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I AUDIT OF CASH AND CASH EQUIVALENTS

SUMMARY OF PROBLEMS
PROBLEM NO. 1 Composition of cash and cash equivalents
PROBLEM NO. 2 Computation of adjusted cash and cash equivalents
(including preparation of adjusting entries)
PROBLEM NO. 3 Cash count and shortage computation
(including preparation of adjusting entries)
PROBLEM NO. 4 Bank reconciliation using the three methods
(including preparation of adjusting entries)
PROBLEM NO. 5 Bank reconciliation and shortage computation
(including preparation of adjusting entries)
PROBLEM NO. 6 Cash shortage computation
(including reconstruction of cash balance)
PROBLEM NO. 7 Proof of cash using the three methods
(including preparation of adjusting entries)
PROBLEM NO. 8 Proof of cash using the three methods
(including preparation of adjusting entries)
PROBLEM NO. 9 Proof of cash using the three methods
(including preparation of adjusting entries)
PROBLEM NO. 10 Proof of cash
(including computation of ending deposit in transit and outstanding checks)
PROBLEM NO. 11 Proof of cash using the three methods
(including determination of reconciling items)
PROBLEM NO. 12 Proof of cash using bank to book method
PROBLEM NO. 13 Proof of cash using bank to book method
(including hypothecation of accounts receivable)
PROBLEM NO. 14 Three-dated bank reconciliation using adjusted balance method
(including computation of deposits in transit and outstanding checks)
PROBLEM NO. 15 - Theory

PROBLEM NO. 1 - PRTC Corporation


Items included:
Current account at Metrobank
Payroll account
Foreign bank account (in equivalent pesos)
Travelers check
Money order
Petty cash fund - currency
Time deposit 30 days
Treasury bills, due 3/31/13 (purchased 12/31/12)
Items not included:
Current account at Allied Bank
Savings deposit in a closed bank
Postage stamps
Employees post dated check
IOU from employees
Credit memo from a vendor for a purchase return
Petty cash fund - expense receipts
Pension fund
DAIF check of customer
Customers check dated 1/1/13
Money market placement (due 6/30/13)
Treasury bills, due 1/31/13 (purchased 2/1/12)

1,800,000
500,000
800,000
50,000
30,000
4,000
200,000
200,000
3,584,000
(100,000) Short term borrowing
150,000 Other noncurrent assets
1,000 Unused supplies (Other CA)
4,000 Trade and other receivables
10,000 Trade and other receivables
20,000 Deduction from accounts payable
6,000 Expenses
2,000,000 Noncurrent asset
15,000 Trade and other receivables
80,000 Trade and other receivables
500,000 Short term investment
300,000 Short term investment

PROBLEM NO. 2 - PRTC Corporation


Requirement No. 1.a
Cash on hand, per trial balance
(a) NSF check
(b) Post dated check received
Cash on hand, as adjusted
Adjusting journal entries:
Accounts receivable
Cash on hand
Accounts receivable
Cash on hand
Requirement No. 1.b
Petty cash fund per total
Employees' vales
Currency in envelope marked "collections for charity"
Unreplenished petty cash vouchers
Petty cash fund, as adjusted
Alternative computation:
Currency and coins
Replenishment check
Petty cash fund, as adjusted
Adjusting journal entries:
Advances to officers and employees
Expenses
Cash short/over (balancing figure or see computation below)
Petty cash fund (P10,000 - P6,700)
Computation of shortage:
Currency and coins
Employees' vales
Unreplenished petty cash vouchers
Replenishment check
Cash and cash items counted
Cash accountability
Unaccounted/Shortage
Requirement No. 1.c
BPI current account, per trial balance
Unreleased check
Post dated check delivered
BPI current account, as adjusted
Adjusting journal entries:
BPI current account
Accounts payable
Accounts receivable
Cash on hand
Requirement No. 1.d
Cash on hand (see no. 1.a)
Petty cash fund (see no. 1.b)
BPI current account (see no. 1.c)
Security Bank current account no. 1
Security Bank current account no. 2
PNB time deposit (cash equivalent)
Cash and cash equivalents, as adjusted

372,000
(60,000)
(30,000)
282,000

60,000
60,000
30,000
30,000
10,300
(1,600)
(1,200)
(800)
6,700
2,100
4,600
6,700

1,600
800
900
3,300
2,100
1,600
800
4,600
9,100
10,000
(900)

950,000
50,000
86,000
1,086,000

50,000
50,000
86,000
86,000

282,000
6,700
1,086,000
1,280,000
(40,000)

1,240,000
300,000
2,914,700

Note: The P500,000 PNB savings account should be presented separately from

cash and cash equivalents since it has been earmarked for the acquisition
of a noncurrent asset.

