CASH AND CASH EQUIVALENTS

PROBLEM 1.

The statement of financial position of Kwarta Company shows cash of 330,820. The following items
were found to comprise this total amount:

Checking account in Metrobank (outstanding checks as of 105,200

Year-end totalled 15,200)
Savings account is Far East bank 30,800
Petty cash fund (including expense receipts for 250) 1,500
Cash on hand (undeposited sales receipts) 4,200
Sinking fund cash 35,000
Cash in foreign bank (in equivalent pesos) 65,000
Customers check on hand
Traveller’s check 14,000
Manager’s check 23,120
Short term treasury bills 52,000

What is the correct amount of cash?

PROBLEM 2.
Green Company’s general ledger showed a balance of 2,205,600 in its cash account on December 31,
2019. Included in this balance are the following items:

DAIF checks returned by bank 20,000

750,000
Saving account 0
IOUs 1,200
Postage stamps 600
Bank draft 10,000
Cash on hand 30,000
500,000
Cash sinking fund 0
Customer’s checks dated January 5,400
2019
Travel advances 4,000
Travel’s checks 8,000

What is the correct balance of cash?

PROBLEM 3.
Jennifer incorporated established a petty cash fund of 5,000 for incidental expenses on June 1, 2019. At
the end of the month, the account of cash on hand indicated that 670.40 remained in the fund. A review
of the petty cash vouchers disclosed the following expenses had been incurred during the month:

Office supplies 341.60

Transportation 1,321.40
Postage 780
 Miscellaneous 837.60
Representation 1,000
1. What is the amount of cash shortage?
2. Prepare the adjusting entry for the end of the month.

PROBLEM 4.
In your cash account of the petty cash fund of Canyon Company as of July 4, 2012, you found the
following composition of its petty cash fund:

Bills and coins accounted 2,450

Approved and signed petty cash vouchers
Dated June 2019 3,300
Dated July 1-4, 2019 800
IOU from Joe Santos, an employee 1,400
A check drawn by Juvy Victoria, an employee, dated
July 15, 2012 2,000

The petty cash fund has an imprest balance of 10,000. The company’s reporting period ends on June 30.

1. What is the correct balance of petty cash fund?

2. How much is the cash shortage or average?
3. Prepare the adjusting entry for June 2019

PROBLEM 5.
In reconciling the book and bank balance of the cash account of Perlas Corporation, you discover the
following for the month of December 2019:

Balance per bank statement 400,000

Balance per book 387,000
Receipts not yet deposited 100,000
Bank service charge 1,000
Customer’s check returned by bank marked DAIF 22,000
A paid check for 40,000 was recorded in the cash book as 4,000.

Assuming no other errors were noted, what is the amount of the outstanding checks at December 31,
2019?

PROBLEM 6.
The books of Manila’s Service, Inc. disclosed a cash balance of 687,570 on December 31, 2019. The bank
statement as of December 31 showed a balance of 547,800. Additional information that might be useful
in reconciling the two balances follows:

(a) Check number 748 for 30,000 was originally recorded on the book as 45,000.
(b) A customer’s note dated September 25 was discounted on October 12. The note was dishonoured on
December 29 (maturity date). The bank charged Manila’s account for 142,650, including a protest fee of
2,650.
(c) The deposit of December 24 was recorded on the books as 28,950, but it was actually a deposit of
27,000.
(d) Outstanding checks totalled 98,850 as of December 31,
(e) There were bank service charges for December of 2,100 not yet recorded on the books.
(f) Manila’s account had been charged on December 26 for a customer’s NSF check for 12,960.
(g) Manila’s property deposited 6,000 on December 3 that was not recorded by the bank.
(h) Receipts of December 31 for 134,250 were recorded by the bank on January 2.
(i) A bank memo stated that a customer’s note for 45,000 and interest of 1,650 had been collected on
December 27, and the bank charged a 360 collection fee.

Based on the above and the result of your audit, determine the following:
1. Adjusted cash in bank balance
2. Net adjustment to cash as December 31, 2019

PROBLEM 7.
The accountant for the Muntinlupa Company assembled the following data:

June 30 July 31
Cash account balance 15,822 39,745
Bank statement balance 107,082 137,817
Deposits in transit 8,201 12,880
Outstanding checks 27,718 30,112
Bank service charge 72 60
Customer’s check deposited July 10, returned by
bank on July 16 marked NSF, and redeposited
immediately, no entry made on books for
return or redeposit 8,250
Collection by bank of company’s notes receivable 71,815 80,900

The bank statement and the company’s cash records show these totals:
Disbursements in July per bank statement 218,373
Cash receipts in July per Muntinlupa’s books 236,452

Based on the application of the necessary audit procedures and appreciation of the above data, you are
to provide the answers to the following:
1. How much is the adjusted cash balance as of June 30?
2. How much is the adjusted bank receipts for July?
3. How much is the adjusted book disbursement for July?
4. How much is the adjusted cash balance as of July 31?