1 Assignment 5 Bank Reconciliation 1. Vocabulary Items Meaning in Thai 1. Bank Statement 2. Bank Reconciliation 3. Cash Short and Over 4. Cashier’s Checks 5. Certified checks 6. Debit memos 7. Credit memos 8. Deduction 9. Differs 10. Outstanding checks 11. Deposits in transit 12. Bank errors 13. Service
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Assignment 5Bank Reconciliation
1. VocabularyItems Meaning in Thai
1. Bank Statement2. Bank Reconciliation3. Cash Short and Over4. Cashier’s Checks5. Certified checks6. Debit memos7. Credit memos8. Deduction9. Differs10. Outstanding checks11. Deposits in transit12. Bank errors13. Service charges14. Not sufficient funds: NSF
Referring to the terms listed in the left column, place the appropriate letter next to the corresponding description. A term may be used more than once. a Debit memo J Petty cash voucherb Bank statement k Remittance advicec Outstanding checks l Unpaid voucher filed Certificate of deposit m Voucher registere Credit memo n Discounts Lostf Cash short and over o Bank reconciliation statementg N.S.F. check P Cancelled checksh Petty cash fund q Deposits in transiti Paid voucher file
1 An interest bearing deposit at a bank which can be withdrawn at will or a fixed maturity date.
2 Form used by a bank to explain a deduction from the depositor’s account.
3 Checks issued by the depositor that have not yet cleared the bank for payment.
4 Cash receipts entered in the depositor’s accounts and put in the bank‘s night depository box. The bank will show the deposit to next month’s statement.
5 A special journal used instead of a purchases journal when a voucher system is used.
6 A fixed amount of cash advanced to a custodian who will be reimbursed after making payment. With the cash.
7 A statement issued by a bank describing activities in a depositor’s account.
8 A form attached to a check informing the payee why the drawer of the check is making payment.
9 A check which the bank has refused to pay because the writer of the check does not have enough money in its
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account to cover the check.10 A form explaining a payment made from a petty cash fund.11 When a voucher system is used, this file serves as the
subsidiary accounts payable ledger.12 Form used by a bank to explain an addition to the
depositor’s account.13 This account may be either a revenue or an expense account,
depending upon its balance.
3. True-False Questions
Indicate whether the following statements are true or false by inserting in the blank space provided a capital “T” for True or “F” for false.
1 Cash includes certain negotiable instruments and demand certificates of deposit, among other times.
2 While a company must make sure that there is enough cash to pay bills, there is no problem holding excess cash.
3 All disbursements should be by check or from a petty cash fund.
4 The cash balance shown on the bank statement usually is not equal to the amount in the depositor’s Cash account before reconciliation.
5 Outstanding checks will require an entry in the depositor’s books after the bank reconciliation statement is prepared.
6 When certified, a check is a liability of the bank on which it is drawn.
7 If the Cash Short and Over account has a debit balance at the end of the accounting period, it will be treated as “other expense” on the income statement.
8 Petty cash is credited when the petty cash fund is reimbursed.9 If voucher register contains a column for discounts lost, the
company is using the net price procedure for handling
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purchase discounts.10 Vouchers in the unpaid voucher file should be filed in order of
the voucher numbers.11 The person who authorizes the disbursement should also be
the person who signs the checks.12 Misappropriations of cash can occur just as easily before or
after a record is made of the receipt.13 All cash receipts should be deposited intact in the bank.14 Cash disbursements should not be made from cash receipts.15 The person who receives the cash should also record cash
transactions in the accounting records.16 Cash receipts and cash disbursements should be the function
of one group to facilitate record keeping for cash.17 Cash includes coin, currency, postdated checks, money
orders, and money on deposit with banks.18 In reconciling the bank account, the deposits in transit are
deducted from the balance per books to determine the correct amount of cash owned by the depositor.
19 The Petty Cash account is debited for the establishment of the fund but is not credited for expenditures from the fund.
20 In a bank reconciliation procedure, the total amount of outstanding checks is deducted from the cash balance per books amount.
21 Outstanding checks are ascertained by comparing the amounts in the Deposits column on the bank statement with a record of deposits in the cash receipts book.
22 In a bank reconciliation procedure, the items found immediately below the ‘balance, per bank statement’ caption necessitate journal entries.
23 NSF checks should be deducted from the Balance per Bank figure in the bank reconciliation procedure.
24 In the bank reconciliation, deposits in transit are added to the Balance per Books.
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25 Postage stamps should be included in the cash fund.