PROBLEM NO. 3 - Rupee Company


Requirement No. 1
Bills and coins
Denomination
P100.00
50.00
20.00
10.00
1.00
0.50
0.25

Quantity
10
80
70
54
410
324
64

Amount
1,000
4,000
1,400
540
410
162
16

Total

7,528

Date
Drawer
Dec. 30 Ms. Jessie
Dec. 30 Robert
Dec. 31 Jay Ar
Dec. 31 Francis
Dec. 31 Ryan

Amount
2,400
28,000
3,360
35,600
16,600

85,960

Date
Account
Dec. 23 Advances
Dec. 27 Postage
Dec. 29 Transportation
Dec. 29 Repairs
Total cash and cash items counted
Less accountabilities:
Petty cash
Undeposited collections - per OR
Undeposited collections - without OR
Excess travel advance returned
Unclaimed salaries
Cash shortage

Amount
14,000
3,240
300
1,600

Checks

Unreplenished vouchers

20,000
86,600
28,000
3,360
15,000

19,140 AJE 1&2


112,628

AJE 4
AJE 3
152,960 AJE 5
(40,332) AJE 6

Requirement No. 2
1 Advances to officers and employees
Postage expense
Transportation expense
Repairs and maintenance
Petty cash fund
2 Unused postage
Postage expense

14,000
3,240
300
1,600
19,140
730
730

3 Travel expense [P9,000+P800+(P600-P240)]


Petty cash fund (personal check of sales manager)
Advances to officers and employees

10,160
3,360

4 Cash
Accounts receivable

28,000

5 Cash
Salaries payable

15,000

6 Cash short/over (Receivable from custodian)


Cash

40,332

7 Cash
Accounts payable

54,000

13,520
28,000
15,000
40,332
54,000

PROBLEM NO. 4 - Dollar Company


DOLLAR COMPANY
Bank Reconciliation - Bank to Book Method
December 31, 2012
Balance per bank
Add (deduct):
a) Customer's uncollectible check (NSF)
b) Dishonored note receivable
(including P2,000 protest fee)
c) Book error in recording collection (P15,400 - P14,500)
d) Book errors in recording disbursements
Check no. 142 (P12,425 - P12,245) - under
Check no. 156 (P3,290 - P32,900) - over
e) December bank service charges
f) Note collected by bank (including interest income
of P1,000 and net of service charge of P500)
g) Deposits in transit
h) Outstanding checks
I) Bank error in recording deposit
j) Petty cash fund
k) Stolen cash sales to be recovered from insurance co.
l) Double counted deposit - NSF
Balance per books

106,000
30,000
62,000
(900)
180
(29,610)
1,830
(25,500)
24,000
(35,000)
(20,000)
10,000
60,000
20,000
203,000

DOLLAR COMPANY
Bank Reconciliation - Book to Bank Method
December 31, 2012
Balance per books
Add (deduct):
a) Customer's uncollectible check (NSF)
b) Dishonored note receivable
(including P2,000 protest fee)
c) Book error in recording collection (P15,400 - P14,500)
d) Book errors in recording disbursements
Check no. 142 (P12,425 - P12,245) - under
Check no. 156 (P3,290 - P32,900) - over
e) December bank service charges
f) Note collected by bank (including interest income
of P1,000 and net of service charge of P500)
g) Deposits in transit
h) Outstanding checks
I) Bank error in recording deposit
j) Petty cash fund
k) Stolen cash sales to be recovered from insurance co.
l) Double counted deposit - NSF
Balance per bank

203,000
(30,000)
(62,000)
900
(180)
29,610
(1,830)
25,500
(24,000)
35,000
20,000
(10,000)
(60,000)
(20,000)
106,000

PROBLEM NO. 4 - Dollar Company


DOLLAR COMPANY
Bank Reconciliation - Adjusted Balance Method
December 31, 2012
BANK
Unadjusted balances, December 31
106,000
Add (deduct):
a) Customer's uncollectible check (NSF)
b) Dishonored note receivable
(including P2,000 protest fee)
c) Book error in recording collection (P15,400 - P14,500)
d) Book errors in recording disbursements
Check no. 142 (P12,425 - P12,245) - under
Check no. 156 (P3,290 - P32,900) - over
e) December bank service charges
f) Note collected by bank (including interest income
of P1,000 and net of service charge of P500)
g) Deposits in transit
24,000
h) Outstanding checks
(35,000)
I) Bank error in recording deposit
(20,000)
j) Petty cash fund
k) Stolen cash sales to be recovered from insurance co.
l) Double counted deposit - NSF
Adjusted balances, December 31

75,000

Adjusting Journal Entries


1) Accounts receivable
Cash in bank

30,000

2) Notes receivable - dishonored


Cash in bank

62,000

Notes receivable - discounted


Notes receivable

60,000

30,000
62,000
60,000

3) Cash in bank
Accounts receivable

900

4) Accounts payable
Cash in bank

180

5) Cash in bank
Accounts payable

29,610

900
180
29,610

6) Bank service charge


Cash in bank

1,830

7) Cash in bank
Bank service charge
Notes receivable
Interest income

25,500
500

8) Petty cash fund


Cash in bank

10,000

9) Claims from insurance co.


