ANSWER KEY QUIZ 1

True or False - False are 2, 3, 6 and 7.

Multiple Choice - B C B C C C D C B A

Problem 1 - LIBERTAD CORPORATION

2009 2010
Unadjusted net income 550,000 700,000
Adjustments:
2009 - Ending inventory (O) (29,000) 29,000
2010 - Ending inventory (O) (33,000)
Depreciation (U) (15,000) (15,000)
2009 - Com receivable (U) 22,000 (22,000)
2010 - Com receivable (U) 18,000
Purchases (U) (60,000) 60,000
Adjusted net income 468,000 737,000
1 2

Problem 2 - BUENDIA Company

2009 2010
2009 - Ending inventory (O) - -
2010 - Ending inventory (U) (10,000)
2009 - Depreciation (O) -
2010 - Depreciation (U) 8,000
Effect on net income - (2,000)
3

2009 2010
2009 - Ending inventory (O) 30,000 (30,000)
2010 - Ending inventory (U) (10,000)
2009 - Depreciation (O) (25,000)
2010 - Depreciation (U) 8,000
Effect on retained earnings 5,000 (32,000) (27,000)
4

Effect on working capital 2011 no effect 5

Problem 3 - VITO CRUZ Company

2009 2010
2009 - Ending inventory (U) (20,000) 20,000
2010 - Ending inventory (O) 18,000
Depreciation (U) 4,000 -
2009 - Insurance (O) (10,000) 10,000
2010 - Insurance (U) (5,000)
Sale of machinery (U) (32,000)
Effect on net income (26,000) 11,000
6
 2009 2010
2009 - Ending inventory (U)
2010 - Ending inventory (O) 18,000
Depreciation (U)
2009 - Insurance (O)
2010 - Insurance (U) (5,000)
Sale of machinery (U) (32,000)
Effect on working capital - (19,000)
7

2009 2010
2009 - Ending inventory (U) (20,000) 20,000
2010 - Ending inventory (O) 18,000
Depreciation (U) 4,000 -
2009 - Insurance (O) (10,000) 10,000
2010 - Insurance (U) (5,000)
Sale of machinery (U) (32,000)
Effect on retained earnings (26,000) 11,000 (15,000)
8
Problem 4 - Interbank transfers
Check No. 115256 because the check was recorded as disbursement of Bank A on December
9 31 but recorded as receipts of Bank B on January 2.
Check No. 115267 because this check was recorded as receipts of Dec. 31 per books but
10 recorded per bank as receipts on Jan. 2
Check No. 115234 because this check was recorded as disbursement per books on Dec. 30
11 and recorded by bank as disbursement on Dec. 31
Check No. 115278 because this check was recorded by Bank B as receipts of Dec. 31 but it
was deducted only from Bank A on Jan. 2 thereby resulting to overstatement of cash on
12 December 31.

Problem 5 - QUIRINO Company

13 Deposit in transit = (60,000 +2,545,600 - 2,505,600) = P100,000**
14 Outstanding checks = 174,200 + (2,181,100 + 106,000) – (2,361,500 – 39,600) = 139,400*

QUIRINO Company
Bank Reconciliation Statement
7/31/210
Per bank Per books
Unadjusted balances, July 31 69,600 825,600
Outstanding checks, July 31* (139,400)
Checks issued by the company and cleared the bank in
July was not recorded in the CD Journal (106,000)
Check of another company incorrectly charged by bank 39,600
Deposits in transit, July 31** 100,000
Customer’s NSF check returned by bank (31,100)
A note payable to the bank was charged directly by (610,000)
 July bank service charge (8,700)
Adjusted balances, July 31 69,800 69,800
17
Adjusting Journal Entries as of July 31, 2010
15 Inventory or Purchases 106,000
Cash 106,000

16 Accounts Receivable 31,100

Cash 31,100

Problem 6 - PEDRO GIL Company

Coins and currencies on hand 28,000

Money orders 26,500
18 Cash on hand 54,500

Checking account balance - PSBank 950,000

Funds on deposit at Equitable PCIBank 495,000
Undelivered checks 48,000
Unrestricted deposits in Z Foreign Bank 160,000
Checks received from customers 90,000
NSF checks (24,000)
Stale checks (3,800)
19 Cash in bank 1,715,200

Petty cash fund 6,500

Cash on hand 54,500
Cash in bank 1,715,200
Treasury bills 95,000
Money market savings 150,000
20 Cash and cash equivalents 2,021,200

POINTS
UNITED NATIONS COMPANY 1
Cash Count Sheet
3-Jan-10

Paper bills 4,590.00

Coins 125.00 4,715.00 1

PCV 2010 Advances 500.00

2010 Postage 100.00
2010 Freight - purchases 394.20
2010 Freight - steel cabinet 741.10
2011 Freight - purchases 244.70 1,980.00

Checks2010 FM - employee 3,000.00

2010 GV - employee 500.00
2010 ABT - customer 1,281.70
2011 ABC - customer 1,011.30
2011 TY - employee 500.00 6,293.00
IOU 2010 JB - employee 300.00

Total items counted 13,288.00 2

Cashier's accountability:
Imprest fund 10,000.00
Collections 3,293.40

Total accountability 13,293.40 1

Shortage 5.40 2

CERTIFICATION
1
This is to certify that the above fund of P13,288 was counted in my presence by
__________, a representative of ___________, on January 3, 2011 at 9:00 A.M. and
was returned to me intact. There are no other funds in my possession for which I am
accountable to United Nations Company.

(signed by cashier)

1 Various debits 1,735.30 1

PCF 1,735.30

2 Advances to employees 800.00 1

PCF 800.00

3 Due from cashier 5.40 1

PCF 5.40

4 Cash 2,282.10
Sales 2,282.10 1

Imprest balance 10,000.00

1,735.30
800.00
5.40 2,540.70
PCF, as adjusted 7,459.30 1

Proof:
Bills and coins 4,715.00
Checks 6,293.00
2011 PCVs 244.70
Total cash items 11,252.70
Less: Non-fund items 3,293.40
500.00 3,793.40
PCF, as adjusted 7,459.30 2