“Fearning Obpctves ea ee | an cotton Suet Paes a ep ats prepared fr thingie ales ae cds and) Fon ono orem 2 explin the diene beeen the cash balance in th coring rsd nd he nce reported on the bs saxeent 1 amie atthe adjusted cre) calc tobe shown int oun btm nd © provideinfomon ning ja nities ‘ek oan seoet i pad on + ont npr spe mre bey nk statment fn ro forma bank reconelaion statement ‘Asan reconelalin statement has thefllowing format ‘ADC Ca Bank Recon For the month ended Augost 31,201 aanceperbooks end, fix Bal. perbankstatement end PX ‘Aad Crit memos (CM) %% Ad: Deposs in tart OTT) esx: Debit memos (OM) (x) Ls Outstanding checks (OC) 6) ‘difiase Book errs _xt_ Addess: Bankers Adjcted balance _PxE_ Adjeste balance Blane per book énidi= the cash balance in the accounting records as ofthe end ofthe current month In the pro forma statement shove, *Balimce per books) enditis the cash balance in the accounting records as of ‘August 31, 20x. «+ Boence per bunk statement; end ~ the ending cash balance inthe bank statement ofthe curtent month Tn the pro fonna eatement above, “Balance per Bonk statement en. is the eas balance on the bank statement a5 of “August 31, 20 rk credits) made by the bank + Credit memos are adaltions (bs recorded by the to the depositors bank acount but not ye depositor Examples of edit memos ince: i: "Catlections made by the bank on bel of te depositor 1A Tngrst income ese by the deposit Presses tom loon direlycedited or aed by the bank to the depositors soos §%, Uaroled-over matured time bankto the enity’s acount deposits transferred by the — ie RE BNShapers fa ae ch a ets) made bythe ban . it memos are duo ema yet recorded | amen itt yt deostoe We amples i enon 4. Bar src charges representing ben inna peso a iimegti nr de NSP) or Drown. aging ‘insufficient fands checks (DAIF) - These are checls | pened and ety eed by the bank but ‘SEijomty rune depstor because te rons sini ta ay forthe check. iinet its cas wen the depositor and te ‘sage hte tank wl ke sutomatic payment baron bt oe ptr sn. Paymf be whith Be ey (epost agent be made ct nly fom bank count | sap | + Book eno - eras coated by he deposior (ee ‘erroneous recording inthe hooks of accounts) | * Deposits in transit se depots mde but | i Sete 9 ‘ek ptr bse Dep ta | veri pan neg Su othe bank pled ina | etches eee + Outstanding cece - at checks Gavn_and_ released © Buyers utara yet nash wih eke Outstanding checks td te logy : cde he > Coie ces ~The ep umes de a tie) Oe dross eat a8 | Bk Rotor : the payee. Certified checks are already deducted from the account thus, they are no longer outstanding. > Sl chet check that remain outstanding for a elatively Tong period of time) are reverted bac to cash meaning ‘hey ane add bak othe cash balance per books, and are excluded from outstanding checks. + Bank errors ~erors committed bythe bank © Crit memos, debit memes, and bok rer are refered to as book reconcling tems. The depositor should make reconling ents for these tems. Depo in transit, cutstonting chats, and bank erors are ‘referred to as bank reconciting tems. The depositor doesnot nak reconciling entries fr these tems. ‘Mstetion 1: Reconciling tems To illustrate how the reconcing items aise let ws analyze how the depositor ett) and the bank recon transactions: 1. Anenity opens a checking account on December 27, 0x1. The cntics in the respective accounting records of the entity (epostor and the bank areas follows: Taty patie) |__| Gaskin bank 1000 | CashonFand 3 it ability = depositor 1,000 Cashomhand L000 ‘As ofthis date, the cash balances per books and per nk. statement ae equa (Cash tk 100 » Dept init, 00) ‘hea two account, ‘Cah in Bank ad “Dept ibility, are the accounts being reconciled by the entity's aecountant. These ane ‘Counterpart accounts, meaning tei Balances should tally # any slven point of time.