4. Multiple Choice Questions
For each of the following questions, indicate the single, best answer by circling the appropriate letter.
1. The June 30, bank statement shows a balance of $648.86. A comparison with the check register shows that two checks, for $68.00 and $36.70 respectively, have not been paid by the bank. The receipts of June 30, amounting to $416.32, were not recorded by the bank as deposited until July 1. The correct check book balance for June 30 is:
A $337.24.B $1,169.88.C $960.48.D $832.64.E $209.40.
2. The Cash account contained a balance of $560 on January 1. The totals of the cash columns in the special journals at the end of January were as follows: cash Receipts Journal, $1,490: Cash Disbursements Journal, $1,630. Checks written and entered in the Cash Disbursements Journal, but outstanding at the end of the month, amount to $200. The January 31st balance of Cash will be:
A $560.B $700.C $420.D $2,050.E None of the above
3. In reference to a check, the payee is:A The one to whose order the check is drawn.
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B The bank on which the check is drawn.C The one who signs the check.D None of the above.
4. If a customer’s check is returned by the bank for lack of sufficient funds (NSF), the accountant should:
A Debit Bad Checks and credit Cash.B Debit Accounts Receivable, and credit Cash.C File the check with Notes Receivable.D Debit Miscellaneous expense and credit cash.
5. As of March 1 of the current year, the Venture Company had outstanding checks of $15,000. During March the company issued an additional $57,000 of checks. As of March 31, the bank statement showed that $51,000 of checks had cleared the bank during the month. The amount of outstanding checks as of March 31 is:
A $9,000.B $6,000.C $21,000.D None of these.
6. In reference to a check, the drawer is: A The one to whose order the check is drawn.B The bank on which the check is drawn.C The one who signs the check.D None of the above.
Questions 7-9 assume the followingCash per bank statement $4,175.98Outstanding checks 1,544.99Cash balance per books 2,642.99Bank service charge 12.00
7. The adjusted cash balance is:A $2,618.99.
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B $5,720.97C $2,642.99D $2,630.99
8. In reconciling the bank statement, checks outstanding should be: A Deducted from balance per books.B Deducted from balance per bank statement.C Disregarded, as they have been entered in the Cash
Disbursements Journal.D Added to the balance per bank statement.
9. To record the bank service charge, which of the following accounts should be credited?
A Cash short and OverB CashC Petty CashD None of these
1. Form the following information prepared a bank reconciliation statement for the Delray Company:
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Balance of Cash account on March 31, 2017 $15,186.54Balance on March 31, 2017, Bank statement 17,157.16Deposit in transit 1,010.72Outstanding checks 2,387.34
The bank statement also contained the following information which had not been recorded on the books of Delray Company:
The bank had collected a note for Delray Company for $600.The bank had charged Delray Company $6 for servicing the
account.______________________
Bank Reconciliation, March 31, 2017
Book balance of Cash Bank statement balanceAdded: Added:
( ) ( )( ) ( )
subtracted: subtracted t:( ) ( )( ) ( )
Reconciled balance Reconciled balance
2. Data for Reed Company are given below:
(1) A deposit placed in the bank’s night depository after banking hours on May 31, appeared on the June bank statement;
(2) but one placed there after hours on June 30 did not. Two checks,
(3) No. 1010 and (4) No. 1013, were outstanding on May 31, Check No. 1010 was
returned with the June bank statement but Check No.1013 was not. (5) Check No. 1100 for $69 was incorrectly entered in the cash
Disbursements Journal and Posted as though it were for $96 (6)Enclosed with the June bank statement was a debit
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memorandum for a bank service charge, (7) Also enclosed was a check received from a customer and
deposited on June 23 but returned by the bank marked “Not sufficient fund,”
(8) Check No.841 written on June 27, was not returned with the cancelled checks.Required:
a. If an item in the foregoing list should not appear on the June bank reconciliation, ignore it. However, if an item should appear, enter its number in a set of parenthesis below to show where it should be added or subtracted in preparing the reconciliation.
Reed CompanyBank Reconciliation,
June 30, 2017Book balance of Cash Bank statement balanceAdded: Added:
Reconciled balance Reconciled balanceb. Certain of the reconciliation items require entries on the
company’s books. Place the numbers of these items within the following parentheses.
