Posted: April 24th, 2016

# Prepare a bank reconciliation in good form

Required
1. Prepare revised income statements and balance sheets for Planter Stores for each of
the two years. Ignore the effect of income taxes.

(Input all amounts in thousands of dollars.)
Revised income statements:FY2012 FY2011
T F F
T F F
Gross profit C C
T F F
Net income C C
Revised balance sheets:
######## ########
T F F
T F F
T F F

Current
assets C C
T F F
Total assets C C

T F F
T F F
T F F
Total liabilities and stockholders’ equity
C C

2. Compute the current ratio at December 31, 2011, before the statements are revised, and compute the
current ratio at the same date after the statements are revised. If Planter applied for a loan in early 2012
and the lender required a current ratio of at least 1 to 1, would the error have affected the loan?

Current
ratio: Formula: T

Before revision: C C
=
F

=
F C
After revision: F

T

3. If Planter did not prepare revised statements before releasing the 2012 annual report, what would be
the amount of overstatement or understatement of net income for the two-year period? What would be
the overstatement or understatement of retained earnings at December 31, 2012, if revised statements
were not prepared?

Net income for two years, before revision: C
Net income for two years, after revision: C
T

Retained earnings at December 31, 2012, before the revision:
F
Retained earnings at December 31, 2012, after F revision:
the

T

4. Given your answers to parts (2) and (3), does it matter if Planter bothers to restate the
financial statements of the two years to correct the error? Explain your answer.

T
nd compute the
an in early 2012
PROBLEM 6-1 Bank Reconciliation

General Instructions
1. The following worksheet may be used to complete the exercise/problem.
2. The blue cells are for data entry. Enter text in the T cells, figures in the F cells, calculation in C cells

P6-1

The following information is available to assist you in preparing a bank reconciliation for Calico Corners on May 31, 2

a. The balance on the May 31, 2012, bank statement is \$8,432.11.
b. Not included on the bank statement is a \$1,250 deposit made by Calico Corners late on May 31.
c. A comparison between the canceled checks returned with the bank statement and the company records indicated
the following checks are outstanding at May 31:

No. 123 \$ 23.40
No. 127 145.00
No. 128 210.80
No. 130 67.32

d. The Cash account on the company’s books shows a balance of \$9,965.34
e. The bank acts as a collection agency for interest earned on some municipal bonds held by Calico Corners. The M
bank statement indicates interest of \$465.00 earned during the month.
f. Interest earned on the checking account and added to Calico Corners’ account during May was \$54.60. Miscellane
bank service charges amounted to \$50.00.
g. A customer’s NSF check in the amount of \$166.00 was returned with the May bank statement.
h. A comparison between the deposits listed on the bank statement and the company’s books revealed that a custom
check in the amount of \$123.45 was recorded on the books during May but was never added to the company’s acco
The bank erroneously added the check to the account of Calico Closet, which has an account at the same bank.
i. The comparison of deposits per the bank statement with those per the books revealed that another customer’s che
the amount of \$101.10 was correctly added to the company’s account.
In recording the check on the company’s books, however, the accountant erroneously increased the Cash account
by \$1011.00

Required

1. Prepare a bank reconciliation in good form.

CALICO CORNERS
BANK RECONCILIATION
May 31, 2012

Balance per bank statement, May 31 F
T F C
Deduct: T
T F
T F
T F
T F C

Balance per books, May 31 F
T F C
Deduct T F
T F
T F C