Mindanao State University

College of Business Administration and Accountancy

BANK RECONCILIATION AND PROOF OF CASH

PROBLEM 1: On August 1, 2012, Garfield Company received its bank which is rent revenue to Garfield, is not recorded by Garfield
statement for July 2012. For bank reconciliation purposes, the until the bank statement is received.
company’s accountant provided you the bank statement and cash book C. On the 23rd of July, an NSF check for P472 was returned by
records as follows: the bank. The check was redeposited on July 27 th and no entry
was made by Garfield.
PER BANK STATEMENT
D. Check No. 1145 dated July 29 was written for P1,492 of
Date Debits Credit Balance
wages but recorded by Garfield on its books as P1,000.
July 1 P66,405
E. On July 16, the bank recorded a withdrawal of P386 for
July 2 P2,502 63,903
Garfield that should have been for Barfield Company.
July 3 2,240 P1,050 62,713
F. The bank service charge for June was P165 and for July was
July 5 2,106 64,819
P175.
July 6 5,535 70,354
G. The interest earned on June was P3,054 and in July was
July 8 5,817 76,171
P3,160.
July 9 8,181 67,990
H. During June, Garfield wrote Check No. 1095 for P9,850 for
July 10 4,317 72,307
rent expense but recorded the check on its books as P8,955.
July 11 6,819 4,926 70,414
Garfield discovered the mistake in July, when the cancelled
July 12 7,425 62,989
checks were returned with the June bank statement but
July 13 62,989
neglected to correct the errors at that time.
July 15 3,509 66,498
I. At the end of June, Garfield had P3,156 of deposits in transit,
July 16 9,777 56,721
and checks totaling P4,742 that had not cleared the bank. In
July 17 6,221 7,702 58,202
addition, all of Garfield’s transactions with the bank after July
July 18 6,484 51,718
29 have not cleared the bank.
July 19 3,418 55,136
July 20 5,310 60,446 1. How much is the deposits in transit as of July 31, 2012?
July 22 6,492 66,938 2. How much is the outstanding checks as of July 31, 2012?
July 23 5,546 61,392 3. How much is the adjusted cash balance as of June 30, 2012?
July 24 61,392 4. How much is the adjusted bank receipts for July?
July 25 8,735 52,657 5. How much is the adjusted book disbursements for July?
July 26 8,246 60,903 6. How much is the adjusted cash balance as of July 31, 2012?
July 27 9,385 70,288 PROBLEM 2: The cash in bank account of Cleveland Company
July 28 70,288 disclosed a balance of P203,000 as of December 31. The bank statement
July 29 7,060 63,228 as of December 31 showed a balance of P106,000. Upon comparing the
July 30 63,228 bank statement with cash records, the following facts were developed:
July 31 6,405 8,987 65,810 A. The company’s account was charged on December 26 for a
TOTAL P77,395 P76,800 customer’s uncollectible check amounting to P30,000.
B. A two-month, 17%, P60,000 customer’s note dated October
PER CASH BOOK 25, discounted on November 25, was dishonored on
Date Debits Credit Balance December 25 and the bank charged the company P62,000
July 1 P62,150 which included a protest fee of P2,000.
July 1 P3,729 P165 65,714 C. A customer’s check for P15,400 was entered as P14,500 by
July 2 5,535 71,249 both the depositor and the bank but was later corrected by the
July 3 8,181 63,068 bank.
July 5 5,817 68,885 D. Bank service charges of P1,830 for December were not yet
July 6 4,317 73,202 recorded on the books.
July 7 73,202 E. A bank memo stated that a customer’s note for P25,000 and
July 8 6,819 66,383 interest of P1,000 had been collected on December 28 and the
July 9 4,926 7,425 63,884 bank charged P500. No entry was made on the books when
July 10 63,884 the note was sent to the bank for collection.
July 11 63,884 F. Receipts on December 31 for P24,000 were deposited on
July 12 3,509 67,393 January 2.
July 13 9,391 58,002 G. Check No. 142 for P12,425 was entered in the cash
July 15 7,702 65,704 disbursement journal at P12,245 and Check No. 156 for
July 16 6,221 59,483 P3,290 was entered as P32,900.
