Question

Using the numbers shown in parentheses, indicate how each separate question will affect the reconciliation of December 31, 2020. (Assume you are reconciling the balance per books and the balance per bank to the correct or adjusted balance). Write your answers on the space provided before each number. Use only CAPITAL LETTERS.

A. Add to bank balance
B. Deduct from the bank balance
C. Add to book balance
D. Deduct from book balance
E. No effect

1. Bank service charge for December, P 300, not recorded on books.

2. Checks totaling P 41,500 were outstanding at December 31, 2020.

3. Deposits totaling P 26,500 were in transit at December 31, 2020.

4. Check No. 601 dated November 30, 2020 was paid by the bank in December.

5. Check No. 607 for P 2,050 were recorded on the books as P 2,500.

6. A check from a customer was paid by the bank in December. It had been returned earlier in December for proper endorsement and was redeposited. No entry for the return or re-deposit had been made.


7. An interest charge was made to the account by the bank in error.

8. The December bank statement included the proceeds of a customer’s draft collected by the bank on December 30, 2020, but not recorded on the books.


9. Credit memorandum from the bank for December was not recorded in December. It was, however, recorded in January 2021.


10. A debit memo issued by the bank for P 450 recorded as a credit to cash.

Answer 1

1. Deduct from the book balance

2. Deduct from bank balance

3. Add to bank balance

4. No effect

5. Add to book balance (assuming the check is for some payment)

6. No effect

7. Add to bank balance

8. Add to book balance

9. Add to book balance

10. No effect