Problem 2-2 (IAA)

Sensible Company
Bank Reconciliation
As of December 31, 2021
Book Bank
Unadjusted Balances 110,000 135,000
Add: Credit Memo for note collected 45,000
Less: Debit Memos
NSF Check (10,000)
Service Charge (5,000) (15,000)
Less: Book Error (27,000)

Add: Deposit in Transit 60,000

Less: Outstanding Check
Check 775 (30,000)
Check 777 (40,000)
Check 770 (20,000) (90,000)
Add: Bank Error 8,000
Adjusted Balances 113,000 113,000

Adjusting Entries
Cash in bank 45,000
Bank Service Charge 5,000
Notes Receivable 50,000
To record the note collected by the bank.

Accounts Receivable 10,000

Cash in Bank 10,000
To record NSF check.

Accounts Payable 27,000

Cash in Bank 27,000
To adjust the understatement of book disbursements.
PROBLEM 2-1

Apathy Company
Bank Reconciliation
As of December 31, 2021

Book Bank
Unadjusted balances 65,000 108,000
Add: Credit memo for note collected 30,000
Less: Debit memo for service charge (2,000)

Deposit in transit 80,000

Less: Outsanding checks:
No. 102 15,000
No. 105 30,000
No. 107 50,000 (95,000)
Adjusted balances 93,000 93,000

ADJUSTING ENTRIES:
Debit Credit
Cash in bank 30,000
Notes receivable 30,000
To record the note collected by bank.

Bank service charge 2,000

Cash in bank 2,000
To record the bank service charge.
 Zodiac Company
Bank Reconciliation
As of April 30

Cash bal. per book, April 30 1,100,000

Add:
Credit Memo for note collected 60,000
Outstanding Check
Check no. 1331 40,000
Check no. 1332 30,000
Check no. 1334 60,000
Check no. 1335 10,000
Total:

Less:
Bank Service Charge 5,000
NSF Check 25,000
Deposit in transit 270,000
Total balance per bank, unadjusted

Adjusting Entries

Cash in Bank 60,000

Notes Receivable

Bank Service Charge 5,000

Accounts receivable 25,000
Cash in Bank
 140,000
1,300,000

-300,000
1,000,000

60,000

30,000
PROBLEM 2-16
Radant Company

Bank Balance 3500000

Add: Deposit in transit 550000
NSF CHECK 50000
Debit Memo for safety deposit box rental fee 5000
Unrecorded check drawn 125000 730000 4230000
Less: Outstanding Check -650000
Book error on creditor check (Overstatement) -270000
Book error on customer's check (Understatement) -180000 -1100000
Balance per book Before Corrections 3130000

Balance per book Before Corrections 3130000

Add:
Overstatement of creditor's check 270000
Understatement of customer's check 180000 3580000
Less: NSF CHECK -50000
Debit memo for safety deposit box rental fee -5000
Unrecorded check drawn -125000
ADJUSTED BOOK BALANCE 3400000
ADJUSTING ENTRIES
Accounts receivable 50000
Cash in Bank 50000
NSF check returned

Bank service charge 5000

Cash in bank 5000
Safety box rental fee

Cash in Bank 270000

Accounts payable 270000
To correct the book error of overstating the creditor's check

Cash in Bank 180000

Accounts receivable 180000
To correct the book error of understating the customer's check

Accounts payable 125000

Cash in Bank 125000
Unrecorded check drawn for accounts payable
PROBLEM 2-8

Alpha Company
Bank Reconciliation
As of December 31, 2021

Balance per book 5,000,000.00

Add: Proceeds of bank loan 516,000.00
Total 5,516,000.00
Less: Understatement of check (200,000-20,000) 180,000.00
Petty cash fund 10,000.00 190,000.00
Adjusted book balance 5,326,000.00

Balance per bank 5,500,000.00

Add: Deposits in Transit 300,000.00
Bank Error (erroneous bank charge) 50,000.00
Deposit omitted from bank statement 150,000.00 500,000.00
Total 6,000,000.00
Less: Bank Error (erroneous bank credit) 130,000.00
Outstanding checks 544,000.00 674,000.00
Adjusted bank balance 5,326,000.00

Adjusting Entries
Cash in Bank 326,000.00
Interest Expense (84,000 x 1/12) 7,000.00
Prepaid Interest Expense 77,000.00
Accounts Payable 180,000.00
Petty cash fund 4,000.00
Supplies 2,000.00
Transportation 3,000.00
Postage 1,000.00
Loan Payable (516,000/86%) 600,000.00
PROBLEM 2-9

PATHETIC COMPANY
BANK RECONCILIATION
AS OF AUGUST 31, 2021

Book Bank
Unadjusted balance 1,300,000 1,200,000
Add:
Overstatement of Check No. 765 20,000
Check No. 555 stopped for payment 10,000 30,000
Total 1,330,000
Less:
Bank Service Charge -5,000
NSF Check -85,000

