Fundamentals of Accounting,

Business and Management

(FABM) 2

BANK RECONCILIATION 2
Part 2

Q2/W3
 a. Adjusted Balance The balances per
bank and per book
are separately
Method determined.

3 Methods of
Preparing a b. Book to Bank The book balance is
adjusted to agree
Bank with the bank
Method balance.
Reconciliation
Statement
c. Bank to Book The bank balance is
adjusted to agree
Method with book balance.
 PROFORMA RECONCILIATION
Adjusted Balance Method

Book Balance PXX

Add: Credit Memos XX
Total XX
Less: Debit Memos XX
Adjusted Book Balance PXX

Bank Balance PXX

Add: Deposit in Transit XX
Total XX
Less: Outstanding Checks XX
Adjusted Bank Balance XX
 PROFORMA RECONCILIATION
BOOK TO BANK Method

Book Balance PXX

Add: Credit Memos XX
Outstanding Checks XX
Total XX
Less: Debit Memos (XX)
Deposit in Transit (XX)
Bank Balance PXX
 PROFORMA RECONCILIATION
BANK TO BOOK Method
Bank Balance PXX
Add: Deposit in Transit XX
Debit Memos XX
Total XX
Less: Outstanding Checks XX
Credit Memos XX
Book Balance PXX
 Computation for Deposits in Transit
Deposits in transit, beginning of the month PXX
Add: Deposits made per books XX
Total amounts that should have been deposited XX

Less: Deposits shown in the bank statement XX

Deposits in transit, end of the month XX
 Computation for Outstanding Checks
Outstanding Checks, beginning of the month PXX

Add: Checks issued per books XX

Total amounts that should have been cleared XX

Less: Checks paid by the bank XX

Outstanding Checks, end of the month XX

General procedures in preparing the reconciliation
1. Determine the balance per book and the
balance per bank.
2. Trace the cash receipts to the bank statement to
ascertain whether there are deposits not yet
acknowledged by the bank.
3. Trace the checks issued to the bank statement
to ascertain whether there are checks not yet
presented for payment.
General procedures in preparing the reconciliation
4. The bank statement should be examined to
determine whether there are bank credits or
bank debits not yet recorded by the
depositor.

5. Watch out for errors. Errors are reconciling

items of the party which committed them.
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Illustration:
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The cash records of Company X show

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the following for the month of

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January,2024. H
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ACCOUNTANCY, BUSINESS AND MANAGEMENT (ABM)

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CASH DISBURSEMENTS G
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CASH RECEIPTS Jan. 6 Ck No. 721 ₱5,000 S

Jan. 5 ₱60,000 7 722 10,000 C

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13 20,000 10 723 18,000 E

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25 30,000 14 724 2,000 A

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28 725 37,000 H

31 40,000 I
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31 726 28,000 H

₱150,000 S

₱100,000 C
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ACCOUNTANCY, BUSINESS AND MANAGEMENT (ABM)

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The general ledger of the company G

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show the cash in bank account for O

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January as follows:
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CASH IN BANK – FIRST BANK T

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Jan. 31 CR ₱150,000 Jan. 31 CD ₱100,000- H

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The balance of the cash in bank on the S

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depositor’ book is ₱50,000. O

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ACCOUNTANCY, BUSINESS AND MANAGEMENT (ABM)

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The following is the bank statement I

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for January received from the First T

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Bank: H
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ACCOUNTANCY, BUSINESS AND MANAGEMENT (ABM)

Account No. 775 FIRST BANK
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Company X
Bacolod City, Philippines G
Bacolod City R
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DATE CHECK NO. DEBIT CREDIT BALANCE
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January 6 ₱60,000 ₱60,000 C
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8 721 ₱5,000 55,000 I
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11 722 10,000 45,000 N
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12 723 18,000 27,000 A
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14 20,000 47,000 H
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17 724 2,000 45,000 G
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26 15,000 CM 60,000 S
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30 6,000 RT 54,000 H
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30 1,000 SC 53,000 L

ACCOUNTANCY, BUSINESS AND MANAGEMENT (ABM)

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Code: CM – Credit Memo SC – Service Charge E
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DM – Debit Memo RT – Returned Check R
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The following data are gathered in connection with the CM and O

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DM appearing on the bank statement. C
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a. The CM of ₱15,000 on January 26 represents proceeds of T
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note collected by the bank in favor of the company. The bank L

charges Company X ₱1,000 for the service it rendered. H

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b. The RT of ₱6,000 represents check of customer deposited S

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previously but returned by the bank because of “no sufficient H
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fund” of NSF. O
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ACCOUNTANCY, BUSINESS AND MANAGEMENT (ABM)

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Required: G
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Prepare the bank the reconciliation S

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statement using the following: C
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a.Adjusted balance method A

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b.Book to bank method I

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c.Bank to book method S

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d.Adjusting journal entries O
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ACCOUNTANCY, BUSINESS AND MANAGEMENT (ABM)

Adjusted Balance Method
Company X
Bank Reconciliation Statement
For the month ended January 31,2024