July 17 3,418 6,484 56,417 H. The following checks were outstanding on December 31:
July 18 5,310 61,727 Check No. Amount Check No. Amount
July 19 6,492 68,219 123 P 3,000 154 P 4,000
July 20 5,074 63,145 *143* 2,000 157 6,000
July 22 8,735 54,410 144 7,000 159 7,000
July 23 8,246 62,656 147 3,000 169 5,000
July 24 62,656 *Certified by the bank in December.
July 25 62,656 I. A deposit of P20,000 was recorded by the bank on December
July 26 8,913 6,885 64,684 5 but it should have been recorded for Cleve Company rather
July 29 5,152 5,913 63,923 than Cleveland Company.
July 30 2,238 66,161 J. Petty cash of P10,000 was included in the cash in bank
July 31 5,857 60,304 balance.
K. Proceeds from cash sales of P60,000 for December 18 were
TOTAL P75,304 P77,150 stolen. The company expects to recover this amount from the
In addition, you gathered the following data from the bank statement insurance company. The cash receipts were recorded in the
and from the company records: books but no entry was made for the loss.
A. Garfield makes a journal entry for service charges, direct L. The December 21 deposit included a check for P20,000 that
deposits, and interest earned in the month subsequent to the had been returned on December 15 marked NSF. Cleveland
month the items are reflected on the bank statement. Company had made no entry upon return of the check. The
B. Arthur Company makes a direct deposit of P675 to Garfield’s redeposit of the check on December 21 was recorded in the
account at the bank on the 30 th of every month. This payment, cash receipts journal of Cleveland Company as a collection on
account.

Prepared by: Mohammad Muariff S. Balang, CPA, Second Semester, AY 2013-2014 Page|1 of 3
 7. What is the adjusted cash balance as of December 31, 2011? in the month of June deposits)
8. Prepare adjusting entries as of December 31, 2011. June bank service charge 350 Nil
June NSF check from a customer
PROBLEM 3: The following data pertaining to the cash transactions returned by the bank (recorded
and bank account of McKinley Company for the month of May are by bank as a charge) 9,000 Nil
available to you:
Cash balance, per records, May 31 P 17,194 14. The deposits in transit as of June 30 is:
Cash balance, per bank statement, May 31 31,948 15. The outstanding checks as of June 30 is:
Bank service charge for May 109 PROBLEM 8: The following information was included in the bank
Debit memo for the cost of printed checks delivered reconciliation for Coolidge Company for October and November 2011:
by the bank 125 Checks and charges recorded by bank in November,
Outstanding checks, May 31 6,728 including a November service charge of P4,000
Deposit of May 30 not recorded by bank until June 1 4,880 and NSF check of P20,000 P 550,000
Proceeds of a bank loan of May 30 net of interest of Service charge made by bank in October and
P300 5,700 recorded by depositor in November 2,000
Proceeds from a customer’s note, including interest Customer’s NSF check returned in October and
of P100 8,100 redeposited in November (no entry made by
Check No. 2772 issued to a supplier entered in the depositor in either October or November 40,000
accounting records at P2,100 but deducted in the Total credits to cash in all journals during November 620,000
bank statement at an erroneous amount of 1,200 Outstanding checks on October 31, 2011 that cleared
Stolen check lacking an authorized signature, in November 230,000
deducted from McKinley’s account by the bank
16. What is the amount of outstanding checks on November 30,
in error 800
2011?
Customer’s check returned by the bank marked
NSF, no entry has been made in the accounting PROBLEM 9: The bookkeeper of Hoover Company recently prepared
records to record the returned check 760 the following bank reconciliation:
9. What is the correct cash balance at May 31? Hoover Company
Bank Reconciliation
PROBLEM 4: The information below is from the books of the December 31, 2011
Roosevelt Corporation on June 30:
Balance per bank P 126,420
Balance per bank statement P 11,164
Receipts recorded but not yet deposited in the bank 1,340 Add:
Bank charges not recorded 16 Deposit in transit P 8,700
Note collected by bank and not recorded on books 1,120 Charge on checkbook printing 210
Outstanding checks 1,100 Error made in recording Check No.