‘rape 100 on enters a deposit tin Deceber 3,200 cst at 2 tn ey cls vert eet Noety yet Deposit willbe resved infra 2052, ‘Aso December ah bec balances per Books and per bank statement tnt gal ae is 2 abit fo cast bk Titout + comespodg cd? © det Uibitty). The 2 rence a eon st. The bank wl up then’ acount when it rece the deposit on ray 2, 202. The cat alances will be equal cx thsdate, Credit mame 5 The bank colts P50 elinbleon behalf ofthe entity it Janey 202, |ome de cel 8 | Sea ‘med elle wen | es ny Set res a erat to dees! titers ese tb a get te PD The ety wi iy Wl bent oy recive the Jersty bank #50 collection wien ? Alter making the mae on ill be equal, ist week of Febeus8 “aig ey, the cash balan Bo ection 1m Book eror ‘4. The entity makes payment of P1,000 but erroneously recordsit 2s PIOD in February 20:2. The check cleared the bank atthe ‘correct amount of P1000. Ely pastor Tea ‘Recounts payable Dipost Habily-depstar 1200 ‘Cashin bank 100 |” Cashonhane 4.000 Cn February 25 2, te cas balances prbooks nd er tank stent ae opin wo aunt (be test ak hank 10 but the coercing et fo pt ity P00). Te 500 diferencelo¢ Sook enor feror commited by the ey This cor oestrus blace per boks “he ery wil dover he enor when pepe the February bank Yecoeliaon on the ft week of Mach, fnmedaely ate the resp of the Febrony bank statement ‘ter making thereon rcolng ey, the sh anes ‘rilbecrul Ovtstondng checks Stn Maen 2g, the ely wrote cha toting PADD However ony P10) ef ose hc wer encased during te meni ay paso a “ects payable 407 | Deposit ability ~ depositor 100 Cashinbank 400 | Cashon hand uo (On March 31, 2042 the cash balances per books and per bank statement are again not equal (the creit tosh in bank is 400 but the coresponding debit to deposi inhiity is only #100 ‘The F300 difference is due to outstanding checks ‘Semaris slnilar fo thoeillstrated above would give rise ‘o differences da to debit memos and bank errrapes laid ee ee ape rls ‘i oh nk stent ane immediately stration 2: Use af fa Relevant informatcg, ‘ABC Co. receive JY reps ts July 206 ark = aes | Sn a 6 Grditmemo P1900) 4 Debit meno P3000 Deposit in wast=#5000) £httanding checks PROD ig tf hts of 5.000) Reprint: Prepare teak esiton Staion ABCC. ‘Bank Reconclation~Landbank Checking account # 10009087) July 31,20 m0 Bal perbnk end. seam adeper 0) tas OC a9 = Mets Bak ers PAOD Adjusted btnce Ades Bok ears Adj bee Pro eos iostration 3 Tasaton aalis Yournved yr SSSR se ag cash Elance iow oy altos Pa 00 while iE Scent hen yt Smee. YO 2G Ne 36 mag 4 Ramet pp nt heck eos with crete 10 your sea" E708 stip no, gi nt nk Reeliton ed Acustomer deposited 6000 to your bank account: You have ‘not yet recorded this collection of account receivable in your accounting books, 44. The bank paid P1000 monthly mobile phone charges directly out of your account, Reguiements: a. Prepare the bank reconciliation. Prepare