Balance per Book ₱50,000.00

Add: Credit Memo:
N/R collected by the bank 15,000.00
Sub-Total 65,000.00
Less: Debit Memos:
NSF Customer’s Check (6,000.00)
Bank Service Charge (1,000.00)
Adjusted Book Balance ₱58,000.00

Balance per Bank ₱53,000.00

Add: Deposit in Transit 70,000.00
Sub-Total 123,000.00
Less: Outstanding Checks (65,000.00)
Adjusted Bank Balance ₱58,000.00
Book to Bank Method
Company X
Bank Reconciliation Statement
For the month ended January 31,2024

Balance per Book ₱50,000.00

Add: N/R collected by the bank 15,000.00
Outstanding Checks 65,000.00
Sub-Total 130,000.00
Less: NSF Customer’s Check (6,000.00)
Bank Service Charge (1,000.00)
Deposit in Transit (70,000.00)
Balance per Bank ₱53,000.00
Bank to Book Method

Company X
Bank Reconciliation Statement
For the month ended January 31,2024

Balance per Bank ₱53,000.00

Add: Deposit in Transit 70,000.00
NSF Customer’s Check 6,000.00
Bank Service Charge 1,000.00
Sub-Total 130,000.00
Less: Outstanding Checks (65,000.00)
N/R collected by the bank (15,000.00)
Balance per Book ₱50,000.00
Adjusting Journal Entries 1/31/2024:
a. Cash in Bank ₱15,000.-
Notes Receivable ₱15,000.-

b. Accounts Receivable 6,000.-

Cash in Bank 6,000.-

c. Bank Service Charge 1,000.-

Cash in Bank 6,000.-
Problem 1: Identifying Outstanding Checks
For the month of May 2023, Tope Company issued the following checks as recorded in
its Cash Disbursement Journal:
Check Date Check No Payee Amount
5/02/2021 1256 Jane ₱2,000-
5/10/2021 1257 May 300-
5/15/2021 1528 Nicole 4,500-
5/18/2021 1259 Kathy 8,700-
5/30/2021 1260 Perry 1,200-
As per the bank statement received by Tope, the following checks were presented and
paid by the bank:
Check No Payee Amount
1256 Jane ₱2,000.-
1259 Kathy 8,700.-
1260 Perry 1,200.-

Instruction: Identify checks outstanding as of end of May 2023.

Problem 2:
The cash receipts journal of Malaya Merchandising reflected the following collections for the
month of May 2023:

Official Receipt Date Official Receipt No. Customer Amount

5/2/2023 4171 Carl ₱4,000.00
5/8/2023 4172 Vince 2,000.00
5/9/2023 4173 Ryan 8,900.00
5/25/2023 4174 Fatima 7,800.00
5/26/2023 4175 Cherry 3,200.00

It is the policy of the company to deposit collection within the following day from the date of
collection. A deposit in transit end of April 30,2023 amounted to ₱4,780.00 did not reflect on the
bank statement. The bank statement for May,2023 revealed the following deposits made:
Deposit Date Amount Requirement:
5/3/2023 ₱4,000.00 Compute for the deposit in transit
5/9/2023 2,000.00
end of May 31,2023.
5/10/2023 8,900.00
5/26/2023 3,200.00
Problem 3:

The bank statement for Juan Company shows a balance per bank of ₱ 15,907.45 on
April 30,22024.
a. On this date the balance of cash per books is ₱11,589.45.
b. Additional information are provided below:
c. Deposits in transit: April 30 deposit (received by the bank on May 1) ₱2,201.40
d. Outstanding checks: No. 453- ₱3,000.00; No. 457- ₱1,401.30; No. 460- ₱1,502.70
e. Errors: Juan wrote check no. 443 for ₱1,226.00 and the bank correctly paid that
amount. However, he recorded the check as ₱1,262.00.
Bank memoranda:
f. Debit– NSF check from Pedro ₱425.60 .
g. Debit– Charge for printing company checks ₱30.00
h. Credit – Collection of note receivable for ₱1,000 plus interest earned of ₱50, less
bank collection fee of ₱15.00.

Requirement: Prepare the bank reconciliation statement using the adjusted method
and the corresponding adjusting entries.
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Problem 4: E

Stacy's Trading’s bank statement for the month of September,2024 G

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showed a balance per bank of ₱81,000. Cash balance per general

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ledger is ₱77,700 at the end of the month. Additional information for O

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the month are as follows: C
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1. Bank statement has ₱1,200 bank service charge. D
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2. Outstanding checks amounted to ₱18,000. N
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3. NSF customer’s check in the amount of ₱1,680 was returned by A
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the bank. H
4. Cash receipts in the amount of ₱15,600 recorded in the company’s I
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books on January 30 does not appear on the bank statement.
5. A credit memo in the amount of ₱3,780 represents a customer’s S
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note collected by the bank in the amount of ₱3,600 with accrued H

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interest of ₱180. L

ACCOUNTANCY, BUSINESS AND MANAGEMENT (ABM)

 Prepare the bank reconciliation
statement of Stacy’s Trading using
the 3 methods and prepare the
adjusting entries for the month
ended September 30,2024.