Posted: April 10th, 2016

What suggestions would you make to improve internal control?

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.

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.
You may need to refer to your textbook for additional information.
2. The blue cells are for data entry. Enter text in the T cells, figures in the F cells, calculation in C cells


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


1. Prepare a bank reconciliation in good form.

May 31, 2012

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

Balance per books, May 31 F
Add: T F
Deduct T F
Adjusted balance, May 31 C

2. A friend says to you: “I don’t know why companies bother to prepare bank reconciliations it seems a was
time. Why don’t they just do like I do and adjust the Cash account for any difference between what the bank
shows as a balance and what shows up in the books?” Explain to your friend why a bank reconciliation sho
be prepared as soon as a bank statement is received.

alculation in C cells

n for Calico Corners on May 31, 2012:

late on May 31.
nd the company records indicated that

ds held by Calico Corners. The May

uring May was $54.60. Miscellaneous

nk statement.
ny’s books revealed that a customer’s
ver added to the company’s account.
an account at the same bank.
ealed that another customer’s check in

sly increased the Cash account
reconciliations it seems a waste of
ference between what the bank
why a bank reconciliation should

At Morris Mart Inc., all sales are on account. Mary Morris-Manning is responsible for
mailing invoices to customers, recording the amount billed, opening mail, and recording the
payment. Mary is very devoted to the family business and never takes off more than one or
two days for a long weekend. The customers know Mary and sometimes send personal
notes with their payments. Another clerk handles all aspects of accounts payable. Mary’s

1. List some problems with the current accounts receivable system.


2. What suggestions would you make to improve internal control?


3. How would you explain to Mary that she personally is not the problem?

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