the adjusting (econcing ene, Solon Analyses |The PA5000 check issue tothe supplier but not yet encashed ‘san outstanding check. ‘The P205,000 amount deposited but not yet credited to your account is a deposit transit «The P60,00 deposit to your account but not yet recorded in the accounting books is a eed memo. 44. The PIO000 devietion from your account but not yet recorded inthe accountng books ia debit memo. Re a) Bank econlation Ages ‘ago Ade:DIT 205,000 es: DM (40.00) Lae (45000) ‘dallas: Book ears AdalLes: Bank errs Adjusted balance P570000 Adjusted balance 97000 | Requirement Adjusting Reconciting ens ‘Acting teomcling) ents are mae only fr Book recone ing tans (is, eat memo, debit memo, and bok eon) No ‘ajuting (oconcling) entries are needed for bank reconciling tems inthe entity's books. Only items (c) and (2) above will be ‘juste inthe books of accounts.azestolows: _The adjusting rsconling eS FETT 909) ‘AE | Cashin bak 00 10 | pent ee Nn ey es ft som 71,000 TE | Commarea oP a ‘Cash in bank to0n) anne Sope on eet Settee ts © Cashin nk er bank statment Pan CaaS es rong ‘ae the balance of cash is ‘Aer posing the etiessboe, brought equal tof aust balan: Analyze the T:-accou bow: Cash Aug 31 (sadist balnee) — 2000 nk ANE on] 19000. ATE Ca) Adjusted balance — 374400 husration 4 ActalPrcedares You ae fhe acount of Boe Sty Ca, You obtained tt lowing infomation forte pupere of preparing the batt sconelatin forthe mnhafNay2b. Cashin ant counting ranks SUBSIDIARY LEDGER Bar CASHIN BANK. BP CURRENT accOUNT [Bate Desrision 7 S| traded Si | pat i SIL | Check #1109 a 16,0 sn | Depa , ea 518 | Oscket0 on srt | Check e111 200,000 S27 | Cmts 0 | Dept Rejuirent: Prepare the bank zeconiston. Saluton ‘We will determine the reconciling items simply by comparing the amounts inthe ledger and the bank statement. Amounts that are in the ledger but not inthe bank statement fare bank reconcling items ‘ ‘Amounts that ae inthe bank statement but notin the ledges ‘re book reconciling items simply cross-cut tems that appear in eae te bank statement ems not cosse-out are both the ledger and the bank st the reconciling items.St aa ae PHILIPPINE ISLANDS ‘Te econeing ters an | Ben eng Onin eck oa hg, at 5c & Dot : tam of ! aoe 00 (rm ledger, dated 81) uk cancing ene © eit meno 95 om ay ,_ Seater it ment kt be a 7 wna amt dt 5620 sitement, dated 5/12/208! set tin ss Bins Bly Co, ak Reconciton ‘ays aeons PARLO a pert HS eo om auc rr Frid tas OM ims) toc ; ‘Add/Less: Book errors __~_AdafLess: Bank errors tne Aan aan ARES] Adjusted balance ystration : Errors [ABC Co. is preparing its September 30,20 bank reconciliation. ‘The following information was determined: 1. Balance per bank statement, September 30, 20x1 ~ 180,000 . Deposit in transit September 3,201 ~Pa2,000.- bes RRetum of customer check for ineulfciency of funds (NSF check), September 30/20x1 ~ 60/0. 4. Balance per books, September 30, 20x —PL43.600.< Outstanding checks, September 30, 2x ~P27,00.~ fA collection of 220000 was recorded in the books a $P220 000, The bank statement shows the correct amount of 320,000.“ e ig The bank erroneously Geited 8 P Co,to ABC's account. 