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Bank Reconciliation and Shortage Computation

The bookkeeper-cashier's bank reconciliation for the year ended December 31, 2015 showed a cash balance per books of P293,500, which was P56,500 less than the bank statement balance of P350,000. After adjusting for items such as outstanding checks, deposits in transit, and erroneous bank entries, the auditors computed a cash shortage of P60,000. Five adjusting journal entries were needed to properly reflect the correct cash balance as of December 31, 2015.

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7K views4 pages

Bank Reconciliation and Shortage Computation

The bookkeeper-cashier's bank reconciliation for the year ended December 31, 2015 showed a cash balance per books of P293,500, which was P56,500 less than the bank statement balance of P350,000. After adjusting for items such as outstanding checks, deposits in transit, and erroneous bank entries, the auditors computed a cash shortage of P60,000. Five adjusting journal entries were needed to properly reflect the correct cash balance as of December 31, 2015.

Uploaded by

CJ alandy
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Bank reconciliation and shortage computation

You are conducting an audit of the Swerte Company for the year ended December 31, 2015.
The internal control procedures surrounding cash transactions were not adequate. The
bookkeeper-cashier handles cash receipts, maintains accounting records, and prepares the
monthly bank reconciliations.

The bookkeeper-cashier prepared the following reconciliation at the end of the year:

Balance per bank statement P 350,000


Add: Deposit in transit P 175,250
Note collected by bank 15,000 190,250
Total 540,250
Less: Outstanding checks 246,750
Balance per general ledger 293,500

In the process of your audit, you gathered the following:

 At December 31, 2015, the bank statements and general ledger showed balances of
P350,000 and P293,500, respectively.
 The cut-off bank statement showed a bank charge on January 2,2016 for P30,000
representing correction of an erroneous bank credit.
 Included in the list of outstanding checks were the following:
a. A check payable to a supplier, dated December 29, 2015, in the amount of
P14,750, released on January 5,2016.
b. A check representing advance payment to a supplier in the amount of P37,210,
the date of which is January 4, 2016, and released in December, 2015.
 On December 31, 2015, the company received and recorded customer's postdated
check amounting to P50,000.

REQUIRED

1. Compute for the following as at December 31, 2015:


a. Adjusted deposit in transit
b. Adjusted outstanding checks
c. Adjusted cash in bank
d. Cash shortage
2. Adjusting entries as of December 31, 2015

SOLUTION:
Requirement No. 1.a
175,25
Unadjusted deposit in transit 0
(50,0
Post dated check received 00)
125,25
Adjusted deposit in transit 0

Requirement No. 1.b


246,75
Unadjusted outstanding checks 0
(14,7
Unreleased check 50)
(37,2
Post dated check issued 10)
194,79
Adjusted outstanding checks 0

Requirement No. 1.c&d


Bank Books
350,0 293,50
Unadjusted balances 00 0
Add (deduct) adjustments:
(50,0
Post dated check received 00) AJE 1
125,2
Deposit in transit (see 1.a) 50
14,75
Unreleased check 0 AJE 2
37,21
Post dated check issued 0 AJE 3
15,00
Note collected by bank 0 AJE 4
(194,7
Outstanding checks (see 1.b) 90)
(30,0
Erroneous bank credit 00)  
250,4 310,46
Balances 60 0
(60,0
Shortage 00) AJE 5
250,4 250,46
Adjusted balances 60 0
Requirement No. 2

50,0
1 Accounts receivable 00
50,00
Cash 0

14,7
2 Cash 50
14,75
Accounts payable 0

37,2
3 Cash 10
37,21
Accounts payable 0

15,0
4 Cash 00
15,00
Notes receivable 0

Cash short/over (Receivable from 60,0


5 cashier) 00
60,00
Cash 0

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