Answer to Question #266331 in Accounting for nicole

Question

Directions: Prepare a bank reconciliation using the Adjusted Balance Method for the following given transaction.

 

Rancor Company provided the following information for the month of December:

 

      Balance per bank statement          ₱ 4,000,000

      Balance per cash book                  2,700,000

      Outstanding checks                     600,000

      Deposit in transit                        475,000

      Service charge                           10,000

      Proceeds of bank loan                    940,000

      Defective check (Debit memo)        50,000

      Credit memo                            435,000

     

Example of Adjusted Balance Method:

Adjusted Balance Method

In this method, both the records of the depositor and the bank should be brought to the corrected balance. Both balances are not correct; hence, the accounts must be adjusted to the correct balance. The pro-forma bank reconciliation statement appears as follows:

Unadjusted book balance xxxx

Add: Items credited by the bank but not recorded by the books xxxx

Total xxxx

Less: Items deducted by the bank but not recorded by the book (xxxx)

Adjusted book balance xxxx

Answer 1

Solution:

The banking reconciliation using the Adjusted Balance Method is as below: