1.

Accounts Cash Sales Net

Date Receivable Sales Discoun Cash
t
1-Jun Cash 800 800
Sales
10-Jun ba 3200 64 3136
15-Jun bo 6000 120 5880
20-Jun be 4800 96 4664
20-Jun Cash 2400 2400
Sales
25-Jun bu 10800 216 1050
4
26-Jun bo 4000 4000
26-Jun be 4000 240 1168
0
30-Jun bo 12000 3600
30-Jun ba 3600 800
45200 3200 936 4746
4

The Following are the company's accounts receivable subsidiary

ledgers. All the debits represent sales. The credit terms are 2/10,
n/30.

ba bo
15-
3-Jun 3200 10-Jun 3200 2-Jun 6000 Jun 6000
26-
4-Jun 4800 30-Jun 4800 9-Jun 4000 Jun 4000
15- 30-
Jun 3600 Jun 3600

bu be
25- 1080 15- 20-
2-Jun 6000 Jun 0 Jun 4800 Jun 4800
16- 1200 26-
10-Jun 4800 Jun 0 Jun 12000
 1. How much is the correct cash receipts balance?
Solution

1. Cash Receipts per

book 47464
Under statement of Cash
receipts by:
Recording Sales discount for collections made
beyond the discount period:
15-Jun 120
25-Jun 216 336
Overfooting the sales discount
column
(936-736) 200
Corrected Cash
receipts 48000

2.

Outstanding Checks, june 30 25000

Customers NSF Check recorded in july but returned in june. 5000
Service Charges made by the bank in june and recorded in
july 500
190,20
Cash disbursements as of july 30 0
Checks and Charges from bank statement for december
including a july service charge of 680 and NSF checks of
15000 196000

How much is the Outstanding checks as of july,31?

Solution:

Bank 19600
Disbursement 0
OC,jun -
e 25000
OC,jul 29,38 (Squeez
y 0 e)
20038
0
 book 19020
disbursement 0
DM,ju
ne -5000
DM,jul
y 680
DM,jul
y 15000
DM,ju
ne -500
20038
0

3.

Outstanding Checks, june 30 25000

Customers NSF Check not yet recorded in july but returned
in june. 5000
Service Charges made by the bank in june and not yet
recorded in july 500
190,20
Cash disbursements as of july 30 0
Checks and Charges from bank statement for december
including a july service charge of 680 and NSF checks of
15000 196000

How much is the Outstanding checks as of july,31?

Solution:

bank 19600
Disbursement 0
OC,ju -
ne 25000
OC, 34,88 (Squeez
july 0 e)
20588
0

book 19020
disbursement 0

DM,jul
y 680
DM,jul 15000
y
The cash receipt and cash payments of GAINZ company for april 2016 are
20588 as follows
0
Cash Receipts Cash Payment

Date Cash Debit Check No. Cash Credit

2-Apr 208700 4113 44550

8 20350 4114 7350
10 27950 4115 96500 4.
16 109350 4116 33200
22 92700CASH 4117 73600
29 53000 4118 50000
Date 30 Item Ref.
16850 Debit Credit 4119
Balance 31600
total 528900 4120 83750
1- Balance 95550
4121 5000
Apr 4122 120650
30 CR 6 Total
528900 624450 546200
30 CP 546200 78250
11
The Cash account of Liezel Company shows the following information at
April 30, 2016:

Liezel Company received the following bank statement

on April 30, 2016:

Bank Statement for April 2016

Beginning Balance 95550
Deposits and other
Credits:
1- 16300 EF
Apr T
4 208700
 9 20350
12 27950
17 109350
22 68400 BC
23 92700 543750
Checks and other
Deposits:
7- 44550
Apr
13 69500
14 45150 US
15 7350
18 33200
21 10950 EF
T
26 73600
30 50000
30 1000 SC (335300.0
0)
Ending Balance: 304000

Explanation:
EFT electronic fund
transfer
US unauthorized
signature
BC bank
collection
SC service
charge

Additional data for the bank reconciliation

include the ff:

a. The EFT deposit was a receipt of monthly rent. The

EFT debit was a monthly insurance payment.

b. The unauthorized signature check was received

from Lester Soon.

c. The 68400 bank collection of a note receivable on

April 22 included 9250 interest revenue.
 d. The correct amount of check number 4115 , a
payment on account, is 69500. (Liezel's accountant
mistakenly recorded the check for 69500.

How much is the correct cash balance as of April 30?

