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Proof of Cash (Adjusted Balance Method)

Euro Company provided bank reconciliation information for November 30 and December 31. There were various reconciling items including undeposited collections, outstanding checks, notes collected by the bank, bank service charges, erroneous bank debits and credits, and NSF checks. The unadjusted book balance for December was P90,000 while the unadjusted bank balance was unknown. During December, receipts were P420,000 per the bank and P270,000 per the books while disbursements were P500,000 per the bank and P407,000 per the books. The task is to prepare a 4-column bank reconciliation for December and the adjusting entries as of December 31.

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1K views1 page

Proof of Cash (Adjusted Balance Method)

Euro Company provided bank reconciliation information for November 30 and December 31. There were various reconciling items including undeposited collections, outstanding checks, notes collected by the bank, bank service charges, erroneous bank debits and credits, and NSF checks. The unadjusted book balance for December was P90,000 while the unadjusted bank balance was unknown. During December, receipts were P420,000 per the bank and P270,000 per the books while disbursements were P500,000 per the bank and P407,000 per the books. The task is to prepare a 4-column bank reconciliation for December and the adjusting entries as of December 31.

Uploaded by

Dio Nolasco
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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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REY OCAMPO ONLINE!

AUDITING PROBLEMS
Proof of Cash (Adjusted Balance Method)

You were able to obtain the following information during SOLUTION GUIDE:
your audit of Euro Company:
Bank
Reconciling items:
(B) (R) (D) (E)
Nov. 30 Dec. 31 11/30 Dec. Dec. 12/31
Undeposited collections P200,000 P120,000 Unadjusted bal.
Outstanding checks 80,000 60,000 DIT – 11/30
Customer’s notes collected by - 12/31
bank 100,000 120,000 OC – 11/30
Bank service charges 2,000 3,000 - 12/31
Erroneous bank debits 10,000 20,000 Error, Dr.–11/30
Erroneous bank credits 40,000 30,000 - 12/31
NSF checks not redeposited 5,000 7,000
Error, Cr.–11/30
Customer's check deposited
- 12/31
December 10, returned by
NSF check red.
bank on December 16
Adjusted bal.
marked NSF, and
redeposited immediately;
Books
no entry made on books for
return or redeposit 10,000 (B) (R) (D) (E)
11/30 Dec. Dec. 12/31
Unadjusted balances: Unadjusted bal.
Books ? 90,000 Note coll.– 11/30
Bank 230,000 ? - 12/31
BSC – 11/30
December Transactions: - 12/31
NSF check–11/30
Bank Books - 12/31
Receipts P420,000 P270,000
NSF check red.
Disbursements 500,000 407,000
Adjusted bal.
REQUIRED:
1. Prepare a 4-column bank reconciliation for the month
of December, using the form that reconciles both the
book and bank balances to a correct cash amount.
2. Adjusting entries as of December 31.
- end -

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