12

Fundamentals of
Accountancy, Business
and Management 2
Quarter 2 – Module 2
Bank Reconciliation Statement Process
Fundamentals of Accountancy, Business and Management 2 –
12
Alternative Delivery Mode
Quarter 2 – Module 2: Bank Reconciliation Statement Process

First Edition, 2020

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Published by the Department of Education

Secretary: Leonor Magtolis Briones
Undersecretary: Diosdado M. San Antonio

Development Team of the Module

Writers: Ma. Fe E. Galia EdD

Editors: Rosalinda G. Butcon
Management Team: Bianito A. Dagatan EdD, CESO V
Schools Division Superintendent

Casiana P. Caberte PhD

Assistant Schools Division Superintendent

Felix C. Galacio Jr. PhD

EPS, Mathematics

Josephine D. Eronico PhD

EPS, LRMDS

Printed in the Philippines by Schools Division of Bohol

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Learning Competencies:
Prepares a bank reconciliation statement. (ABM_FABM12-IId-13)

At the end of the lesson, you are expected to:

 explain the bank reconciliation process;
 practice on bank reconciliation; and
 prepare bank reconciliation statement.

Lesson 1: Bank Reconciliation Statement

Process

What is it

The Bank Reconciliation Process

Step 1. Adjusting the Balance per Bank.

The first step is to adjust the balance on the bank statement to the true,
adjusted, or corrected balance.

The items necessary for this step are listed in the following schedule:

Step 2. Adjusting the Balance per Books.

The second step of the bank reconciliation is to adjust the balance in the
company's Cash account so that it is the true, adjusted, or corrected balance.

Examples of the items involved are shown in the following schedule:

Step 3. Comparing the Adjusted Balances

After adjusting the balance per bank (Step 1) and after adjusting the balance
per books (Step 2), the two adjusted amounts should be equal. If they are not equal,
you must repeat the process until the balances are identical.
The balances should be the true, correct amount of cash as of the date of the
bank reconciliation. The adjusted cash balance will appear as the Cash in Bank in
the Statement of Financial Position (Balance Sheet).
 What’s More

Directions: Write TRUE if the statement is correct and FALSE if the statement is
wrong. Write your answer at the answer sheet provided below.
1. The adjusted amount of both balance per books and balance per bank should be
true but not necessarily correct amount of cash as of date of reconciliation.
2. Both balance per book and bank should always be equal after the reconciliation.
3. Bank reconciliation adjusted the balance in the company's Cash account so that it
shall result to a corrected balance.
4. In adjusting the balance per bank, the bank service charges must be deducted.

Lesson 2: Bank Reconciliation Practice

What is it

Practice Set for Reconciling Items:

1. Practice Set 1
For the month of May 2016, Tope Company issued the following checks as
recorded in its Cash Disbursement Journal:

As per the bank statement received by Tope, the following checks were
presented and paid by the bank:

Instruction: Identify checks outstanding as of end of May 2016

Answer: Check 1257 issued to May for P300 and Check 1528 issued to Nicole for
P4,500

2
2. Practice Set No. 2
The cash receipts journal of Malaya Merchandising reflected the following
collections for the month of April 2016:

It is the policy of the company to deposit collection within the following day from the
date of collection.

The bank statement for April 2016 revealed following deposits made:

Instruction: Compute for the deposit in transit or undeposited collection as

of end of April 2016.
Answer: P4,780

3. Practice Set 3.
Identify whether the following independent transaction is a book or a bank
reconciling. In addition, determine the amount of the error and state whether the
amount will be added or deducted in the preparation of the bank reconciliation(use
adjusted method):
A. Eagle Repairs received P1,500 from Jane. The bookkeeper recorded the
amount as P500.
Answer: Book. P1,000 will be added to the books.
B. Nation Bank collected from the customer of Eagle the sum of P5,000
representing payment of the said customer to Eagle. No entry was made in
the books of Eagle.
Answer: Book. P5,000 will be added to the books.

What’s More

Directions: Identify whether the following independent transaction is a BOOK or a

BANK reconciling and write at the opposite of the answer the amount to be added
or deducted.
1. The bank teller deducted CK 123 for P3,500 from the account of Eagle. The said
check was issued by Egles Company a different depositor of the bank.
2. The bookkeeper of Eagle recorded Check No. 345 in the Cash Disbursement
Journal as P5,205. The correct amount of the check was P5,250.
3. The deposits of Eagle earned interest of P100 for the month. Eagle does not have
knowledge of interest earned until it receives the bank statement.
4. Philippine National Bank collected from the customer of Maria Co. the sum of
P7,500 representing payment of the said customer. No entry was made in the
books of Maria Co.

3
Lesson 3: Bank Reconciliation Statement

What is it

Preparing Bank Reconciliation

Item 1 The bank statement for August 2014 shows an ending balance of Php3,490.
Item 2 On August 31 the bank statement shows charges of Php35 for the service
charge for maintaining the checking account.
Item 3 On August 28 the bank statement shows a return item of Php100 plus a
related bank fee of Php10. The return item is a customer's check that was
returned because of insufficient funds.
Item 4 The bank statement shows a charge of Php80 for check printing on August
20. Item 5 The bank statement shows that Php8 was added to the checking
account on
August 31 for interest earned by the company during the month of August.
Item 6 The bank statement shows that a note receivable of Php1,000 was collected
by
the bank on August 29 and was deposited into the company's account. On
the
same day, the bank withdrew Php40 from the company's account as a fee for
collecting the note receivable.
Item 7 The company's Cash account at the end of August shows a balance of
Php967. Item 8 During the month of August the company wrote checks totaling
more than
Php50,000. As of August 31 Php3,021 of the checks written in August had not
yet cleared the bank and Php200 of checks written in June had not yet
cleared the bank.
Item 9 The Php1,450 of cash received by the company on August 31 was recorded
on
the company's books as of August 31. However, the Php1,450 of cash
receipts was deposited at the bank on the morning of September 1
Item 10 On August 29 the company's Cash account shows cash sales of Php145.
The
bank statement shows the amount deposited was actually Php154. The
company reviewed the transactions and found that Php154 was the correct
amount.