Cash in bank

60,000

10) Accounts receivable


Cash in bank

1,830

25,000
1,000
10,000
60,000
20,000
20,000

BOOKS
203,000
(30,000) AJE No. 1
(62,000) AJE No. 2
900 AJE No. 3
(180) AJE No. 4
29,610 AJE No. 5
(1,830) AJE No. 6
25,500 AJE No. 7

(10,000) AJE No. 8


(60,000) AJE No. 9
(20,000) AJE No. 10
75,000

PROBLEM NO. 5 - Swerte Company


Requirement No. 1.a
Unadjusted deposit in transit
Post dated check received
Adjusted deposit in transit

175,250
(50,000)
125,250

Requirement No. 1.b


Unadjusted outstanding checks
Unreleased check
Post dated check issued
Adjusted outstanding checks

246,750
(14,750)
(37,210)
194,790

Requirement No. 1.c&d


Unadjusted balances
Add (deduct) adjustments:
Post dated check received
Deposit in transit (see 1.a)
Unreleased check
Post dated check issued
Note collected by bank
Outstanding checks (see 1.b)
Erroneous bank credit
Balances
Shortage
Adjusted balances

Bank
350,000

Books
293,500
(50,000) AJE 1

125,250
14,750 AJE 2
37,210 AJE 3
15,000 AJE 4
(194,790)
(30,000)
250,460
250,460

310,460
(60,000) AJE 5
250,460

Requirement No. 2
1 Accounts receivable
Cash

50,000

2 Cash
Accounts payable

14,750

3 Cash
Accounts payable

37,210

4 Cash
Notes receivable

15,000

5 Cash short/over (Receivable from cashier)


Cash

60,000

50,000
14,750
37,210
15,000
60,000

PROBLEM NO. 6 - Davao Company


Unadjusted balance per bank, 12/31
Outstanding checks , 12/31
Undeposited collections, 12/31
Adjusted balance per bank, 12/31 (Cash accounted)
Cash balance per books, 12/31/Cash accountability (see computation bel
Cash over (short)
Computation of cash balance per books, 12/31
Cash receipts:
Owners' investment
Proceeds from loan
Collections from customers (see computation below)
Total
Cash disbursements:
Purchases (P250,000 - P15,000)
Store fixtures (P50,000 - P5,000)
Loan payment
Expenses paid
Cash balance per books, 12/31
Computation of collections from sales
Purchases/TGAS
Less merchandise inventory, 12/31
Cost of sales
Add gross profit (P220,000 x 120%)
Sales
Less accounts receivable, 12/31
Collections from sales

91,500
(4,500)
5,000
92,000
122,000
(30,000)

150,000
98,000
414,000
662,000
235,000
45,000
80,000
180,000

540,000
122,000

250,000
30,000
220,000
264,000
484,000
70,000
414,000

PROBLEM NO. 7 - Euro Company


Euro Company
Proof of Cash - Bank to Book Method
For the month of December, 2012
Beginning
Unadjusted bank balances
Undeposited collections
November
December
Outstanding checks
November
December
Customers' note collected by bank
November
December
Bank service charges
November
December
Erroneous bank debits
November
December
Erroneous bank credits
November
December
NSF checks not redeposited
November
December
NSF check redeposited
Unadjusted book balances

Receipts

230,000

420,000

200,000

(200,000)
120,000

(80,000)
(100,000)

500,000

100,000
(120,000)

150,000

(60,000)
(120,000)

2,000
(3,000)

3,000

(20,000)

20,000

(10,000)

(40,000)

(40,000)
(30,000)

5,000

227,000

Ending

120,000
(80,000)
60,000

2,000
10,000

Disb

(30,000)
7,000

(10,000)

5,000
(7,000)
(10,000)

270,000

407,000

90,000

PROBLEM NO. 7 - Euro Company


Euro Company
Proof of Cash - Book to Bank Method
For the month of December, 2012
Beginning
Unadjusted book balances
Undeposited collections
November
December
Outstanding checks
November
December
Customers' note collected by bank
November
December
Bank service charges
November
December
Erroneous bank debits
November
December
Erroneous bank credits
November
December
NSF checks not redeposited
November
December
NSF check redeposited
Unadjusted bank balances

Receipts

227,000

270,000

(200,000)