( ), ( ), ( ), ( ), ( ), ( ), ( ), ( )
3. At August 31, of the current year, the cash in Bank account of L.P. Smith Co. reflected a balance of $9,685.40. This balance was
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determined after the cash register and the cash receipts journal had been posted, at the same date, the bank statement indicated a balance of $ 9,887.67. The following items were revealed in the comparison of the bank statement and the analysis of cancelled checks and bank notices:
(1) Bank service charges for August totaled $8.55.(2) A check for $89 in payment of a voucher was erroneously
recorded in the check register as $98.(3) A deposit of $4,396.81, representing receipts of August 31,
had been made too late to appear on the bank statement.(4) Checks outstanding totaled $4,099.63(5) A check drawn for $20 had been erroneously charged by the
bank as $200.(6) The bank had collected for L.P. Smith Co. $679 on a note left
for collection.
Required:a. Prepare a bank reconciliation.b. Journalize the necessary entries assuming the accounts have not
------------------------------------------Book balance of CashAdded: ( ) ( ) ( )
subtracted: ( ) ( ) ( ) ( )Reconciled balance
Bank statement balanceAdded: ( ) ( ) ( )
subtracted: ( ) ( ) ( )Reconciled balance
General Journal Page…
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Date Descriptions AC.No.
Debitamount
Creditamount
4. From the following prepare a bank reconciliation statement on 31st March 2017. 1. Balance as per Cash Book $1,800,000 2. Cheques paid into Bank March 2015 but credited by the bank in April 2017 $7,900
2. Cheques issued in march 2017 but cashed in April 2017 $11.000 4. Cheques entered in the Cash Book in March 2017 but paid into bank in April 2017 $1,000 5. Interest allowed by the bank $2,500 6. Interest charged by the bank $500
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No
DescriptionsBank Boo
kBank
to Book
Book to
Bank
To TRUEBank Book
123456
Book balance of Cash Bank statement balanceAdded: Added:
( ) ( )( ) ( )
Deduct: Deduct:( ) ( )( ) ( )( ) ( )
Reconciled balance Reconciled balance
5. (Bank Reconciliation)
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The following information is extracted from the bank statement and the accounting records of the Won Corporation for the month of July:
1. Cash balance from books July 31 $1,857.102. Cash balance from bank July 31 1,967.203. NSF check returned by banks with bank statement 81.004. Note collected by bank on July 31 190.005. Interest on preceding note 5.506. Bank service charge for July 4.407. Outstanding checks at end of July 150.008. Deposit in transit at end of July 150.00
Required1. Prepare a bank reconciliation for the Won Corporation on July
31. 2. Prepare the journal entries necessary to adjust Won’s book on
July 31,2017
--------------------------
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Bank Reconciliation
------------------------------------------Book balance of CashAdded: ( ) ( ) ( )
The Papa Corporation’s cash account showed a balance of $17,198.00 on March 31. The bank statement balance for the same date indicated a balance of $17,924.55. The following additional information is available concerning Papa’s cash balance on March 31.
1. Undeposited cash on hand on March 31 amounted to $724.502. A Customer’s NSF check for $173.80 was returned with the bank
statement3. A note for $2,000 plus interest of $25 was collected for Papa by
the bank during March. The bank notified Papa of this collection on the bank statement.
4. The bank service charge for March was $15.5. A deposit of $951.75mailed to the bank on March 31 did not
appear on the bank statement.6. The following checks mailed to creditors had not been processed
by the bank on March 31:#429 $57.40 #433 $214.80#432 $147.50 #434 $191.90
7. A Customer check for $149.50 in payment of his account and listed correctly for that amount on the bank statement had been incorrectly recorded on the accounting records as $194.50
Required1. Prepare a bank reconciliation for the Papa Corporation on March 31.
2. Prepare any adjusting journal entries necessary to record the information from requirement 1
--------------------------
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Bank Reconciliation
------------------------------------------Book balance of CashAdded: ( ) ( ) ( )
Deduct: ( ) ( ) ( ) ( )Reconciled balance
Bank statement balanceAdded: ( ) ( ) ( )
Deduct: ( ) ( ) ( )Reconciled balance
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General Journal Page…
Date Descriptions AC.No.
Debitamount
Creditamount
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7. (Bank Reconciliation) The Top Company received a bank statement for February, as follows:From: Thai Bank, Chiangrai Branch To: Top Company, 33 Prachasan St. Muang Chiangrai. 57000
SC= Service Charge NSF= Check ReturnedCM=Credit Memo DM= Debit Memo
The receipt of $460 on February 14 was for a $445 note collected by the bank, plus $20 current interest, less a $5 service charge. The company’s accounting records contained the following information:
Cash balance on February 28 from the books: $2,610.42