12,000 depost of Eye Busy Reguiremen: Prepare the bank reconciaton. Solution [Hates books end PTS O0 Bal perbank end P1800 | aaisem ‘aut 32000 Tse DM (NSF check) (600) Ls OC 27000) ‘Ada/Less: Book eos: “ade Bank rors ‘Understatement 90000, Overstatement a Adjusted ance P1700, Adjusted lence er73000|ep | corey ty Eisioco tse oa Thos, he ec i my “Foy tthe ean pros. Aialyze the T-2ccouy bow: ‘Should be'(SBR) Cash Dr. co 320000 Sama EO Cosh Toe Te zon 0 230000 a, 320,000 = dest POH ANSE AE Bal, Sort’ Entry made Coreen addition Bal 000 1009 a0 a Ron 109 = Banker: ef The P1200 eroneous dito ABC's bank acct caused the cash bolance per bask to be overstated. Thus, the correction isa deduction. Analyze the T-accounts below: ‘iy ni ‘Should bets itliability-ABCCo _Deposit lability - ABC Co.” Deposit ability ABCCoi —_Depost ibility “ABC Co!" 7 Daf Ge 12000 _ () @ 12,000 Bal - ‘Gerad by P1000 (0 SBE vs. 1200 EM), (© Dest ily” he account te wed bythe bank, Ts the “Cah br scone maintained inthe depositor’ counts re the ones we azeeconcing ina bank recone Comection: ‘Deposit liability - ABC Co. Entry made Coneeton deduction ___ 12,000, Bal.Iastation 60 ABC a. is pep following ions 4 Thecash be eons per bank staterent is 68,00 Creit meno Put Debit memo =P epost in at-PISO Outstanding es -P00 She dures per beck ovate By P90,000. The bank dabisare undead A000 1 ane bank reconciliation. 7, ine ip while the cash balan Requirement: Prepare the bark earn. Solution Ba. per books ed D000 Bal perbank end ‘isco mo sept som] tase (mn) soc 200) _Ad/Less: Book errors: ‘AddlLess: Bank errors: | Understatement 90,000 _Overstatement ceo, Aste ieee “664000 Asesetblece sees Notes © Booker Te oman ei hth dane Dat ato emote a eco | ‘mount! a > > > 50.000 700m Remember the lowing ‘Tocorrect an oestted cedit You ‘Tocorrect an overstated debit YOU ‘To correct an understated ret exit, “To connect an understated obit, Yo debit.open sunk Romi ap mm ding bing, [BOORERRORS sake seit ated he ending blag ao : Fortin nse secant ENE Nee ae eorelg | — Ge ‘of cash tobe overstated. Anal balance of cash ; ra ‘tol be inbook debit te pes en ae epost ability = a 7” pemcar ABCC 7 Uaiewaneat = Oventionent [> Gri ane Fh ae tnbook ea (Datuctonon amet feroteae eee ee tee ‘c. Overstatement in | ® Overstatement, ‘Credit Le rood (Outactonon (osmao| "trot 200 Cott wae th Tao Ba eee I Crentemanin | > Unleae [* Deb Adan ‘Une by PA OSH EM) teokendie cation bone The unerntet e bek eae the omen tring bee ote nda ye se rt (460,00 SBE vs. 540,000 EM = 8,000 under) BANK ERRORS: = Net oferor| Eicon nding Corton flame of ah = Galentement | = Cr lon ‘nasi = Vader] Unde nthe roe Desa inbank ered. xe [Teast [> Orertanenr | © Debt Deduction pee inbank debit. con the ae ae = ‘Debit (Deduction Cammenn| = Geanen Conesen _ sy © Saket nthe pe forma sraneliaton camemeatin | Tales | Crit Adon hes Greate ‘on the pro forma bank debit. eonelation)yuk Rion me Mlustration & Book to Bank/Bank to Book 1 bank reconciia tion | ‘The folowing information pertains to ABC Co’s cash on December 31, 20x: Balance per bank statement P8000, CCeedit memo -P5,000, Debit memo~ 2000 an: be (ABC co prepa NO ied " re fowing owing wil the sh Eaang Pech ae 7 partake Pg rm a customer, TEPTeSntg he bank cle 40,000 inter Seam eeee| Re *ESeeemctonese,| : Somers, Soeivene | a + Bete ya onset Skiecessaoeeree Ba Steere mean we © Sere enemy rian | Spi te eset po mate. ‘ptankerror cused the debits tobe overstated by 90,000 & ton Pu ek noon etonts ene rt Pet end P80 ecw som Aue aD as Lss: DM (2,000) Less: OC (3,000) steko