Question

Negros Island Navigation has the following information for bank reconciliation Bank Balance as of December 1, 2020 -50,000.00 Deposits--- --90,000.00 Checks issued --45,000.00 Bank Service Charge --500.00 Note Collected, including interest of P300.00,0------5,600.00 A check amounting to 1,000.00 was recorded by the bank as disbursement for 10,000.00 All outstanding checks in November was negotiated while on December, P65,000.00. is still outstanding. December Deposit in transit is P10,000. Collection of P6,000.00 was deposited but not recorded by the company. A check dated January 21, 2021 was received from a customer amounting to 5,000.00 was received December 27, 2020 was included in the book. Petty Cash Fund - .-20,000.00 Time Deposit, 90 days - 100,000.00 Investment in Equity Securities --50,000.00 Postal Money Order-- --5,000.00 Payroll Fund-- -- 100,000.00 The cash in bank includes a compensating balance amounting to P25,000.00, no agreements was signed. 1. Prepare a two column bank reconciliation. 2. Prepare adjusting entries for bank reconciliation 3. Compute for total amount of cash and cash equivalents to be reflected in the statement of financial position as of December 31, 2020.

Answer 1

1. Two Column Bank Reconciliation
	Sr. NO	Particulars	Debit	Credit	Balannce
	1	Bank Balance as on 01 December 2020			50000
	2	Deposits		90000	140000
	3	Check Issued	45000		95000
	4	Bank Service Charges	500		94500
	5	Note collected		5600	100100
	6	Interest on Note collected	300		99800
	7	Correction in Bank Disbursement		9000	108800
	8	Outstanding Check	65000		43800
	9	Deposit in Transit		10000	53800
	10	Collection not recorded by company	6000		47800
	11	Check for jan recorded in books		5000	52800
	12	Balance as Per books on 31 Dec 2020			52800

2. Adjusted Bank Entries
Sr. No	Particulars	Debit	Credit
1	Bank Interet A/c Dr	500
	To Bank A/c		500
2	Bank A/c Dr	5300
	Interest on Note Collected A/c Dr	300
	To Notes A/c		5600
3	Bank A/c Dr	6000
	To CAsh (Collection Deposit)		6000
4	Customer A/c Dr	5000
	To Bank A/c		5000
	(Being Check recorded cancel)

3. Total Cash and Cash Equivalents
Cash in bank as per books	52800
Adjustment
Bank Service Charges	-500
Note collected		5600
Interest on Note collected	-300
Collection not recorded by company	6000
Check for jan recorded in books	-5000
Net Cash in Bank		58600
Petty Cash fund		20000
Postal Money Order		5000
Compensation Balance	-25000
Total Cash and Cash Equivalents	58600