200,000
(120,000)

80,000
100,000

407,000

(100,000)
120,000

90,000

60,000
120,000

(2,000)
3,000

(3,000)

20,000

(20,000)

10,000

40,000

40,000
30,000

(5,000)

230,000

Ending

(120,000)
80,000
(60,000)

(2,000)
(10,000)

Disb

30,000
(7,000)

10,000

(5,000)
7,000
10,000

420,000

500,000

150,000

PROBLEM NO. 7 - Euro Company


Euro Company
Proof of Cash - Adjusted Balance Method
For the month of December, 2012
Beginning

Receipts

Unadjusted bank balances


Undeposited collections
November
December
Outstanding checks
November
December
Erroneous bank debits
November
December
Erroneous bank credits
November
December
NSF check redeposited

230,000

420,000

200,000

(200,000)
120,000

Adjusted bank balances

(80,000)
10,000

Disb
500,000

Ending
150,000
120,000

(80,000)
60,000

(60,000)

(20,000)

20,000

(10,000)

(40,000)

(40,000)
(30,000)
(10,000)

(10,000)

320,000

290,000

410,000

200,000

Unadjusted book balances


Customers' note collected by bank
November
December
Bank service charges
November
December
NSF checks
November
December

227,000

270,000

407,000

90,000

100,000

(100,000)
120,000

Adjusted book balances

320,000

(2,000)
(5,000)
290,000

Adjusting journal entries:


1) Cash in bank
Note receivable

120,000
120,000

2) Bank service charge


Cash in bank

3,000

3) Accounts receivable
Cash in bank

7,000

3,000
7,000

(30,000)

120,000 AJE 1
(2,000)
3,000

(3,000) AJE 2

(5,000)
7,000

(7,000) AJE 3

410,000

200,000

PROBLEM NO. 8 - Cebu Company


Cebu Company
Proof of Cash - Bank to Book Method
For the month of December, 2012
Balances per bank (a,g)
Deposits in transit (b)
November 30
December 31
Outstanding checks (c,f)
November 30
December 31 (P3,870 - P700)
Bank collections not in books (d)
November 30
December 31
Bank service charges not in books (e)
November 30
December 31
DAIF checks
Returned in Dec., not recorded (h)
Returned in Nov., recorded in Dec. (i)
Returned and recorded in Dec. (j)
Bank error - Check of Cibo Company (k)
Cash receipts used for payment (l)
Book errors (m,n)
Customer check (P465-P165)
Disb check (P3,250-P325)
Balances per books

11/30
14,010

Receipts
281,070

2,740

(2,740)
3,110

(4,260)
(1,200)

1,200
(1,600)

(1,050)
(900)
750

279,540

(3,170)
(1,600)

950
(640)

640

(800)

800

(900)
(2,010)
750

2,010

(300)
13,290

12/31
19,630
3,110

(4,260)
3,170

950

1,050

Disb.
275,450

2,925
274,635

(300)
(2,925)
18,195

PROBLEM NO. 8 - Cebu Company


Cebu Company
Proof of Cash - Book to Bank Method
For the month of December, 2012
Balances per books (refer to requirement 1.a)
Deposits in transit (b)
November 30
December 31
Outstanding checks (c,f)
November 30
December 31 (P3,870 - P700)
Bank collections not in books (d)
November 30
December 31
Bank service charges not in books (e)
November 30
December 31
DAIF checks
Returned in Dec., not recorded (h)
Returned in Nov., recorded in Dec. (i)
Returned and recorded in Dec. (j)
Bank error - Check of Cibo Company (k)
Cash receipts used for payment (l)
Book errors (m,n)
Customer check (P465-P165)
Disb check (P3,250-P325)
Balances per bank (a,g)

11/30
13,290

Receipts
279,540

(2,740)

2,740
(3,110)

4,260
1,200

(1,200)
1,600

1,050
900
(750)

281,070

3,170
1,600

(950)
640

(640)

800

(800)

900
2,010
(750)

(2,010)

300
14,010

12/31
18,195
(3,110)

4,260
(3,170)

(950)

(1,050)

Disb.
274,635

(2,925)
275,450

300
2,925
19,630

PROBLEM NO. 8 - Cebu Company


Cebu Company
Proof of Cash - Adjusted Balance Method
For the month of December, 2012
Balances per bank (a,g)
Deposits in transit (b)
November 30
December 31
Outstanding checks (c,f)
November 30
December 31 (P3,870 - P700)
Bank error - Check of Cibo Company (k)
Cash receipts used for payment (l)

Balances per books


Bank collections not in books (d)
November 30
December 31
Bank service charges not in books (e)
November 30
December 31
DAIF checks
Returned in Dec., not recorded (h)
Returned in Nov., recorded in Dec. (i)
Returned and recorded in Dec. (j)
Book errors (m,n)
Customer check (P465-P165)
Disb check (P3,250-P325)

