Computation of - Outstanding checks and deposit in transit PDF

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COMPUTATION OF OC & DITOn your examination of the financial statements of Tarlac Company for the year ended December 31, 2019, you obtained the following information on the checking account of the company:The bank statement on November 30, 2019 showed a balance of P15,300. Among the bank credits...

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COMPUTATION OF OC & DIT On your examination of the financial statements of Tarlac Company for the year ended December 31, 2019, you obtained the following information on the checking account of the company: The bank statement on November 30, 2019 showed a balance of P15,300. Among the bank credits in November was a customer’s note for P5,000 collected for the account of the company which the company recognized in December among its receipts. Included in the bank debits were cost of checkbooks amounting to P60 and a P2,000 check which was charged by the bank in error against Tarlac account. Also in November, you ascertained that there were deposits in transit amounting to P4,000 and outstanding checks totaling P8,500. The bank statement for the month of December showed total credits of P20,800 and total charges of P10,200. Company books for December showed total receipts of P36,780 and disbursements of P20,360. Bank debit memos for December were: No. 001 for service charges, P80 and No. 002 on a customer’s returned checks marked “refer to drawer” for P1,200. The bank error of P2,000 in November was corrected by the bank in December. On December 29, 2019, the company placed with the bank a customer’s promissory note with a face value of P6,000 for collection. The company treated this note as part of its receipts although the bank was able to collect on the note only in January, 2020. A check for P198 was recorded in the company cash payments book in December 12 P1,980.

How much is the deposit in transit Total receipts per books Notes collected by bank in November Notes with bank treated as receipt by client Receipts for December per books Receipts for December per bank: Total receipts per bank Deposits in transit Check erroneously charged by bank in November Deposit in transit, December 31, How much is the outstanding check Total disbursements per books Bank charges in November Error in recording check (1,980 – 198) Disbursements for December per books Disbursements for December per bank: Total bank debits NSF check returned Bank charge, December

P36,780 P5,000 6,000

(11,000) P25,780

P20,800 ( 4,000) ( 2,000) ( 14,800) P10,980

P20,360 P 60 1,782

P10,200 ( 1,200) ( 80)

( 1,842) P18,518

Outstanding check, November 30 Outstanding check, December 31

( 8,500)

( 420) P18,098

Taken from the records of Girly Co. are the following: Balance per books, October 31 Total Credits per books, November Balance per books, November 30 Balance per bank statement, October 31 Balance per bank statement, November 30 Total Debits per bank statement, November Loan proceeds directly credited to Girly’s account in October Collection of receivable directly credited to Girly’s account in November – not yet recorded in the books NSF checks returned in October NSF checks returned in November - not yet recorded in the books Check received from a customer amounting to ₱1,800 was recorded in the books in October as Overstatement in book debit in October Overstatement in book credit in November Understatement in bank debit in October Overstatement in bank credit in October Deposit amounting to ₱1,050 was recorded by the bank in November as

4,440 8,320 2,400 5,520 4,560 2,800

Deposits in transit – October 31 Outstanding checks – October 31

4,500 3,800

1,200 600 900 300 180 800 300 290 370 150

1. How much are the deposits in transit on November 30? a. 5,820 b. 6,190 c. 5,340 2. How much are the outstanding checks on November 30? a. 7,620 b. 8,680 c. 9,120 3. How much is the adjusted balance of cash on November 30? a. 3,000 b. 3,300 c. 2,400

d. 6,920

d. 8,280

d. 3,580

1. A (See solutions below) 2. D (See solutions below) 3. A (See solutions below) Solutions: Oct. 31 Book Dr. (squeeze)

Per books 4,440

Per bank 5,520

6,280 8,320 2,400

Book Cr. Nov. 30

Bank Dr.

2,800

Nov. 30

4,560

Oct. 31

1,840

Bank Cr. (squeeze)

Deposit in transit as of November 31 is computed as follows: DIT, Oct. 31 Book debits CM, Oct. Understated collections in Oct. (1,800 - 180)

Deposits in transit 4,500 6,280 (1,200)

1,840 (600) 3,460

(1,620)

2,140

900

5,820

Bank credits CM, Nov. Understated deposits in Nov. (1,050 - 150)

DIT, Nov. 30

Outstanding checks as of November 31 is computed as follows: Outstanding checks 3,800 Bank debits DM, Nov. Understated bank debits in Oct. Overstated bank credit in Oct.

2,800 (300)

8,320 (900)

(290)

(800)

OC, Oct. 31 Book credits DM, Oct. Overstated book debits in Oct.

(300)

Overstated book credits in Nov.

1,840

(370)

6,320 OC, Nov. 30

8,280

The bank reconciliation is prepared as follows: Bal. per books, Nov. 30 Add: Credit memos : Proceeds from loan Less: Debit memos: NSF check Add/Less: Book errors: Overstatement of Payments

2,400

Adjusted balance

3,000

600 (300)

Bal. per bank statement, Nov. 30

Add: Deposits in transit Less: Outstanding checks Add/Less: Bank errors: Understatement of deposit

4,560 5,820 (8,280) 900

300 Adjusted balance

3,000...