Book Bank
Unadjusted Balance, April
30 78250 304000
deposit in Transit 69850
Outstanding Checks -241000
Error in Check
4115(96,500-69500) 27000
EFT-Rent 16300
Bank Collection 68400
Unauthorized signature
Check -45150
EFT- Insurance -10950
Service Charge -1000
Adjusted Balance, April 30 132850 132850

5. The auditor of Unova Company is examining the composition of the cash and cash
equivalent line item on the financial statement prepared by the company’s accountant.
The following items are considered:

1. Unova Company has maintained a cash balance of 80,000 at all time with Davao
Bank to ensure future credibility.
2. Savings account and Current account amounting to 800,000 and 1,100,00 are
currently held at the Davao Bank.
3. Undeposited curreny and coins amounting to 11,550
4. Two certificate of deposit, each has an amount of 575,000. Both are purchased 70-
days before maturity.
5. Unova received a check amounting to 180,000 dated February 28, 2017.
6. The company has a commercial paper due in 120 days at 3,000,000
7. On August 15, 2016, the company acquired marketable shares to be held as
“trading” at the amount of 30,000. Fair value at the year-end at 20,000.
8. Travel advances of 50,000.

1. How much is the Cash?

2. How much is the Cash Equivalent?

Solution:

1. Saving account – Davao Bank 800,000

 Checking Account – Davao Bank 1,100,000
Undeposited currency and coins 11,250
TOTAL CASH 1,911,250

2. Two certificates of deposit 1,150,000

(575,000 x 2)
TOTAL CASH EQUIVALENT 1,150,000

6. Hoenn Company is under the audit of Ruby audit firm. Part of the audit is to check the
checkbook of Hoenn Company to look if the cash and cash equivalent of Hoenn in its
financial stamen is stated correctly. The checkbook balance as at November 31, 2016,
end of fiscal year, was 120,000. The following items are not recorded but held by the
accounts receivable staffs in safe as of the date of audit.

Amount Description
65,000 Check drawn on Hoenn account,
payable to the supplier, dated
November 25, but not yet mailed to
the payee as of November 30. The
check has not been recorded on the
checkbook.
34,000 Check payable to Hoenn company,
dated November 3, 2016 for the
sale of merchandise to Customer
Misty, terms FOB Shipping point,
shipped at November 29 and
currently in transit. Check not
included in the line item cash and
cash equivalent.
10,000 Check from a customer, marked by
the bank as “DAUD”. The return of
the Check was properly recorded.

Cash and cash equivalent on the unaudited statement of financial position of Hoenn
Company as at November 30, 2016 is 354,000 which includes the checkbook balance
above.

The amount to be shown as Cash and cash equivalent on the statement of

financial position of Hoenn Company as at November 30, 2016 is

Solution:

Cash and cash equivalent on the unaudited statement of financial position

120,000
 Check payable to Hoenn by Customer Misty 34,000
CASH AND CASH EQUIVALENT 154,000

7. Upon examination of the petty cash fund of Jotho Company on January 5, 2016
11:00 am, the audit found the following items on the petty cash drawer:

a. Total Bills and coins - 7,567

b. Certified check of the general manager Dated December 1, 2015 - 1,500
c. An envelope containing contributions of employees for donation to victims of
recent typhoon has amount written on envelope as 5,000 but the bills and coins
inside only amounts to 3,800.
d. Unused postage stamp – 550
e. Check payable to the petty cash custodian, representing cash to replenish the
PCF – 4,500
f. Petty cash vouchers not yet replenished
a. PCV # 007 Postage stamps 600 (Dated: January 4, 2016)
b. PCV # 008 Supplies 450 (Dated: December 21, 2015)
c. PCV # 009 Transportation 300 (Dated: December 30, 2015)
It was noted by the auditor that there is a shortage on the petty cash fund in the
amount of 4,285. The shortage will be charge as receivable from petty cash custodian.

1. How much is the adjusted Petty cash balance as of December 31, 2015?
2. How much is the established amount of PCF by Jotho Company?
3. How much is the net Adjustment on the PCF?