11/30
14,010

Receipts
281,070

2,740

(2,740)
3,110

(4,260)

3,110
(3,170)
2,010

750
12,490

282,190

273,100

21,580

13,290

279,540

274,635

18,195

1,200

(1,200)
1,600

(950)

(1,050)

1,050
900

1,600 AJE 1
(950)
640

(640) AJE 2

800

(800) AJE 3

900

300
(2,925)
282,190

Adjusting journal entries:


1,600
1,600

2) Bank service charge


Cash in bank

640

3) Accounts receivable
Cash in bank

800

4) Cash in bank
Accounts receivable

300

5) Cash in bank
Accounts payable

12/31
19,630

(4,260)
3,170
(2,010)
750

12,490

1) Cash in bank
Note receivable

Disb.
275,450

640
800
300
2,925
2,925

273,100

300 AJE 4
2,925 AJE 5
21,580

PROBLEM NO. 9 - MQM Company

MQM Company
Proof of Cash - Bank to Book Method
For the month of December, 2012
Nov. 30
Unadjusted bank balances
Undeposited receipts:
November
December
Outstanding checks:
November
December
Erroneous bank debit
Payment to creditor in cash
NSF checks:
Returned, recorded in December
Returned, recorded in January
Unrecorded bank collections:
November
December
Bank service charges:
November
December
Book error in December
Unadjusted book balances

December
Receipts
Disb.

215,600

2,204,500

90,600

(90,600)
101,200

(26,750)
12,100
(10,400)

(121,500)

2,221,900

230,400
101,200

(26,750)
14,300
(9,500)
12,100
(10,400)
(8,600)

121,500
(116,400)

7,500

165,450

2,189,700

Dec. 31

(14,300)
9,500

8,600

(116,400)
7,500
(4,200)
(3,600)
2,160,550

4,200
3,600
226,800

PROBLEM NO. 9 - MQM Company

MQM Company
Proof of Cash - Book to Bank Method
For the month of December, 2012
Nov. 30
Unadjusted book balances
Undeposited receipts:
November
December
Outstanding checks:
November
December
Erroneous bank debit
Payment to creditor in cash
NSF checks:
Returned, recorded in December
Returned, recorded in January
Unrecorded bank collections:
November
December
Bank service charges:
November
December
Book error in December
Unadjusted bank balances

December
Receipts
Disb.

165,450

2,221,900

(90,600)

90,600
(101,200)

26,750
(12,100)
10,400

121,500

2,204,500

226,800
(101,200)

26,750
(14,300)
9,500
(12,100)
10,400
8,600

(121,500)
116,400

(7,500)

215,600

2,160,550

Dec. 31

14,300
(9,500)

(8,600)

116,400
(7,500)
4,200
3,600
2,189,700

(4,200)
(3,600)
230,400

PROBLEM NO. 9 - MQM Company

MQM Company
Proof of Cash - Adjusted Balance Method
For the month of December, 2012
Nov. 30

December
Receipts
Disb.

Unadjusted bank balances


Undeposited receipts:
November
December
Outstanding checks:
November
December
Erroneous bank debit
Payment to creditor in cash
Adjusted bank balances

215,600

2,204,500

90,600

(90,600)
101,200

Unadjusted book balances


NSF checks:
Returned, recorded in December
Returned, recorded in January
Unrecorded bank collections:
November
December
Bank service charges:
November
December
Book error in December
Adjusted book balances

(26,750)

2) Cash in bank
Note receivable

230,400
101,200

279,450

12,100
2,227,200

(26,750)
14,300
(9,500)
12,100
2,179,850

326,800

165,450

2,221,900

2,160,550

226,800

10,400

10,400
8,600

121,500

(121,500)
116,400

(7,500)

279,450
-

2,227,200
-

Adjusting journal entries:


1) Accounts receivable
Cash in bank

2,189,700

Dec. 31

8,600
8,600
116,400
116,400

3) Bank service charge


Cash in bank

4,200

4) Accounts payable
Cash in bank

3,600

4,200
3,600

(14,300)
9,500

(8,600) AJE 1
116,400 AJE 2

(7,500)
4,200
3,600
2,179,850
-

(4,200) AJE 3
(3,600) AJE 4
326,800
-

PROBLEM NO. 10 - Baht Company


Baht Company
Proof of Cash - Bank to Book Method
For the month of December, 2012
Nov. 30
Unadjusted bank balances
Add (deduct) adjustments:
Customers' note collected by bank
November
Bank service charges
November
December
Erroneous bank debit-November
Undeposited collections
November
December
Outstanding checks
November
December
NSF checks
December
Book errors in December
Uncollected customer's note treated as receipts
Error in recording a check (SB P990, AR P9,900)
Unadjusted book balances

December
Receipts
Disb.

