjusting entry

Oct. 3, Cash in bank 1,445
20x1
Accounts receivable (1,860 + 198) 2,058
Bank service charge 62
Note receivable (3,565 + 155) 3,410
Interest income 155

7.Solution:
Disbursement
  31-Mar Receipts 30-Apr
s
Per books 396,600 180,000 36,600 540,000
ADD: CM
March 36,000 (36,000)
April 42,000 42,000
LESS: DM
March (10,920) (10,920)
April 16,020 (16,020)
Book errors:
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March (27,000) (27,000)

April 9,000 (9,000)
Adjusted bal. 394,680 186,000 23,700 556,980

31-Mar Receipts Disbursements 30-Apr

Per bank 280,900 191,380 26,900 445,380
ADD: DIT
March 46,780 (46,780)
April 131,400 131,400
LESS: OC
March (23,000) (23,000)
April 19,800 (19,800)
Bank errors:
March 90,000 (90,000)
April
Adjusted bal. 394,680 186,000 23,700 556,980

Guide in Checking Problem 3

No. 1
Bank reconciliation 11 points (1 point for each correct amount)
Adjusting entry 5 points (1 point each for each correct debit
and credit amount in the entry)

No. 7
Proof of cash – book 7 points (1 point for each correct amount
per line)
4 points (for adjusted balances (1 point
each)
Proof of cash – bank 6 points (1 point for each correct amount
per line)
4 points for adjusted balances (1 point
each)
Total 37 points
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PROBLEM 4: MULTIPLE CHOICE – COMPUTATIONAL

1. A (25,650 + 5,900 – 750 – 2,000) = 28,800

2. C
Solution:
Per books, June 30 68,757 Per bank, June 30 54,780
(i) Credit memo (4,500 + 165 - 36) 4,629 (h) Deposits in transit 13,425
(d) Outstanding
(b) Dishonored check (14,265) checks (9,885)
(e) Bank charges (210) (g) Bank error 600
(f) NSF checks (1,296)
(a) Book error (4,500 - 3,000) 1,500
(c) Book error (2,895 - 2,700) (195)
Adjusted balance 58,920 Adjusted balance 58,920

3. B (28,000 – 12,000 + 4,000 + 500) = 20,500

4. B (30,140 + 4,000 – 5,200) = 28,940

5. C (27,200 + 450 – 700 + 1,450) = 28,400

6. B (38,000 + 940 – 220 - 90 + 18) = 38,648

7. D (40,000 – 2,000 + 8,000 + 400) = 46,400

8. C (54,075 + 9,375 – 8,625 – 375) = 54,450

9. A (113,000 + 17,200 – 10,800) = 119,400 adjusted balance + 2,400 NSF

= 121,800 unadjusted balance of cash per book (squeezed upwards)
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10. A
Solution:
OC
12,600 31-Mar
Checks drawn
Disbursements 49,700 42,100 (squeeze)
30-Apr 5,000

CIB - per books

31-Mar 34,900
Collections* 32,400 42,100 Checks drawn
25,200 30-Apr (squeeze)

* (Deposits per bank in April of ₱42,700 less ₱10,300 DIT from last month that
cleared in April) = 32,400

OR

Per bank statement

37,200 31-Mar
Disbursements 49,700 42,700 Deposits
30-Apr 30,200

 30,200 per bank - 5,000 outstanding checks recorded in books but

not yet presented for payment with the bank = 25,200