Question

8:35 + LTE | < Bank Reconciliation Situations For each situation below: First indicate what the situation might be such as an error, embezzlement, O/S check, DIT etc. Second, indicate which party should be adjusted; the books or the bank. Then indicate if the adjustment is an addition or deduction to that party. There will be little things within each description that will indicate which party is correct. Remember the steps for these type of situations: • Define the problem. • Who made the error? Adjust the party that made the error by reversing the error. If you cannot tell what should be done, go back to step one and define the problem. It means you do not understand it yet. You

Answer 1

1. Deposit of $125.8 cash by cllerk has been wrongly entered by clerk in our books.

Our books should be adjusted Clerk has made an error

Entry : Cash A/c Dr $ 2.7

To bank A/c $ 2.7

(Being adjusting entry accounted)

2. Bank has wrongly deducted amount from our company account though cheque is not issued by us.

Bank has made the error, Banks books should be adjusted. No entry in our accounts.

3. Cheque has been issued by the company that means it has been signed by authorized personnel from our company but payment has not been recorded. It is embezzzlement case. Though it is appearing in bank statement, clerk has not recorded payment in journal.

Entry : Employee personal A/c or Loss by Theft A/c Dr $ 400

To Bank A/c $ 400

4. Cash deposited in bank of $ 453 has been wrongly accounted by clerk as $ 435.

Clerk has made the error. It should be adjusted in our books.

Entry : Bank A/c Dr $ 18

To cash A/c $ 18

(Being rectification entry has been made)

5. Bank has wronly credited our account instead of crediting non profit organisation.

bank has made clerical error while entering account number. we are not required to adjust in our  books.

6. Bank has not recorded deposit made by the company in february. Our books shows deposit in the bank account. bank account would have been increased by the deposit amount in our books. while doing bank reconciliation, we need to deduct deposit amount in our books to arrive at bank balance as per bank books.

7. Bank has not recorded cheque issued by the company in february. Our books shows issual of cheque in the bank account. bank account would have been decreased by the issued amount in our books. while doing bank reconciliation, we need to add issued amount of cheque in our books to arrive at bank balance as per bank books.

8. If it is error from bank i, there should be a deposit slip from our side. There is no bank slip and amount is not reflecting in bank books, it seems like manipulation of accounts by clerk.

Entry; Employee perosnal A/c Dr

To Bank A/c

(Being amount recovered from the employee)