76,500

104,000

(25,000)

25,000

300

51,000

300
(400)

Dec. 31
129,500

10,000

(10,000)

400
-

20,000

(20,000)
54,900

54,900

(42,500)

(42,500)
90,490

(90,490)

(6,000)

6,000

8,910

30,000
(8,910)

101,800

121,400

30,000
39,300

183,900

Computation of deposits in transit, December 31:


Deposit in transit, Nov. 30
Add collections in December:
December book receipts
Less receipts not representing collections in December:
Customers' note collected by bank, Nov. 30
Note with the bank treated as receipts
Total
Less deposits credited by the bank in December:
December bank receipts
Less receipts not representing deposits:
Erroneous bank debit, Nov.; corrected Dec.

20,000
183,900
25,000
30,000

55,000

128,900
148,900

104,000
10,000

94,000
54,900

Outstanding checks, December 31:


Outstanding checks, Nov. 30
Add checks issued in December:
December book disbursements
Less disbursements not representing checks for December:
Book error (SB P990, AR P9,900)
Bank service charge, Nov.; recorded Dec.
Total
Less checks paid by the bank in December:
December bank disbursements
Less disbursements not representing checks:
NSF checks, Dec.
Bank service charge, Dec.

42,500
101,800
8,910
300

9,210

92,590
135,090

51,000
6,000
400

6,400

44,600
90,490

PROBLEM NO. 10 - Baht Company


Baht Company
Proof of Cash - Book to Bank Method
For the month of December, 2012
Nov. 30
Unadjusted book balances
Add (deduct) adjustments:
Customers' note collected by bank
November
Bank service charges
November
December
Erroneous bank debit-November
Undeposited collections
November
December
Outstanding checks
November
December
NSF checks
December
Book errors in December
Uncollected customer's note treated as receipts
Error in recording a check (SB P990, AR P9,900)
Unadjusted bank balances

December
Receipts
Disb.

39,300

183,900

25,000

(25,000)

(300)

101,800

(300)
400

Dec. 31
121,400

(10,000)

10,000

(400)
-

(20,000)

20,000
(54,900)

(54,900)

42,500

42,500
(90,490)

90,490

6,000

(6,000)

(8,910)

(30,000)
8,910

51,000

129,500

(30,000)
76,500

104,000

PROBLEM NO. 10 - Baht Company


Baht Company
Proof of Cash - Adjusted Balance Method
For the month of December, 2012
December
Nov. 30
Receipts
Disb.
Unadjusted bank balances
Add (deduct) adjustments:
Erroneous bank debit-November
Undeposited collections
November
December
Outstanding checks
November
December

76,500

104,000

10,000

(10,000)

20,000

(20,000)
54,900

(42,500)

Dec. 31

51,000

129,500
54,900

(42,500)
90,490

(90,490)

Adjusted bank balances

64,000

128,900

98,990

93,910

Unadjusted book balances


Add (deduct) adjustments:
Customers' note collected by bank
November
Bank service charges
November
December
NSF checks
December
Book errors in December
Uncollected customer's note treated as receipts
Error in recording a check (SB P990, AR P9,900)

39,300

183,900

101,800

121,400

25,000

(25,000)

Adjusted book balances

64,000

(300)

(300)
400

(400) AJE 1

6,000

(6,000) AJE 2

(8,910)

(30,000) AJE 3
8,910 AJE 4

(30,000)

128,900
-

Adjusting journal entries:


1) Bank service charge
Cash in bank

400

2) Accounts receivable
Cash in bank

6,000

400
6,000

3) Notes receivable
Cash in bank

30,000

4) Accounts payable
Cash in bank

8,910

30,000
8,910

98,990
-

93,910
-

PROBLEM NO. 11 - Hangover Company


Hangover Company
Proof of Cash - Bank to Book Method
For the month of July, 2012
July
6/30

Receipts

Unadjusted bank balances


Direct deposits
June
July
NSF check redeposited - July
Book error - July (SB P1,492, AR P1,000)
Bank error - July
Bank service charges
June
July
Interest earned
June
July
Book error - June (SB P9,850, AR P8,955)
Deposits in transit
June
July
Outstanding checks
June
July

66,405

76,800

(675)

675
(675)
(472)

Unadjusted book balances

62,150

165

(3,054)

Disb
77,395

(675)
492
386

165
(175)

175

3,054
(3,160)

(3,160)
895

(3,156)
2,238

(4,742)

75,304

65,810

(472)
(492)
(386)

895
3,156

7/31

2,238
(4,742)
5,857

(5,857)