NSF checks not recorded on books nor redeposited 160 25 issued in December 1,600
10. Assuming no errors were made, compute the cash balance per NSF check 5,000 15,510
books on June 30 before any reconciliation adjustments. Total P 141,930
Deduct:
PROBLEM 5: The cash in bank account of Taft, Inc. for April showed
Outstanding checks P 4,480
an ending balance of P129,298. Deposits in transit on April 30 was
Note collected by bank (includes P50
P18,200. Outstanding checks as of April 30 were P59,435, including a
interest) 9,500 13,980
P5,000 check which the bank had certified on April 27. During the
Balance per books P 127,950
month of April, the bank charged back NSF checks in the amount of
P3,435 of which P1,835 had been redeposited by April 20. On April 23, Hoover has P9,100 cash on hand on December 31, 2011.
the bank charged Taft’s account for a P2,200 items which should have 17. The amount Hoover should report as cash on the statement of
been charged against Kmart, Inc., the error was not detected by the financial position as of December 31, 2011 should be:
bank. During April, the proceeds from notes collected by the bank for
Taft, Inc. was P7,548 and bank charges for this services was P18. PROBLEM 10: Truman’s accountant is preparing its October bank
reconciliation and has collected the following data:
11. How much is the unadjusted balance per bank on April 30?
Per book Per bank
PROBLEM 6: Shown below is the bank reconciliation for Wilson October 1 balance P 11,600 P 10,000
Company for the month of May: October deposits 24,600 21,200
Balance per bank, 5/31 P 75,000 October checks 27,800 29,000
Add: Deposits in transit 12,000 Note collected (includes 10%
Total P 87,000 interest) - 4,400
Less: Outstanding checks P 14,000 October service charge - 20
Bank credit in error 5,000 19,000 October 31 balance 8,400 6,580
Balance per books, 5/31 P 68,000 Additionally, deposits in transit and outstanding checks from
The bank statement for the month of June contains the following data: September’s reconciliation were P4,400 and P2,800 respectively.
Total deposits P 55,000 18. The correct cash balance at October 31 should be:
Total charges including an NSF check of P4,000 and
a service charge of P200 48,000 PROBLEM 11: Reconciliation of Eisenhower Company’s bank
All outstanding checks on May 31, including the bank credit, were account at May 31 is:
cleared in the bank in June. There were outstanding checks of P15,000 Balance per bank P 2,100,000
and deposits in transit of P19,000 on June 30. Deposits in transit 300,000
Outstanding checks (30,000)
12. The total cash receipts per books in June is:
13. The total cash disbursements per books in June is: Correct cash balance P 2,370,000
Balance per books P 2,372,000
PROBLEM 7: Harding Company deposits all receipts and makes all Bank service charge (2,000)
payments by check. The following information is available from the
Correct cash balance P 2,370,000
cash records:
May 31 Bank Reconciliation June data are as follows:
Balance per bank P 262,460 Bank
Deposits in transit 21,000 Total credits P 1,620,000
Outstanding checks (38,000) Total debits 2,300,000
Balance per books P 245,460 Collection by bank (P400,000 note plus interest) 420,000
NSF check 10,000
Month of June Results Per bank Per book Balance 1,420,000
Balance, June 30 P 279,950 P 303,550
June deposits 107,840 158,890 Books
June checks 111,000 100,800 Deposits recorded P 1,800,000
June note collected (not included 30,000 Nil Checks recorded 2,360,000
Balance 1,810,000

Prepared by: Mohammad Muariff S. Balang, CPA, Second Semester, AY 2013-2014 Page|2 of 3
 August 31 480,000
19. The deposits in transit on June 30 amount to:
Outstanding checks:
PROBLEM 12: Part of Kennedy Company’s unadjusted trial balance July 31 100,000
at December 31, 2011 showed a cash balance of P17,400. The balance August 31 650,000
per bank statement was P12,000 on December 31, 2011. Outstanding August collection of P200,000 recorded by entity as 20,000
checks amounted P6,900. Interest of P40 was credited to the August check in payment of account payables for
enterprise’s account by the bank during December but has not yet been P600,000 recorded by entity as 60,000
entered on the company’s books. Deposit of Reagan Company erroneously credited by
bank to Carter Company 200,000
20. Assuming no errors exist in the company‘s cash balance,
August check of Reagan Company erroneously
deposits in transit at December 31, 2011:
charged by bank to Carter Company 400,000
PROBLEM 13: Nixon Company keeps all its cash in a checking 23. Prepare a proof of cash for the month of August following the
account. An examination of the entity’s accounting records and bank adjusted balance method.
