CHAPTER 7 Problem 7-1 Requirement 1 a. Accounts receivable 200,000 Cash in bank 200,000 b. Cash in bank 250,000 Accounts payable 250,000 c. Cash in bank 100,000 Accounts payable 100,000 d. Accounts receivable 450,000 Cash 450,000 Requirement 2 Cash in bank per book 3,000,000 Customer check outstanding for 18 months ( 200,000) Undelivered check 250,000 Postdated check delivered 100,000 Collection on January 2017 recorded on December 31, 2016 cC 450,000) Adjusted cash in bank 2,700,000 Time deposit - 30 days 1,000,000 Petty cash fund —.20,000 Total cash and cash equivalent 3,220,000 Requirement 3 The money market placement of P2,000,000 due on June 30, 2017 should be separately shown as current asset. The sinking fund of P1,500,000 is presented as noncurrent asset. Problem 7-2 Requirement 1 a. Accounts receivable 150,000 Cash on hand 150,000b. Expenses Receivable from employee Petty cash fund 15,000 Requirement 2 Cash on hand Postdated check Adjusted cash on hand Petty cash fund Unreplenished petty cash expenses (10,000) Postdated employee check Adjusted petty cash Cash on hand Petty cash fund Security Bank current account PNB current account Bond sinking fund 2,500,000) Total cash and cash equivalents 6,885,000 Requirement 3 10,000 5,000 1,000,000 (150,000) 850,000 50,000 (3,000) 35,000 850,000 35,000 2,000,000 1,500,000 *The BSP 120-day treasury bill of P3,000,000 is separately shown as current asset. “The overdraft in BDO current account of P200,000 is shown as current liability. “The BPI Time deposit of P2,000,000 is shown as noncurrent investment because itis restricted for land acquisition. Problem 7-3 Requirement 1 a. Accounts receivable (100,000 + 150,000) Cash on hand b. Advances to employees Cash short or over Petty cash fund 15,000 . Cash in bank (200,000 + 300,000) Accounts payable Requirement 2 Cash on hand NSF customer check Postdated customer check 250,000 250,000 10,000 5,000 500,000 500,000 1,000,000 ( 100,000) (150,000)Adjusted on hand 750,000 Currency and coins Check drawn payable to petty cashier Adjusted petty cash Cash in bank Undelivered company check Postdated company check delivered 300,000 Adjusted cash in bank 4,500,000 Cash on hand Petty cash fund Cash in bank Saving deposit 2,000,000 Total cash Problem 7-4 Requirement 1 Cash on hand NSF customer check Postdated customer check Adjusted cash on hand Petty cash fund: Currency and coins Philippine Bank current account 5,000,000 Undelivered company check Postdated company check delivered 45,000 Adjusted balance Cash on hand Petty cash fund Philippine Bank current ity Bank current account No. | City Bank current account No. 2 Asia Bank saving deposit 250,000 Asia Bank time deposit Total cash and cash equivalent Requirement 2 1, Accounts receivable Cash on hand 50,000 ¢ 2,000 33,000 35,000 4,000,000 200,000 750,000 35,000 4,500,000 7,285,000 200,000 (35,000) (15,000) 150,000 5,000 25,000 5,070,000 150,000 5,000 5,070,000 4,000,000 100,000) -2,000,000 11,375,000 50,0002. Receivable from officer 2,000 Expenses 12,000 Cash short or over 1,000 Petty cash 15,000 3. Philippine Bank current 70,000 Accounts payable 70,000 4. City Bank current 100,000 Bank overdraft 100,000 Problem 7-5 Fluctuating Fund System Imprest Fund System 1. Petty cash fund 10,000 1. Petty cash fund 10,000 Cash in bank 10,000 Cash in bank 10,000 2. Postage 1,500 2. No entry Supplies 5,500 Transportation 1,200 Miscellaneous expense 800 Petty cash fund 9,000 3. Petty cash fund 14,000 3. Petty cash fund 5,000 Cash in bank 14,000 Postage 1,500 Supplies 5,500 Transportation 1,200 Miscellaneous expense 800 Cash in bank 14,000Problem 7-6 Fluctuating Fund System 1. Petty cash fund ‘10,000 Cash in bank 10,000 2. Postage 1,500 ‘Supplies 3,000 Petty cash fund 4,500 3. Transportation 1,000 Accounts payable 3,500 Petty cash fund 4,500 4, Petty cash fund 19,000 Cash in bank 19,000 Problem 7-7 Fluctuating Fund System May 2 Petty cash fund 10,000 Cash in bank 10,000 10,000 2 May Imprest Fund System Petty cash fund 10,000 Cash