77,150

60,304

PROBLEM NO. 11 - Hangover Company


Hangover Company
Proof of Cash - Book to Bank Method
For the month of July, 2012
July
6/30

Receipts

Unadjusted book balances


Direct deposits
June
July
NSF check redeposited - July
Book error - July (SB P1,492, AR P1,000)
Bank error - July
Bank service charges
June
July
Interest earned
June
July
Book error - June (SB P9,850, AR P8,955)
Deposits in transit
June
July
Outstanding checks
June
July

62,150

75,304

675

(675)
675
472

Unadjusted bank balances

66,405

(165)

3,054

Disb
77,150

675
(492)
(386)

(165)
175

(175)

(3,054)
3,160

3,160
(895)

3,156
(2,238)

4,742

76,800

60,304

472
492
386

(895)
(3,156)

7/31

(2,238)
4,742
(5,857)

5,857

77,395

65,810

PROBLEM NO. 11 - Hangover Company


Hangover Company
Proof of Cash - Adjusted Balance Method
For the month of July, 2012
July
6/30
Receipts
Disb
Unadjusted bank balances
Deposits in transit
June
July
Outstanding checks
June
July
NSF check redeposited - July
Bank error - July

66,405

76,800

3,156

(3,156)
2,238

Adjusted bank balances

64,819

75,410

77,652

62,577

Unadjusted book balances


Direct deposits
June
July
Bank service charges
June
July
Interest earned
June
July
Book errors
June (SB P9,850, AR P8,955)
July (SB P1,492, AR P1,000)

62,150

75,304

77,150

60,304

675

(675)
675

Adjusted book balances

64,819
-

(4,742)
(472)

(165)

3,054

(4,742)
5,857
(472)
(386)

492

675

2) Bank service charge


Cash in bank

175

675
175
3,160
3,160

4) Rent expense
Cash in bank

895

5) Wages expense
Cash in bank

492

895
492

386

(175) AJE 2
3,160 AJE 3

(895)

1) Cash in bank
Rent income

(5,857)

675 AJE 1

(3,054)
3,160

75,410
-

65,810
2,238

(165)
175

Adjusting journal entries:

3) Cash in bank
Interest income

77,395

7/31

77,652
-

(895) AJE 4
(492) AJE 5
62,577
-

PROBLEM NO. 12 - Celtics Corporation


Requirement No. 1
Total deposits per bank statement in June
Note collected by bank in July
Deposits in transit, June 30
Deposits in transit, July 31
Cash receipts per books in July

9,000,000
(200,000)
(400,000)
1,000,000
9,400,000

Requirement No. 2
Total disbursements per bank statement in June
July NSF check
July service charge
Outstanding checks, June 30
Outstanding checks, July 31
Cash disbursements per books in July

7,000,000
(140,000)
(10,000)
(900,000)
600,000
6,550,000

Requirement No. 3
Balance per books, June 30, 2007
July receipts per books (see no. 21)
July disbursements per books (see no. 22)
Balance per books, July 31, 2007
Requirement No. 4
Balance per bank statement, July 31 (P3M+P9M-P7M)
Deposits in transit, July 31
Outstanding checks, July 31
Adjusted bank balance, July 31
Balance per books, July 31
Note collected by bank in July
NSF check
Bank service charges
Adjusted book balance, July 31

2,500,000
9,400,000
(6,550,000)
5,350,000

5,000,000
1,000,000
(600,000)
5,400,000
5,350,000
200,000
(140,000)
(10,000)
5,400,000

PROBLEM NO. 4 - Syria Company


Syria Company
Proof of Cash - Bank to Book Method
For the month of December, 2012
Nov. 30
Unadjusted bank balances
480,000
Undeposited collections:
November 30
100,000
December 31
Outstanding checks:
November 30
(150,000)
December 31
DAIF checks:
Returned in Nov., recorded in Dec.
10,000
Returned and recorded in Dec.
Returned in Dec., recorded in Jan.
Erroneous bank debit
Unrecorded bank collection in Dec.
Anticipated loan proceeds from AR hypothecation
Nov. 30 sales (P180,000 x 80%)
144,000
Dec. 31 sales (P200,000 x 80%)
Deposits with loan payment (P725,000 x 80%)
Anticipated loan payment from undeposited collections
Nov. 30 (P100,000 x 80%)
(80,000)
Dec. 31 (P140,000 x 80%)
Interest charge for bank loan in Dec.
Unadjusted book balances

504,000

December
Receipts
Disb
240,000

300,000

(100,000)
140,000

(25,000)
(29,000)
(90,000)

(106,000)
(144,000)
160,000
580,000

735,000

420,000
140,000

(150,000)
120,000
(10,000)
(25,000)