Add:
Deposit in Transit 275,000
Total 1,475,000
Less:
Outstanding checks
No. 761 -55,000
No. 762 -40,000
No.763 -25,000
No. 764 -65,000
No.765 -50,000 -235,000
Adjusted Balances 1,240,000 1,240,000

ADJUSTING ENTRIES
Cash in Bank 30,000
Accounts Payable 20,000
Miscellaneous Income 10,000
#
Bank Service Charge 5,000
Accounts Receivable 85,000
Cash in Bank 90,000
#
Receivable from Cashier 40,000
Accounts Receivable 30,000
Sales Discount 10,000
Balance per bank 1 805 000
Deposit in transit 325 000
2 130 000
Outstanding check (275 000)
Adjusted bank balance A 1 855 000
Problem 2-11

What amount should be reported as cash in bank at year end?

Balance per book 850,000

Less: NSF checks 100,000
Add: Notes collected by bank 750,000
Adjusted cash balance 1,500,000 A
PROBLEM 2-13: ABLE COMPANY

BOOK TO BANK
February 28 Book Balance
Note Collected by Bank
Interest earned on note
Outstanding Checks
NSF Customer Check
Bank Service Charge (2000 + 3000)
Deposit in Transit
Bank Error - Erroneous Charge
Cash Balance per Bank, unadjusted B

What is the cash balance per bank statement?

A 1,435,000.00
B 1,530,000.00
C 1,340,000.00
D 1,550,000.00
1,460,000.00 February 28 Book Balance
100,000.00 Note Collected by Bank
10,000.00 Interest earned on note
200,000.00 NSF Customer Check
(130,000.00) Bank Service Charge (2000 + 5000)
(5,000.00) Adjusted Book Balance
(85,000.00)
(20,000.00) Bank Balance
1,530,000.00 Deposit in Transit
Erroneous Bank Credit
Outstanding Checks
Adjusted Bank Balance
 1,460,000.00
100,000.00
10,000.00
(130,000.00)
arge (2000 + 5000) (5,000.00)
1,435,000.00

1,530,000.00
85,000.00
20,000.00
(200,000.00)
1,435,000.00
Book Reconciling Items
Bank Service Charges 15,000.00
NSF check 40,000.00

Bank Reconciling Items

Deposit in Transit 130,000.00
Outstanding Check 100,000.00
 Cash in Bank
Unadjusted Balance 920,000.00 Bank Service Charge 15,000.00
Unrecorded customers check 35,000.00 Customer's NSF Check 40,000.00
Adjusted Balance (a) 900,000.00
Balance per bank statement December 31 2,800,000
Bank service charge for December 12,000
Interest paid by bank to Sapphire Company for December -10,000
Deposits made but not yet recorded by the bank 350,000
Checks written but not yet recorded by the bank -650,000
Check recording error (64,000 - 46,000) 18,000
Cash balance per ledger on December 31 2,520,000 B.
 BOOK BANK
Unadjusted Balance 2,120,000 3,070,000
Add: Proceeds of bank loan 500,000
Customer’s note collected by bank 435,000 935,000
Less: Debit memo for service charge (5,000)
NSF Check (50,000) (55,000)

Add: Deposit in transit 450,000

Bank error (Erroneous deduction) 180,000 630,000
(200,000 - 20,000)
Less: Outstanding Checks (700,000)
(750,000 - 50,000)
Adjusted balance 3,000,000 3,000,000
Unadjusted cash balance per bank 8,000,000
Deposit in Transit 1,200,000
Outstanding Check (1,300,000)
Erroneous bank credit (150,000)
Adjusted Cash balance per bank 7,750,000 A

Unadjusted cash balance per bank 8,000,000

Deposit in Transit 1,200,000
Outstanding check (1,300,000)
Erroneous bank credit (150,000)
Note Collected by bank (1,100,000)
Bank service charge 20,000
NSF check 500,000
Book error-overstated payment (100,000)
Unadjusted cash balance per book 7,070,000 A.

Adjusted Cash balance per bank 7,750,000

Currency and Coins on hand 900,000
Petty Cash Fund 50,000
Total Cash 8,700,000 A.
Problem 2-19
Bank Balance, July 1 550,000
Deposits 1,800,000
Check processed -1,400,000
Service Charge -30,000
NSF Check -120,000
Auto-debit arrangement -100,000
Unadjusted bank balance, July 31 700,000 A.

Unadjusted Balance per bank, 7/31 700,000

DIT 100,000
OC -150,000
Bank Error 270,000
Cash in bank, adjusted, per bank 920,000 B.

Bank Balance, adjusted 920,000

Service charge 30,000
NSF check 120,000
Auto-debit arrangement 100,000
Book error (understated receipts) -180,000
Cash in bank balance per ledger 990,000 C.