Solution:

Count I (composition: Bills and coins, Employees’ good check and replenishment
check)
Bills and coins 7,565
Certified check of the general manager 1,500
Replenishment Check 4,500
Commingled cash from the opened envelop
(5,000 – 3,800) (1,200)
PCV # 007 (Dated: January 4, 2016) 600
ADJUSTED PETTY CASH FUND BALANCE 12,965 (1)

Count II (composition: Supporting documents representing valid disbursement

from PCF)

PCV # 008 (Dated: December 21, 2015) 450

PCV # 009 (Dated: December 30, 2015) 300
TOTAL 750

Count I 12,965
Count II 750
 Total 13,715
Established PCF balance (SQUEEZE) (18,000) (2)
Shortage 4,285

Established PCF balance 18,000

Adjusted PCF balance (12,965)
Net Adjustment on the PCF 5,035 Debit (3)

8. You are auditing general cash for Pichu Company for the fiscal year ended July 31,
2014. The client has not prepared the July 31 bank reconciliation. After a brief
discussion with the owner you agree to prepare the reconciliation, with assistance from
one of the Pichu Company’s clerk. You obtain the following information:

General ledger Bank statement

Beginning balance 41,110 57,530
Deposits 250,560
Cash receipts journal 254,560
Checks cleared (236,150)
Cash Disbursement journal (218,110)
July bank service charge (870)
Note paid directly (61,000)
NSF check (3,110)
Ending balance 82,560 6,960

June 30 Bank reconciliation

Information from General ledger and bank statement

Balance per bank 57,530

Deposit in Transit 6,000
Outstanding checks (17,420)
Balance per books 46,110

Additional information:
a. Checks clearing that were outstanding on June 30 totaled 16,920.
b. Checks clearing that were recorded in the July disbursement journal totaled
204,670.
c. A check for 10,600 cleared in the bank, but had not been recorded in the cash
disbursement journal. It was for an acquisition of inventory. Mew used the periodic
inventory method.
d. A check for 3,960 was charged to Mew Company but had been written on different
company’s bank account.
e. Deposits included 6,000 from June and 244,560 for July.
f. The bank charge Mew Company’s account for a NSF check totaling 3,110. The
credit manager concluded that the customer intentionally closed its account and
the owner left the city. The check was turned over to a collection agency.
g. A note for 58,000, plus interest, was paid directly to the bank under an
arrangement signed 4 months ago. The note payable was recorded at 58,000 on
mew company’s books.
 1. How much is the outstanding check on July 31?
2. How much is the deposit in transit on July 31?
3. The adjusted cash balance on July 31 is

Solution:
1. Outstanding checks, June 30 17,420
Checks issued in July
Cash disbursement journal 218,110
Unrecorded check 10,600 228,710
Checks paid in bank in July
236,150
Erroneous check charge by bank (3,960) (232,190)
OUTSTANDING CHECK, JULY 31 13,940

2. Deposit in Transit, June 30 6,000

July deposit per cash receipts journal 254,560
Deposit credited by the bank in July (250,560)
DEPOSIT IN TRANSIT, JULY 31 10,000

3. Book Bank
Unadjusted balances 82,560 6,960
Outstanding checks (solution 1) (13,940)
Deposit in Transit (solution 2) 10,000
Bank service charge (870)
Unrecorded check (10,600)
Check erroneously charge to Pichu 3,960
NSF check (3,110)
Note payable (58,000 + 3,000) (61,000)
Adjusted Balances 6,980 6,980

9. The auditor of Celebi Company gathered the following information:

a) The March 31 bank statement balance include bank service charge of 2,000.
b) The March 31 cash balance in the Books was 244,500.
c) Undeposited receipsy were 36,000 while outstanding checks (all not cleared) were
63,000.
d) The bank statement shows a bank service charge amounting to 3,000.
e) The April 30 cash balance in the books was 319,750, which recognizes 482,750 for
April receipts and 405,500 for checks written in April. In transit to the bank were
receipts of 28,750. Check of 15,000 written prior to April and checks of 60,500
written in April had not yet cleared by the bank.

1. What is the total book disbursement for April?

2. What is the March 31 bank balance?
3. What is the total bank receipts in April?
4. What is the total bank disbursement in April?
 5. What is the bank balance on April 30?

Solution:
1. Checks written during April 405,500
November bank service charge recorded on the
Company book in April 2,000
Total Book disbursement 407,500

Balance April receipts April Balance April

March 31 Disbursemen 30
t
Balance per 244,500 482,750 407,500 319,750
books
Undeposited
receipts:
March 31 (36,000) 36,000
April 30 (28.750) (28,750)
Oustanding
checks:
March 31 63,000 63,000
April 30 (75,500) 75,500
Bank service
charge:
March 31 (2,000) (2,000)
April 30 3,000 (3,000)
Balance per 269,500 (2) 490,000 (3) 396,000 (4) 363,500 (5)
bank
10 . The bookkeeper-cashier of the Lugia absconded on the evening of July 16, 2016,
apparently with a large portion of the company’s cash. He had taken with him certain
accounting record, including the cahs journal and the general ledger. You are called upon
to look if shortages are existing on which the missing employee is accountable for.