Dec. 31

(120,000)

29,000
90,000
(106,000)
160,000

580,000
(80,000)
112,000
(38,000)

(112,000)
38,000

700,000

539,000

PROBLEM NO. 4 - Syria Company


Syria Company
Proof of Cash - Adjusted Balance Method
For the month of December, 2012
December
Receipts
Disb

Nov. 30
Unadjusted bank balances
480,000
Undeposited collections:
November 30
100,000
December 31
Outstanding checks:
November 30
(150,000)
December 31
Erroneous bank debit
Deposits with loan payment (P725,000 x 80%)
Adjusted bank balances
430,000
Unadjusted book balances
504,000
DAIF checks:
Returned in Nov., recorded in Dec.
(10,000)
Returned and recorded in Dec.
Returned in Dec., recorded in Jan.
Unrecorded bank collection in Dec.
Anticipated loan proceeds from AR hypothecation
Nov. 30 sales (P180,000 x 80%)
(144,000)
Dec. 31 sales (P200,000 x 80%)
Anticipated loan payment from undeposited collections
Nov. 30 (P100,000 x 80%)
80,000
Dec. 31 (P140,000 x 80%)
Interest charge for bank loan in Dec.
Adjusted book balances

430,000
-

240,000

Dec. 31

300,000

(100,000)
140,000

140,000

580,000
860,000

(150,000)
120,000
(90,000)
580,000
760,000

735,000

700,000

10,000
25,000

420,000

25,000
29,000

(120,000)
90,000
530,000
539,000

106,000

(29,000)
106,000

144,000
(160,000)

(160,000)

860,000
-

80,000
(112,000)
38,000

112,000
(38,000)

760,000

530,000

PROBLEM NO. 14 - Noel Company


Requirement 1.a
Deposits in transit, Nov. 30
Add collections in December:
December book receipts
Customers' note collected by bank in Nov.
Total
Less deposits credited by the bank in December:
December bank receipts
NSF check redeposited (Customer A)
Deposits in transit, Dec. 31

35,000
963,230
(20,000)
941,010
(3,270)

943,230
978,230
937,740
40,490

Requirement 1.b
Outstanding checks, Nov. 30
Add checks issued in December:
December book disbursements
Collection fee for note collected in Nov.
Total
Less checks paid by the bank in December:
December bank disbursements
Bank error in check payment (P1,340 - P340)
NSF check - Customer A
NSF check - Customer B
Outstanding checks, Dec. 31

88,240
1,008,480
(80)
1,010,410
(1,000)
(3,270)
(6,730)

1,008,400
1,096,640

999,410
97,230

Requirement 1.c
Deposits in transit, Dec. 31 (see Requirement 1.a)
Add collections, Jan. 1-12:
Jan. 1-12 book receipts
NSF check - Customer B
Total
Less deposits credited by the bank, Jan. 1-12:
Jan. 1-12 bank receipts
Correction of error in check payment in Dec.
Deposits in transit, Jan. 12

40,490
292,500
6,730
321,490
(1,000)

299,230
339,720
320,490
19,230

Requirement 1.d
Outstanding checks, Dec. 31 (see Requirement 1.b)
Add checks issued, Jan. 1-12:
Jan. 1-12 book disbursements
Unrecorded payroll checks
Total
Less checks paid by the bank, Jan. 1-12:
Outstanding checks, Jan. 12

Nov. 30

97,230
177,570
5,500

December
Receipts
Disb

Unadjusted bank balances


344,420
Deposits in transit:
Beginning of period
35,000
End of period
Outstanding checks:
Beginning of period
(88,240)
End of period
Bank error in check payment
NSF check redeposited (Customer A)
Adjusted bank balances
291,180

941,010

Unadjusted book balances


271,260
Note collected by bank in Nov.
19,920
NSF check not redeposited (Customer B)
Unrecorded payroll in Jan.

963,230
(20,000)

1,010,410

(35,000)
40,490

(3,270)
943,230

(88,240)
97,230
(1,000)
(3,270)
1,015,130
1,008,480
(80)
6,730

183,070
280,300
230,180
50,120

Dec. 31

January 1-12
Receipts
Disb

275,020

321,490

40,490

(40,490)
19,230

230,180

Jan. 12
366,330
19,230

(97,230)
50,120

(50,120)

299,230

183,070

335,440

226,010

292,500

177,570

340,940

(6,730)

6,730
5,500

(5,500)

(97,230)
1,000

(1,000)

219,280

Adjusted book balances

291,180
-

943,230
-

1,015,130
-

219,280
-

299,230
-

183,070
-

335,440
-

PROBLEM NO. 15 - Theory


1C
2C
3B
4A
5A
6B
7B
8D
9B
10 B
11 B
12 B