in bank No entry No entry Petty cash fund 10,000 Postage 1,500 Supplies 3,000 Transportation ‘1,000 Accounts payable 3,500 Cash in bank 19,000 Imprest Fund System 2 Petty cash fund 10,000 Cash in bank 10,00029 Postage 1,000 29 Postage 1,000 Supplies 3,000 Supplies 3,000 Transportation 2500 Transportation 2,500 Miscellaneous expense 1,500 Miscellaneous expense 1,500 Petty cash fund 8,000 Petty cash fund 8,000 Petty cash fund 8,000 Cash in bank 8,000 June 30 Supplies 2,000 June 30 Supplies 2,000 Accounts payable 1,000 Accounts payable 1,000 Transportation 1,000: Transportation 1,000 Petty cash fund 4,000 Petty cash fund 4,000 July 1 Petty cash fund 4,000 Supplies 2,000 Postage 1,000 Transportation 1,000 To reverse the adjustment made on June 30. 5,000, July 15 Supplies 1,500 3,500 Postage 500 1,500 Transportation 500 1,500 Miscellaneous expense 500 Miscellaneous expense ' 500 Petty cash fund 3,000 Cash in bank 12,000 Petty cash fund 12,000 Cash in bank 12,000 Problem 7-8 2016 Nov. 2 Petty cash fund 10,000 Cash in bank 10,000 30 Postage 2,000 Supplies 5,000 Petty cash fund 10,000 Cash in bank 17,000 Dec. 31 Postage 3,000 Supplies 4,000 Special deposit 2,000 Petty cash fund 9,000 2017 Jan. 1 Petty cash fund 9,000 Postage 3,000 Supplies 4,000 Special deposit 2,000 2 No entry31 Postage Supplies Accounts payable Cash short or over Cash in bank Problem 7:9 Requirement 1 2016 Dec. 1 Petty cash fund Cash in bank 20 Distribution costs Miscellaneous expenses Equipment Cash in bank 31 Receivable from employee Distribution costs Transportation Petty cash fund 2017 Jan. 1 Petty cash fund Receivable from employee 2,000 Distribution costs Transportation 15 Noentry 2017 Jan, 31 Distribution costs Administrative expenses Transportation Purchases Cash in bank Requirement 2 Petty cash Less: Petty cash expenses from December 21, 2016 to January 31, 2017: Distribution costs (1,500 + 500) Administrative expenses Transportation (500 + 1,000) Purchases Petty cash before replenishment Problem 7-10 Answer B Problem 7-11 Answer A 6,000 7,000 1 19,000 10,000 10,000 5,000 2,000 2,000 9,000 2,000 1,500 500 4,000 4,000 1,500 500 2,000 2,000 1,500 1,200 6,700 10,000 2,000 2,000 1,500 6,701Problem 7-12 Answer B Problem 7-13 Answer C Problem 7-14 Answer B Problem 7-15 Answer B Petty cash fund (50,000 - 10,000) Cash on hand (500,000 - 100,000) Cash in bank ~ current account Cash in bank - payroll account Time deposit Cash in sinking fund Total cash and cash equivalents 8,940,000 Problem 7-16 Answer A Petty cash fund Undeposited collections Cash in bank Total Problem 7-17 Answer C Checking account #101 Checking account #201 Time deposit account 250,000 90-day Treasury bill Total cash and cash equivalent Problem 7-18 Answer B Question 1 Answer B Checkbook balance Postdated customer check NSF check Undelivered company check Cash on hand Change fund Adjusted balance Question 2 Answer C Treasury bill Money market placement 3,000,000 Total cash equivalents 40,000 400,000 4,000,000 1,000,000 2,000,000 1,500,000 50,000 1,100,000 2,500,000 3,650,000 1,750,000 ( 100,000) 500,000 2,400,000 8,000,000 (2,000,000) ( 500,000) 1,500,000 2,440,000 2,500,000 5,500,000Problem 7-19 Answer B Problem 7-20 Answer C Problem 7-21 Answer B Problem 7-22 Answer C Cash on hand and in bank Saving deposit 1,000,000 Total Problem 7:23 Question 1 Answer A Question 2 Answer A Problem 7-24 Answer D Checking account at Second Bank Payroll account Value added tax account Foreign bank account 2,000,000 Traveler's check Petty cash fund Money order Total unrestricted cash Problem 7-25 Answer B Security bank Currency and coins Petty cash fund (50,000 - 10,000) Total Problem 7-26 Answer A Checkbook balance Customer check not included in checkbook balance 200,000 Undelivered check payable to supplier Adjusted cash in bank 4,600,000 Coins and currencies on hand Petty cash: Coins and currencies Replenishment check 48,000 5,000,000 6,000,000 5,500,000 500,000 400,000 300,000 20,000 1,000 8,900,000 3,155,000 00 300,000 5,000 