You obtained the following information from the available records.

Balances at the close of business, July 16, 2016:

Accounts receivable 442,550

Accounts payable 207,300
Cash in Bank, less checks outstanding 98,830

Transactions, January 1 to July 16, 2016:

Sales, per receivable clerk 5,876,170

Cash sales none
Sales allowance in customer’s account 18,330
Cash purchase of furniture, per dealer’s invoice 3,000
Total merchandise purchases 3,615,260
Cash dividends declared, 50,000 (of which 10,000 remains unpaid) 1,865,830

A check for 100,000 had been cashed by the bookkeeper shortly before his departure.
Although the signature on the check had been obviously forged, it was paid by the bank
and retuned with other canceled checks.

Lugia Company
Statement of Financial Position
December 31, 2015

Assets

Cash 32,670
Accounts receivable 226,230
Inventory (at cost) 440,350
Furniture 74,560
Accumulated depreciation (31,800) 42,760
Total assets 742,010

Liabilities and Shareholders’ equity

Accounts payable 114,720

Share capital 500,000
Retained earnings 127,290
Total Liabilities and Shareholders’ equity 742,010

1. What is the total amount paid for merchandise purchases?

 2. What is the cashier’s accountability (correct cash balance before
shortage) on July 16, 2016?
3. What is the amount of cash shortage chargeable against the cashier?

Solution:
1. Accounts payable, December 31, 2015 114,720
Purchases 3,615,260
Accounts payable, July 16, 2016 (207,300)
Payment for merchandise purchases 3,522,680

2. Cash Balance, December 31, 2015 32,670

Collections 5,641,520
Disbursement (5,431,510)
Cash Balance, July 16, 2016 242,680

3. Cash accountability (solution 2) 242,680

Cash accounted (98,830)
Total shortage 143,850
Shortage chargeable against the bank (100,000)
Shortage chargeable against the cahier 43,850
 CORRECTION OF ERROR

In the Past, Bea5tmode Company has depreciated its computer hardware using
the straight line method. The computer hardware has a 0% salvage value and an
estimated usefil life pf 5 years. AS a resilt of the rapid advancement in information
technology, management of the company determined that it receives most of the
benefits from its computer facilities in the first few years of ownership. Hence, as
of January 1, 2016 the company proposes changing tto the sum of the years digits
method for depreciating its computer hardware. The following computer purchases
were made by the company at the beginning of each year.

2013 90000
2014 50000
2015 60000

1. How much depreciation expense that should be recognized for the years
2013,2014,2015?

Solution :

2013 acquisition:
Cost: 90000
Less: Accum.
Depreciation, Dec. 31
2015 (16,200 x 3) 48600
Book Value: Jan 1, 2016 41400
Less: Salvage Value (10%
x 90,000) 9000
Remaining Depreciable
Cost 32400
2160
SYD RATE x 2/3 0

2014 acquisition:
Cost: 50000
Less: Accum.
Depreciation, Dec. 31
2015 (9000 x 2) 18000
Book Value: Jan 1, 2016 32000
Less: Salvage Value (10%
x 90,000) 5000
Remaining Depreciable
Cost 27000
SYD RATE x 3/6 1350
 0

2015 acquisition:
Cost: 60000
Less: Accum.
Depreciation, Dec. 31
2015 10800
Book Value: Jan 1,
2016 49200
Less: Salvage Value
(10% x 60,000) 6000
Remaining
Depreciable Cost 43200
SYD RATE x 4/10 17280
Total Depreciation 52380

2. The audited income statement of GAINZ BRUH, Co. shows a net income of 175000 for the
year ended December 31, 2016. Adjustments were made for the following errors:
a. December 31, 2015, inventory overstated by 22500
b. December 31, 2016, inventory was understated by 37500

What is the adjusted net income for the year ended Dec, 31 2016?

Solution:

Unadjusted net 1150

income(squeeze) 00
December 31,2015 - inventory
overstated 22500
December 31,2016 - inventory
understated 37500
17500
Adjusted Net income 0

3. The audited income statement of GAINZ BRUH, Co. shows a net income of 175000 for the
year ended December 31, 2016. Adjustments were made for the following errors:
a. December 31, 2015, inventory understated by 22500
b. December 31, 2016, inventory was overrstated by 37500

What is the adjusted net income for the year ended Dec, 31 2016?

Solution:

Unadjusted net 2350

income(squeeze) 00
 December 31,2015 - inventory (2250
overstated 0)
December 31,2016 - inventory (3750
understated 0)
17500
Adjusted Net income 0

4.