MEXICO COMPANY

You have completed your examination of the cash on hand and in bank UL
financial stateinen ts for the year ejided December 3 1, 1 and noted the following:

1. The Company maintains a general bank account at the Metro Bank and a imprest payroll bank account
at Citizens Bank. All checks are signed by the Company president Emiliano Zapata.

2. Data and reconciliation prepared by Pancho Villa, the Company bookkeeper, at November 30, 2015
indicated that the payroll account had a P1,000 general ledger and bank balance with no-in transit or
outstanding items, and the general bank account had a P12,405 general ledger balance with checks
outstanding aggregating P918 (No. 1202 for P575 and No. 1205 for P343) and undeposited collection
of P492.

3. Your surprise cash count on Tuesday, January 2, 2016 revealed customer’s checks totalling P540 and a
Metro Bank deposit slip for that amount dated December 29, 2015 were in the Company’s safe and that
no cash was in transit to the bank at that time, Your examination of the general account check book
revealed check No. 1216 to be the first unused check.

4. Company general ledger accounts are prepared on a posting machine and all transactions are posted in
chronological sequence. The ledger card for the general bank account is reproduced below.

5. The December statements from both banks were delivered unopened to you. The Citizens Bank
statement contained deposits for P1,675; Pl,706; P1,845; and P2,597 and 72 paid checks totalling
P7,823. The Metro Bank statement is also reproduced below.

6. Cut off statements were acquired by you personally from both banks on January 8, 2016 and Metro
Bank statement is reproduced also below.

7. You determine that the bank statements are correct except that Metro Bank incorrectly charged a
returned check on December 21 but credited on the account the same day.

8. The P362 check charge by the Metro Bank on December 28 was check No. 2000 drawn payable to
Mexico Company and endorsed “Mexico Company by Pancho Villa”. Your investigation showed that
the amount credited by the Metro Bank on December 29 was an unauthorized transfer from Citizens
Bank Payroll Account to Metro Bank General Account which was not recorded, The check was charged
to Mexico Company on January 2, 2016 on the cut off statement received by you from the Citizens
Bank.

9. Drafts charged against Metro Bank account were for trade acceptance which were signed by Emiliano
Zapata and issued to a supplier.

10. On December 28, a 60-day, 6%, P1,000 note was collected by Metro Bank for Mexico for a P4
collection fee.

11. The P12, debit memo from Metro Bank was a charge for printed checks.

12. Check No. 1213 was issued to replace check No. 1205 when the latter was reported not received by a
vendor. Because of the delay in paying this account, Mexico Company was no longer entitled to the 2
per cent cash discount it had taken in preparing the original check.

Required:

Prepare proof of’ cash that will end up with adjusted balances.