43,000Total Problem 7-27 Answer D Problem 7-28 Answer C Coins and currency Accommodation check Total Problem 7-29 Answer C Coins and currency Replenishment check 4,000 Total Problem 7-30 Answer C Total petty cash Currency and coins Amount of replenishment 7,000 Problem 7-31 NOV aWNo oNUeeEag 8 aA 10. D Problem 8-1 Balance per book Add: CM for note collected Total Less: DM for service charge Problem 7-32 NA PPh = >PONBA>O 4,948,000 22,000 15,000 37,000 2,000 Problem 7-33 woENONANnCO PLeNOvayy> 65,000 30,000 95,000 2,000Adjusted book balance Balance per bank Add: Deposit in transit Total Less: Outstanding checks: No. 102 105 107 Adjusted bank balance Adjusting entries: 1. Cash in bank Note receivable 2. Bank service charge Cash in bank Problem 8-2 Balance per book Add: CM for note collected Total Less: DM for service charge NSF check Book error (52,000 - 25,000) Adjusted book balance Balance per bank Add: Deposit in transit Erroneous bank debit 68,000 Total Less: Outstanding checks: No. 770 775 777 Adjusted bank balance Adjusting entries: 1. Cash in bank Bank service charge Note receivable 2. Bank service charge Accounts receivable Accounts payable Cash in bank 93,000 108,000 80,000 188,000 15,000 30,000 50,000 95,000 93,000 30,000 30,000 2,000 2,000 110,000 45,000 155,000 5,000 10,000 27,000 _ 42,000 113,000 135,000 60,000 8,000 203,000 20,000 30,000 40,000 —_90,000 113,000 45,000 5,000 50,000 5,000 10,000 27,000 42,000Problem 8-3 Balance per book Add: CM for note collected Total Less: DM for service charge Adjusted book balance Balance per bank Add: Deposit in transit Total Less: Outstanding checks: No. 116 122 124 125 Adjusted bank balance Adjusting entries 1. Cash in bank Bank service charge Note receivable 250,000 Interest income 30,000 2. Bank service charge Cash in bank 60,000 180,000 120,000 250,000 270,000 10,000 5,000 2,840,000 _ 270,000 3,110,000 —__5,000 3,105,000 3,265,000 —450.000 3,715,000 5,000Problem 8-4 Balance per book 5,000,000 Add: Note collected by bank 2,150,000 Total 7,150,000 Less: Bank service charge 50,000 NSF check 500,000 550,000 Adjusted book balance 6,600,000 Balance per bank 4,450,000 Deposit in transit 3,000,000 Total 7,450,000 Less: Outstanding checks _ 0,00 Adjusted bank balance 6,600,000 Adjusting entries 1, Cash in bank 2,150,000 Bank service charge 50,000 Note receivable 2,000,000 Interest income 200,000 2. Bank service charge 50,000 Accounts receivable 500,000 Cash in bank 550,000Problem 8-5 Book balance Add: Collection of note Interest on note Book error on check no. 175 Total Less: Bank service charge Payment for light and water NSF check Adjusted book balance Bank balance Add: Deposit in transit Total Less: Bank error Outstanding checks 2,750,000 Adjusted bank balance Adjusting entries 1. Cash in bank Note receivable 2,500,000 Interest income Accounts payable 2. Bank service charge Light and water Accounts receivable Cash in bank 1,405,000 2,500,000 150,000 45,000 2,695,000 4,100,000 5,000 245,000 220,000 470,000 3,630,000 5,630,000 —750,000 6,380,000 1,100,000 1,650,000 3,630,000 2,695,000 150,000 45,000 5,000 245,000 220,000 470,000Problem 8-6 a. Balance per book - April 30 Credit memo for note collected Outstanding checks: No. 1331 1332 1334 1335 Total Less: Bank service charge NSF check Undeposited collections Balance per bank - April 30 b. Adjusting entries 1. Cash in bank Note receivable 2. Bank service charge Accounts receivable Cash in bank 30,000 c. Balance per book - April 30 CM for note collected Bank service charge NSF check Adjusted cash in bank 1,130,000 Problem 8-7 a. Balance per bank Add: Undeposited collections NSF check DM for safety deposit Unrecorded check Total Less: Checks outstanding Overstatement of creditor’s check Understatement of customer's check Balance per book b. Adju: ing entries: 1, Cash in bank Accounts payable Accounts receivable 2. Accounts receivable Bank service charge Accounts payable Cash in bank 1,100,000 60,000 40,000 30,000 60,000 10,000 5,000 25,000 270,000 