Audit of Cash and Cash Equivalents

1. In your audit of the cash account of Bobby Company, you obtained

the following balances:
August 31 September 30
a. Balances per bank P14,010 P19,630
b. Balances per books 13,290 18,195
c. Deposits in transit 2,740 3,110
d. Outstanding checks 4,260 3,870
e. Bank collections, not in books 1,200 1,600
f. Bank charges, not in books 950 640
g. Of the outstanding checks on September 30, one check for
P700 was certified at the request of the payee.
h. Receipts for September, per bank statement - P281,070.
i. September disbursements, per cash journal - P274,635.
j. NSF check from customer was charged by the bank on
September 28 and has not been recorded - P800.
k. NSF check returned in August and recorded in September -
P900.
l. NSF check returned and recorded in September - P900.
m. Check of Bobbie Company charged by the bank in error - P2,010.
n. Receipts on September 6 paid out in cash for travel expenses -
P750.
o. Error in recording customer's check on September 20 - P165
instead of P465.
p. Error in disbursements journal for September - P3,250 instead
of P325.

You noted in your audit that the NSF checks returned by the bank
are recorded as a reduction in the cash receipts journal instead of
recording them in the cash disbursements journal, redeposits are
recorded as regular cash receipts.

Required:
 Prepare a four-column reconciliation of receipts, disbursements,
and balances using the adjusted balance method and to submit
adjusting journal entries as of September 30, 2021.

2. The following information is available:

November 30 December 31
Deposit in transit P 10,400 P ?
Outstanding checks 16,014 ?
NSF checks 1,052 1,400
Customers' notes collected by bank 3,000 8,554
Bank service charges 100 130
Erroneous bank debits 1,200 1,800
Erroneous bank credits 2,000 6,000

Book balances ? 332,472

Bank balances 261,120 ?

December transactions: Books Bank

Receipts P302,460 P299,902
Disbursements 222,846 220,196

Required:

a. Prepare a four-column reconciliation that would end at

adjusted balances.
b. Adjusting journal entries as of December 31, 2021.

3. In reconciling the cash in bank account of Solo Company with the

bank statement for the month of July 2021, the following data are
summarized:
 Cash in bank:
Balance, June 30 P1,000,000
Book debits for July including June CM for
note collected, P300,000 4,000,000
Book credits for July including June NSF of
P100,000 and service charge of P4,000 3,600,000

Bank statement for July:

Balance, June 30 P1,650,000
Bank debits for July including service charge
of P1,000 and June outstanding checks of
P854,000 2,500,000
Bank credits for July including CM for bank
loan of P500,000 and June deposit in
transit of P400,000 3,500,000

Required:
Prepare a four-column bank reconciliation showing the
adjusted method.

4. On October 7, 2021, the cash book of Uno Company showed the

following entries:
Receipts Checks
September 30 (Overdraft) P 0 P5,000
October 1 Tuesday 1,200 1,600
2 Wednesday 3,000 2,400
3 Thursday 800 1,200
4 Friday 6,000 3,400
5 Saturday 4,000 2,500

Cash receipts are deposited at the beginning of every Monday,

Wednesday and Friday and in each case includes the receipts of the
preceding two working days. The bank statement data at the close
of October 5 showed:

Balance, September 30 - Overdraft P6,500

Deposits 7,000
Checks (includes all checks issued prior to
October 4 and also a check for P300
belonging to Uni Company erroneously
charged to Uno Company account) 5,800
A check for P256 issued on October 5 had
been cancelled by the company but the
bookkeeper has not made any entry on this.

Required:

a. The book balance as at October 5, 2021

b. The bank balance as at October 5, 2021
c. The undeposited collection as at September 30, 2021
d. The outstanding checks as at September 30, 2021
e. The adjusted book and bank balances as at October 5, 2021
ANSWERS
Cash
on hand PCF BPI C & CE
Unadjusted balances 372,000 10,000 950,000 3,372,000
Customer's NSF check (60,000) (60,000)
Customer's PD check (30,000) (30,000)
Employees' vales (1,600) (1,600)
Unreplenished PCVs (800) (800)
Shortage (900) (900)
Undelivered check 50,000 50,000
Postdated check 86,000 86,000
Restricted for new equipment (500,000)

282,000 6,700 1,086,000 2,914,700