statement for the month ended December 31, 2010 revealed a bank
statement balance of P8,469,000 and a book balance of P8,524,000. A PROBLEM 16: In your audit of the cash account of Obama Company,
deposit of P950,000 placed in the bank’s night depository on December you are required to prepare the adjusted balances of cash in August and
29 does not appear on the bank statement. Checks outstanding on September, receipts and disbursements and to submit adjusting journal
December 31 amount to P270, 000. The bank statement shows that on entries as of September 30, 2011:
December 25, the bank collected a note for Nixon Company and 8/31/2011 9/30/2011
credited the proceeds of P935,000 to the entity’s account. The proceeds Balances per book P 26,580 P 36,390
included P35,000 interest, all of which Nixon Company earned during Balances per bank 33,020 44,260
the current period. Nixon Company has not yet recorded the said Deposits in transit 5,480 6,220
collection. Nixon Company discovered that check number 1000759 Outstanding checks 13,520 12,740
written in December for P183,000 in payment of an account had been Bank collections not in books 2,400 3,200
recorded in the entity’s records as P138,000. Included with the Bank charges not in books 1,900 1,280
December 31 bank statement was an NSF check for P250,000 that Additional information follows:
Nixon Company had received from Ana Company on December 20. A. Of the checks outstanding on September 30, one check for
Nixon Company has not yet recorded the returned check. The bank P1,400 was certified at the request of the payee.
statement shows a P15,000 service charge for December. B. An NSF check for P1,600 from a customer was charged by
21. The net adjustment to the cash account is: the bank on September 28 and has not been recorded.
C. An NSF check for P2,100 was returned in August and
PROBLEM 14: Ford, Inc. had the following bank reconciliation at
recorded in September.
March 31, 2011:
D. An NSF check for P1,800 returned and recorded in
Balance per bank, 3/31/2011 P 37,200
September.
Deposit in transit 10,300
E. A check for P4,020 of Bush Company was charged by the
Total P 47,500
bank in error against Obama’s account.
Outstanding checks (12,600)
F. A receipt on September 6 of P1,500 was paid out in cash for
Balance per books, 3/31/2011 P 34,900
expenses incurred. The receipt and disbursement was
Data per bank for the month of April 2011 follow: recorded by Obama.
Deposits P 42,700 G. An error was made in recording a customer’s check on
Disbursements 49,700 September 20. The recorded amount was P330 instead of
All reconciling items at March 31, 2011 cleared the bank in April. P930.
Outstanding checks at April 30, 2011 totaled P5,000. There were no H. An error occurred recording a disbursement in September.
deposits in transit at April 30, 2011. The recorded amount was P6,500 instead of P650.
22. What is the cash balance per books at April 30, 2011? I. September disbursements per cash journal are P549,270.
J. Receipts for September per bank statement are P562,140.
PROBLEM 15: The following information is gathered from the K. Check No. 143 issued in August was mutilated and returned
records of Carter Company: by the payee, Clinton Corporation. A replacement, Check No.
Balance per book, August 31 P2,000,000 163, was issued. Both checks were entered in the check
Receipts per entity record for August 4,400,000 register for P5,000 but no entry was made to cancel Check
Disbursements per entity record for August 3,600,000 No. 143.
Balance per bank, August 31 1,860,000 L. The outstanding checks balance as of August 31 and
Bank receipts for August 5,000,000 September 30 both include Check No. 143.
Bank disbursements for August 3,940,000
Obama Company deducts from its cash receipts journal every NSF
NSF check:
check received instead of recording it at their cash disbursements
July 100,000
journal. Redeposits are recorded as regular cash receipts.
August 50,000
Notes collected by bank for Carter: 24. How much is the adjusted cash balance as of August 31, 2011?
July 200,000 25. How much is the adjusted cash receipts for September?
August 300,000 26. How much is the adjusted cash disbursements for September?
Deposit in transit: 27. How much is the adjusted cash balance as of September 30,
July 31 600,000 2011?

Prepared by: Mohammad Muariff S. Balang, CPA, Second Semester, AY 2013-2014 Page|3 of 3