300,000 1,000,000 60,000 60,000 5,000 25,000 1,100,000 60,000 ¢ 5,000) (25,000) 3,500,000 550,000 50,000 5,000 125,000 730,000 4,230,000 650,000 270,000 180,000 1,100,000 3,130,000 450,000 270,000 180,000 50,000 5,000 125,000 180,000c. Balance per book 3,130,000 Overstatement of creditor's check 270,000 Understatement of customer's check = 180,000 Total 3,580,000 Less: NSF check 50,000 DM for safety box 5,000 Unrecorded check 125,000 180,000 Adjusted book balance 3,400,000 Problem 8-8 Balance per book 2,700,000 Add: Proceeds of bank loan 940,000 Note collected by bank 435,000 —_1,375,000 Total 4,075,000 Less: Service charge 10,000 Customer's check charged back 50,000 -60,000 Adjusted book balance 4,015,000 Balance per bank 4,000,000 Add: Deposit in transit 475,000 Incorrect deposit 90,000 Erroneous bank charge 150,000 Erroneous debit memo 200,000 =__915,000 Total 4,915,000 Less: Outstanding checks 600,000 Erroneous bank credit 300,000 900,000 Adjusted bank balance 4,015,000Adjusting entries: 1. Cash in bank Bank service charge Interest expense (60,000 x 1/6) Prepaid interest expense Loan payable (940,000/94%) Note receivable 400,000 Interest income 2. Bank service charge Accounts receivable Cash in bank Problem 8-9 Balance per book Add: Proceeds of bank loan Total Less: Understatement of check in payment of account (200,000 - 20,000) Petty cash fund 190,000 Adjusted book balance Balance per bank Add: Undeposited collections Erroneous bank charge Deposit omitted from bank statement 500,000 Total Less: Erroneous bank credit Outstanding checks 674,000 Adjusted bank balance Adjusting entry Cash in bank Interest expense (84,000 x 1/12) Prepaid interest expense Accounts payable Petty cash fund Supplies Transportation Postage Loan payable (516,000/86%) Problem 8-10 1,375,000 5,000 10,000 50,000 1,000,000 40,000 10,000 50,000 60,000 5,000,000 516,000 5,516,000 180,000 10,000 __ 5,326,000 5,500,000 300,000 50,000 150,000 _ 6,000,000 130,000 544,000 5,326,000 326,000 7,000 77,000 180,000 4,000 2,000 3,000 1,000 600,000Balance per book Add: Overstatement of check number 765 Check number 555 stopped for payment Total Less: Service charge NSF check Adjusted book balance Balance per bank Add: Undeposited collections 275,000 Total Less: Outstanding checks: Number 761 762 763 764 765 Adjusted bank balance Adjusting entries 1. Cash in bank Accounts payable Miscellaneous income 10,000 2. Bank service charge Accounts receivable Cash in bank 3. Receivable from cashier Accounts receivable Sales discounts 10,000 Problem 8-11 Balance per book Service charge 10,000) Debit memo for printed checks Proceeds of bank loan 570,000 Proceeds of customer's note 810,000 NSF check Adjusted book balance Balance per bank Outstanding checks Deposit in transit 500,000 Bank error in recording check 20,000 10,000 5,000 85,000 55,000 40,000 25,000 65,000 30,000 30,000 5,000 85,000 40,000 1,300,000 30,000 1,330,000 90,000 1,240,000 1,200,000 1,475,000 235,000 1,240,000 20,000 90,000 30,000 1,719,000 ( (12,000) (77,000) 000,000 3,195,000 ( 685,000) (90,000)Stolen check deducted by bank in error 80,000 Adjusted bank balance 1. Cash in bank Interest expense Loan payable Note receivable Interest income 10,000 2. Service charge (10,000 + 12,000) Accounts receivable Cash in bank Problem 8-12 Answer A Balance per bank Deposit in transit 325,000 Total Outstanding checks Adjusted bank balance Problem 8-13 Answer D Per bank statement Deposit in transit 520,000 Outstanding checks Bank error 40,000) Adjusted bank balance Problem 8-14 Answer A Balance per book Bank charges Customer note collected by bank 1,500,000 Interest on customer note 60,000 NSF customer check Depositor’s note charged to account (1,000,000) Adjusted book balance Problem 8-15 Answer B Balance per bank Add: Deposit in transit Total 3,000,000 1,380,000 30,000 600,000 800,000 22,000 77,000 99,000 1,805,000 2,130,000 (275,000) 1,855,000 3,800,000 ( 675,000) ( 3,605,000 4,000,000 (10,000) ( 250,000) 4,300,000 2,000,000 —200,000 2,200,000