Problem 1
Polaris Company provided the following data for the month of July
Cash in bank per ledger
Balance June 30 1,000,000
Book debits for July including June CM for note collected, P300,000 4,000,000
Book credits for July including June NSF of P 100,000 and service charge of P 4,000 3,600,000
Bank statement for July
Balance June 30 1,650,000
Bank debits for July including service charge of P1,000 and
June outstanding checks of P854,000 2,500,000
Bank credits for July including CM for bank loan of P500,000 and
June deposit in transit of P400,000 3,500,000
Required:
Prepare bank reconciliation on June 30 and July 31 and adjusting entries on July 31.
JUNE 30 Bank Reconciliation
Bank to Adjusted Balance Method
Bank Statement Balance, June 30 1,650,000
Add: Deposit in Transit, June 30 400,000
Less: Outstanding Checks, June 30 (854,000)
Adjusted Bank Statement Balance, June 30 1,196,000
Book to Adjusted Balance Method
Cash in Bank Balance, June 30 1,000,000
Add: Credit Memo, June 30 300,000
Less: Debit Memo – NSF , June 30 (100,000)
Less: Debit Memo – Service Charge, June 30 (4,000)
Adjusted Cash in Bank Balance, June 30 1,196,000
Adjusting Entries for June 30
Cash in Bank 300,000
Notes Receivable 300,000
Accounts Receivable 100,000
Cash in Bank 100,000
Service Charge 4,000
Cash in Bank 4,000
JULY 31 Bank Reconciliation
Cash in Bank Balance, June 30 1,000,000
Add: Book Debits 4,000,000
Less: Book Credits (3,600,000)
Cash in Bank Balance, July 31 1,400,000
Bank Statement Balance, June 30 1,650,000
Add: Bank Credits 3,500,000
Less: Bank Debits (2,500,000)
Bank Statement Balance, July 31 2,650,000
Book to Adjusted Balance Method
Cash in Bank Balance, July 31 1,400,000
Add: Credit Memo, July 31 500,000
Less: Debit Memo, July 31 (1,000)
Adjusted Cash in Bank Balance, July 31 1,899,000
Adjusting Entry for July 31
Cash in Bank 500,000
Loans Payable 500,000
Service Charge 1,000
Cash in Bank 1,000
Bank to Adjusted Balance Method
Deposit in Transit, June 30 400,000
Add: *Book Debits, Net (P 4,000,000 – 300,000) 3,700,000 * Net of the CM from June
Less: **Bank Credits, Net (P 3,500,000 – 500,000) (3,000,000) ** Net of the CM from July
Deposit in Transit, July 31 1,100,000
Outstanding Checks, June 30 854,000
Add: **Book Credits, Net (P 3,600,000 – 104,000) 3,496,000 ***Net of the DM from June
Less: ***Bank Debits, Net (P 2,500,000 – 1,000) (2,499,000) ****Net of the DM from July
Outstanding Checks, July 31 1,851,000
Bank Statement Balance, July 31 2,650,000
Add: Deposit in Transit, July 31 1,100,000
Less: Outstanding Checks, July 31 (1,851,000)
Adjusted Bank Statement Balance, July 31 1,899,000
Problem 2
Pollux Company provided the following information:
Balance per book October 31 600,000
Receipts per book for November
(collection from customer, P 100,000 recorded as P 10,000) 2,200,000
Disbursements per book for November
(check for P300,000 in payment of account recorded as P30,000) 1,800,000
Balance per bank statement. November 30 930,000
Deposit in transit October 31 300,000
Outstanding checks November 30 400,000
Bank receipts for November including an erroneous credit of P100,000
which should have been credited to Poland Company 2,500,000
Bank disbursements for November including check of Poland Company, P200,000 1,970,000
Required:
Prepare bank reconciliation on October 31 and November 30 and adjusting entries on October 31 and
November 30.
October 31 Bank Reconciliation
Bank to Adjusted
Corrected Bank Statement Balance, October 31 300,000
Add: Deposit in Transit, October 31 300,000
Adjusted Bank Statement Balance, October 31 600,000
Outstanding Checks, November 30 400,000
Add: Bank Disbursements, Net 1,770,000
Less: Book Disbursements, Net (P 1,800,000 + 270,000) (2,070,000)
Outstanding Checks, October 31 100,000
Bank Statement Balance, October 31 400,000
Add: Deposit in Transit, October 31 300,000
Less: Outstanding Checks (100,000)
Adjusted Bank Statement Balance, October 31 600,000
Book to Adjusted
Cash in Bank Balance, October 31 600,000
November 30 Bank Reconciliation
Bank to Adjusted
Bank Statement Balance, November 30 930,000
Add: **Deposit in Transit, November 30 190,000
Less: Outstanding Check, November 30 (400,000)
Add: Error, Net (P 200,000 – 100,000) 100,000
Adjusted Bank Statement Balance, November 30 820,000
Deposit in Transit, October 31 300,000
Add: Net Book Receipts (P 2,200,000 + 90,000) 2,290,000
Less: Net Bank Receipts (P 2,500,000 – 100,000) (2,400,000)
**Deposit in Transit, November 30 190,000
Cash in Bank Balance, October 31 600,000
Add: Book Receipts 2,200,000
Less: Book Disbursements (1,800,000)
***Cash in Bank Balance, November 30 1,000,000
***Cash in Bank Balance, November 30 1,000,000
Less: Error, Net (P 90,000 – 270,000) (180,000)
Adjusted Cash in Bank Balance, November 30 820,000
Adjusting Entries
Cash in Bank 90,000
Accounts Receivable 90,000
Accounts Payable 270,000
Cash in Bank 270,000