Given the above information, prepare a bank reconciliation statement.

The bank reconciliation for this exercise is:

 4

What’s More

Directions: Prepare a bank reconciliation statement using the adjusted method.

Hint: Bank Debit Memo are deductions made by the bank to the account of the
depositor
Bank Credit Memo are additions made by the bank to the account of the
depositor

The bank statement for Juan Company shows a balance per bank of P15,907.45 on
April 30,2015.
On this date the balance of cash per books is P11,589.45.
Additional information are provided below:
Deposits in transit: April 30 deposit (received by the bank on May 1) P2,201.40
Outstanding checks: No. 453-P3,000.00
No. 457-P1,401.30
No. 460-P1,502.70
Errors: Juan wrote check no. 443 for P1,226.00 and the bank correctly paid that
amount. However, he recorded the check as P1,262.00.
Bank memoranda:
 Debit– NSF check from Pedro P425.60.
Debit– Charge for printing company checks P30.00
Credit – Collection of note receivable for P1,000 plus interest earned of P50,
less bank collection fee of P15.00.

Assessment
5
Directions: Write the letter of the correct answer in the answer sheet provided
below:
1. The accounts to be added in adjusting the balance per bank:
I. Deposits in Transit II. Interest earned III. NSF Checks IV. Outstanding Checks
A. I only B. I and II only C. I and III only D. I and IV only
2. The accounts to be deducted in adjusting the balance per bank:
I. Deposits in Transit II. Interest earned III. NSF Checks IV. Outstanding Checks
A. I only B. I and II only C. IV only D. I, II, III and IV
3. The accounts to be added in adjusting the balance per books:
I. Bank service charge II. Interest earned III. Notes Receivable IV. NSF
Checks
A. I only B. I and II only C. II and III only D. I, II, III and IV
4. The accounts to be deducted in adjusting the balance per books:
I. Bank service charge II. Interest earned III. Notes Receivable IV. NSF
Checks
A. I only B. I and IV only C. I, II, and III only D. I, II, III and IV
5 – 7. Answer the questions based on the table provided below
For the month of October 2020, Galia Company issued the following checks as
recorded in its Cash Disbursement Journal:
Check Date Check No Payee Amount
10/2/2020 1234 Roselyn 2,000
10/7/2020 1235 Reymark 1,000
10/15/2020 1236 Inday 2,500
10/20/2020 1237 Margie 575
As per the bank statement received by Galia, the following checks were presented
and paid by the bank:
Check No Payee Amount
1234 Roselyn 2,000
1236 Inday 2,500
5. Identify the check/s outstanding as of end of October 2020.
A. Ck# 1235 B. Ck# 1235 & 1236 C. Ck# 1235 & 1237 D. Ck# 1234 &
1236
6. How much is the total checks outstanding?
A. 1,000 B. 1,575 C. 3,500 D. 4,500
7. How much should be the total checks issued for the month?
A. 1,575 B. 3,500 C. 4,500 D. 6,075
8-10. Choose the choices below on what must be done by the bookkeeper on the
given transactions.
A. Add to the bank balance B. Add to the book balance
 C. Deduct to the bank balance D. Deduct to the book balance
8. The bank statement shows service charge of Php35 for maintaining the checking
account.
9. The bank statement shows a return item of Php100 plus Php10 bank fee due to
insufficient funds. What must the bookkeeper do with the amount?
10. The company wrote checks with a total of Php50,000. At the end of the month
Php3,021of the checks written were not yet cleared in the bank.

Answer6 Sheet
FABM 2

Name: __________________________________________________________
Grade & Section: ________________ Score: _______

Quarter 2 – Module 2

Lesson 1 Lesson 2
What’s More What’s More
1. 1.
2. 2.
3. 3.
4. 4.

Lesson 3
What’s More
Solution (You may use the back of this answer sheet for your
solution)
Assessment
1. 6.
2. 7.
3. 8.
4. 9.
5. 10.

Answer Key 7

Quarter 2 - Module 2

Lesson 1 Lesson 2

What’s More What’s More

1. FALSE 1. BANK - P3,500

2. TRUE 2. BOOK - P45
3. TRUE 3. BOOK - P100
4. FALSE 4. BOOK - P7,500

Lesson 3

What’s More

Assessment

1. A 6. B
2. C 7. D
3. C 8. D
4. B 9. D
5. C 10. C
References

Teaching Guide for Senior High School FUNDAMENTALS OF ACCOUNTANCY,

BUSINESS, AND MANAGEMENT 2.

Florecer L Ong, et. al 2017. Fundamentals Of Accountancy, Business, And

Management 2 For Senior High School. Quezon City. C & E PUBLISHING, INC.