ama Balers od GY Bart en PSN] Adit le 7 “Aju nee cen ts at at mae _ - (150,000) Less OC | jueeze the miss ju yemation. pre me eerie Ren anmeiaay OR | czmeenat GB. tadentenent—_ 08 | | Lo LUO Aijsted balance PSTN rel metcka ent 6000 Sync Perbnk en PAOD ste | aiasom 5,000 Aad: DIT 4,000 teow oon | tac) sfeookewo Vance Se | merce a | Ait “200 i 0 + 4x0 p09 9000+ 2000-5,000= 6000 astep 6, fovea sean nieensen TOTES si ant AIC TH a ons ne inves gatered. | Mare eel March 20 ~ (rt yet ete st) "parc apy Tea ied treet presen payment = P2250 cea tr ruany deouted with fhe Bank earlier, yp, ‘sbonne ABCCo sot ytarae ofthe dishonor. Whats the oneratper ABCs shook on March 31, 20%1? Sutin akprbos rs | Bayer bank (P1380) Bek ge itm sina Pr he depos neat Pte dems bewcen the amour sctoaly alt the books and bet the amount | a ty tbat ameunt OF dep] count ak Recmetion 7 For example yume atl epost of 00, When coche our econ yo fn at at he ak eed nly 0 How mocha epost nna?” Yes yn are 20) =the iene beeen de aunt ou dep’ ie. P00) andthe aunt sly Grd your sunt a PO, There sno depos in ast fhe amount deposed i sult eno ciedbyhetnko ne ly’seccu Depot in wast maybe computed sng the lowing account ea vans OF Dea a = pete mate ig cent" | pay ekg Tell Debits prbooke vila pr tone oer Mat month 09) ede: os ofbock ‘oromcurent mon _ xx ax Om Soret (dass ore uring cs Outstanding checks represent the dference between the amount ff ches dawn and the mount of ches encased with the nk For example, you wrote checks totaling #10000 and Aistibuted them to various payees. When you recived your bank Statement, you found out that only #700 of the checks deawn ‘were presented for payment, How? much are the outstanding checks? Yew you're conec agin! 3,000 the diference between the checks deawn (ie, P1000) and thse presented fr payment (ie, P7000). “There 8 no outstanding check if the amount of checks Arawn sequal othe amount of checks encased withthe Bank.sagt coat using the follo using ceca ay PMN owing Teaccount analysis tots 7 6, beg. bal Cece ring curent mont: x Tela Crets per boot cach ened Ferm Debt per Bonk gy Hotonert es: OM fast iSeroMin coment — Gg) (0) nen ent ts Elect of book Lear Ettottenk 0) "Sores mentn ee ett seitass Efoctof aaa: he bank sa “Booker cure orn curt meh mont stration 1: Computation of DIT and OC “Taken from the records of ABC Co are the following: Balance per bank statement, tober 31 * 4600 Balance per bank tatement Novenber30 3.800 ‘Total Credits per bank statement, November 1,500 Balance per books, October 31 5700 ‘Total Credits per books, November 5,200 lace er books Novena 10 Catecion ont det cee ABC account ‘in October. 500, Proce aan dct reed o ABCs acount _ in November not yt recorded inthe bene 300 NSF cela etna nOxober own NSF ces rue t Novem yereoded Jin the books ey (Check cid rm ester aug to 200 was corded inthe oak i Oca 2008 (Check ised ta supper among tig, recorded inthe booksin Novembes gO pot Deposit amounting to P1500 Deposit in transit — October ‘Outstanding checks -October31 Rouirements: ‘2. Compute forthe deposits in transit and o ‘of November 30. ' Prepare the bank reconciliation for the month November 30. Solutions: book debits and Bank debits should be computed fst Refer tothe ‘Taccount analyses shown below a SER an =z, ee ce ole wae (Om |e me "hg es | oat sent os iin tl a aera s oa es Sas eines | eer ook eebis 300 fea eens eae al ce Seis a AS asa cmp | nd ert ng == sae! bean Sika” ze Ba twos = Omaatena | Ug ne vuoy SR BOE asm oe] cx SOS ate imam TE OC, Nov. 30 Ec he ce ee c | Cranes | 7 Wie the CM st month, ae i recorded in books this month (ie, November, the book debits ar | ‘ceased, However, te increase does wot representa “dees | ‘mnie by ABC Co. ving te caret mont” Accordingly, its deducted trom the book debits in the DIT T-account above. > When the CM this montis recorded by the bank this month ‘he bank credits re ineresed, However, the increase does mt represent a “deposit made by ABC Co, and eredited by the | bank during the curent mont.” Accordingly, i is deduced {rom the bank credit in he DIT Lacnunt oboe. Book errors She esived em ex | Was recorded inthe books in Guan F200 October ae a Aung > What happened? — 1,500. > Whit was the corcton made thle month? ~ A. bask crit was made to reveise the overstated book debi. > Bf of correction: Book credits are increased but the increase dloes not represent a “check dwn during cure! moth" >. Where car fnd bok cats? ~ Outstanding checks account > What should! do? — deduct P,800 from book ceils in the OC account Book debits last mouth ae overstated by [ Gheck issued oa supplier amounting to Pi0d was) Seseeded ithe books in Never anno SO Analysis: > What happened? ~ Book crits this month are overstated by 00. z > What at the correction mate tis month? — Nowe yet. The correction willbe made next month (Le, December) > Eject of err: Book ces ae overated. > Wher con fn oo crits? ~ Outstandirg checks account > What shoul do? ~ deduct P90 from bak eis inthe OCT: [coco Noveiber oF 30) wate" "58 ] ‘oo Wier hppenf? Book dit hs month are wader by aso. a iP ‘the convection made this month? - None yet. eee ee ws ‘correction willbe made next month aire unerae vf Baki esa eter dnc oes> at sh scoot ‘Bankes 70 > ts he cocion de smth? — Abe eit rade osppenentie dee: ‘tof mec Bak dee ae increased but the incr scott sna” efi bk is? ~Osstandng checks T-acourt Wat su b= det 70 on bank debits in he! Facont . |epostnainingts bt vacraipg eieeNetatee Amis ht et i Mol - Ban crt this month are understate Wat the cretion comecion a ma mde hs moth? ~ None yet > Eft oer: Betkertg ts December). isa nde, Whe conf bank cen Wha sad = aed yg at ‘Errors Inst month ae preted to have buen cored tis meth ‘Asotin °° ho overstated debit at moth corte hia month by 2 rit 30 {efecto thin months ite ore et i! month ‘would havean opps ele. UAnnderstated debi lat month come this moth by 2, 20 ‘ec om hs moms dee An nettle i! month would have an opps elle roe tis month se promumed to be coeled next month ‘Acodingly, an ero ne month cored on the Faccount sng he ‘eros ect on this mon das ces rather an the tect tits coeco, rors cn oly be considered once nthe computation of ihr DIT (OG For enampl he ear ales DIT, wil at affect OC (nd vee ve). Requirement (0s Bank reconciliation Bat pe Bsae, Wav 30 PT] Bap bn sae wv 5 PASOD ‘ad Crt manos ‘at Deponte i are. e30 Prosmcstmiban 200 | CoseCutandng erects (9400) Late bet meas Niadisee Ban rors Wise choc (200) | “Understatement aepock 1350 | Aeioes Boak anor: Grectanent Upiariaiesecctone 4.00 Ane btnes A800 | Aste BE oo IMluseation 2: Reconstruction of information ‘ABC Co, had the following bank reconciliation on May 31, 20x: Balance per bank statement ~ May 31 100000 ‘Add: Deposit in transit May 4000 Less Outstanding checks ~May 2am). ‘Apt banc el tc ba er ooks)~ May 31 152,000 ‘The bank statement for the month of June 20<1 shows the followingape z vaio as bus | so Se FIT wl mn nt 7 sexadetnkinJane. There my} PALO th resp and ath dibs, Poo of ek serena ena] el sg ect gt? remnant —"Uaike ths bank reconlition which s prepared monthly er eee ees = rec errs smear 1b. How muchisthe cash lance per books on June 30, 20%1? ‘Illustration: [nformation relating to ABC Co’s cash in bank is as follows: soto ‘November 30 | December Bookbalance Z 50, 7 Repsnoent a Book debits a Depontsper bunk fine anon | [Rook edit = aos Las IT in ay ht din ine (esto | Raat Ea} ‘Ads DIT aot ie 30 span | [eee bane — 7 ask cpt oro fne meow | ne - tam TT [Ntes cote by bank 2a 3000 matas. Bank service charge 20) 10 cae ash Asbusements per toks in June are computed «| [NSF checks a 0 1400 Ovestatement of check in| — | |Gomewcfoaaie | gm] aa] pean —jne —1300/___1200| corer, vme| (Sc a_i Add OC sof junes) az) | [Outstanding checks = 9,750) 17,850. Diarents per bse =_| | Deposit of123 Corp. enoneously FEBE| |eeited to ABCCo’s account | 1.500 Thee ttc ~~" Perbokson ue oiscomputed as follows: | Retirements: Compute for the following by preparing a prof of cath beg, Ba May icy) gee Unadjusted book balance as of December 31. Rectiptsinjare a . Unadjusted bank disbursements in December. —E6010| 40) Dihurementsints® | © Adjusted cash balance ab of November 30 400 nba. Je 4. Adjusted cash receipts in December, ‘atm 39). Aajstd eth disbursements in Deceber 1. ‘Adjusted cash balance asf December 3pianos ~ per books” Bisse the pr a Sree ttc Cm pi = re Sd Reig [Disbursements [Des 51 a Tp $e, 1 J LR ‘The prof of cash sina oa Faccount The sum of be amounts in the first wo columns (Nov. 30 and Receipt) i equal | fo dhe sum ofthe amounts the st two columns (Disbursements | tnd Dee 31), Accordingly, we ean squeeze for the missing, vale | asfollows: Viakenoe per books S60 |, 2490 J 28200. ‘The computation above is depicted ina account as follows: | ‘aki Nov.20 Sea ecsps 21500 | 24290 Dabusenents [Caste Dect Step 2: Credit memos ‘The prof of cash that we are "two date” bank conan 7 are simply bank Preparing inthis illustration is cl The Nov, 30 and Dec, 31 colunt rraltions fr the months of November & an sun i Tor eco Teco [Resp (ones [ST Tamara 58 See Dee bank isenbee 5H Pree Be “The proof of cash above is also called 2 “fourcolumn” bank reconciliation. The Reopls and Disbursvienscokurins pertain to the current month of December. Thus, items pertaining to Novembers (lat month) receipts or disbursements that were ‘only recorded in December are,excludad-{dedueted) from these columns. ‘On the other hand,.those that represent receipts and ‘disbursements during December that are not yet record are fncluded (add) in these columes. ‘The credit memos’ are placed in the Receipts and Disbursements columns as follows: Now 36] Resp [Disbursements [Dec 37 Tiamnsrperbootal 5600 | atom | 24200 | 9300 [Note coleeted by bone | Novenber [2350 _|@250 + Deseste, 3000 Tenn wb SR. > The 92,250 November CM was only recorded in December. Md the December Book debits (receipts) bat this does not represent a December receipt but rather 2 November receipt that was only recorded in December ‘Accordingly, iis deducted from the December receipts > The 93,000 CM this month ‘a December receipt that fs already recorded by the bank but nt yt it he Pooks wail only be recorded in the books next month i Januar) ‘Accordingly, its added to te December recsP This has increasnk enti = Step 4: Book rors December, Analysis: > What happened? ~ Book credits last month are overstated by 91,900. > What sos the correction made this month? ~ A book debit was made to reverse the overstated book credit > Bf of error: Book debits are increased but the increase does ‘not represent & “December recep.” > What should 1 do? ~ deduct 1,900 from book debits (Receipts col) Tanmerpatoos 501 isn) | 2620 | 9.0 Note caleba [azar ‘Now. 30 | Receipis [Disbursements [Dee 51 Novenber | 230 5| | Telmesperbost| sai | 31500 | 2x20 | 9300 | December 30 [000] [otc ny bon Henk soc le [November | 2250_| (5) ‘November |i) camel Decenber aco | 30 tok res) bcs ha oy 9 Dcomber Dishursm were na ye record > Observed htt as may balanced. Gversiatement of deck in Payment of slaveae Snapter oe sutra Eee ee ee wt arb A ie mouth are overstated ‘Nov.30 | Rectipts [Disburemenis] Dee 51 at etn ti by) [iimeperbank [15000 [27300 [21900 | 2000 is i ml aA nim il? [Dees | sd crenber > Mr et ee) Sesser 6_| Sar el se [sedge naa > Ege fore eke ee —| > at 48 - [November | O73) 7a (Daten! [Deceer Fat | a7 Tk roe “The complted rot fash sos [_-November | ano) 0), J December Ta Ta Pert Cattaneo] aa _[_sa750_| am | Bow | Dec t ‘No.3 Raps Disbursements 723200 Babee pertsia_ 5601 | 1900 > Obene tat in Teoh tin ep of coh gaint © Perbank Ching snap as follows Peto ash per bank is prepar > > Answers to requirements: (amounts taken from the proof of ash) ve 300 (Observe that the adjusted balance per Books and per bank are equal. ‘A proof of cash that covers more than fo months ean also be prepared, for example, a proof-of cash that covers the months {bf Ostober, November and December. Such a proof of cash is falled a "three date bank reconciliation” anda ‘seven: Column” bank reconciliation. Its also possible to prepare a ‘one-hundred date bank reconelation. You might want to give this a try. €@ ‘Unadjusted book balance as of December 31. jt ‘Unadjusted bank disbursements in December. 21900 ‘Adjusted eash balance as of November 30 8850 ‘Adjusted cash receipts in December. 50750 ‘Adjusted cash disbursements in December... 27.600 12,000 “Adjusted cask balance as of December 31Aste balance sn tons (bank credits) made by th park acount bat nt yet recorded hy ‘by the bank on behalf + Crt ems CM ‘rk te eps’ ‘he dps, eg calesions made cine «sewn tank debi) made y ter bedepasio’bank arcunt bat not yet recorded ‘he desta eg, NSFchcksbankservice charges. 4+ Digs in rms (DIT) ~ ae deposits made but not yl ‘cdi te bank the dposto’s bank account. + Ontimig ces (0C)- are checks drawn. and relete! esl eno et encased withthe bank. nk Riomeiiatin 8 PROBLEMS ieitiae eed ger padin Ll cy ago be bas eee ee a 1c aes, Son . nee eens pole mertl hompetlcon (SP reer lo Eee ee 1 eS Sree ee ee paren rae (a reel n Se es oni eee eer ee eee ea oer do eer ee estan enn ee rege antic el taae eco een rae apace ere ee eee aaa Bea eee aaa See Seater PROBLEM 2: MULTIPLE CHOICE ~THEORY 1. These are deposits made but not yet credited by the bank to the depositor’ bank acount Credit memos (CM) Debitmemes OM) {¢ Outstanding cheeks (OC) ‘ Deposits in trait (DT)