Figure 9.

5 Bank Reconciliation Statement

(Bank Balance to Book Balance Method)

X Company
Bank Reconciliation Statement
December 31, 2020

Balance per bank statement

Book debits not yet credited by the bank (e.g. undeposited
Add:
collections)
Bank debits not yet credited by the company (e.g. service
charges for the month of December, NSF checks returned in
December)
Total
Book credits not yet debiyed by the bank (e.g. outstanding
Less:
checks)
Bank credits not yet debited by the company (e.g. proceeds of
note collected by bank)
Balance per books

Figure 9.6 Bank ReconciliationStatement

(Book Balance to Bank Balance Method

X Company
Bank Reconciliation Statement
December 31, 2020
Balance per books
Book credits not yet debiyed by the bank (e.g. outstanding
Add:
checks)
Bank credits not yet debited by the company (e.g. proceeds of
note collected by bank)
Total
Book debits not yet credited by the bank (e.g. undeposited
Less:
collections)
Bank debits not yet credited by the company (e.g. service
charges for the month of December, NSF checks returned in
December)
Balance per bank

Figure 9.7 Bank Reconciliation Statement

(Adjusted Balance Method)

X Company
 Bank Reconciliation Statement
December 31, 2020

Unadjusted balance per

bank
Book debits not yet credited by the bank (e.g. undeposited
Add:
collections)
Book credits not yet debited by the bank (e.g. ountstanding
Less:
checks)
Adjusted bank balance
Unadjusted balance per
books
Bank credits not yet debited by the company (e.g. proceeds of
Add:
note collected by bank)
Bank debits not yet credited by the company (e.g. bank
Less:
charges)
Adjusted book balance
 P xxx
P xxx

xxx xxx

P xxx
xxx

xxx xxx
P xxx

P xxx
P xxx

xxx xxx
P xxx
xxx

xxx xxx

P xxx
P xxx

xxx

(xxx)
P xxx

xxx

(xxx)
P xxx

Figure 9.8

Date
2019
December 30
2020
January 3

January 4
Kiting
Metrobank Equitable PCI Bank
Description Book Bank Book Bank

Bank transfer not recordd on the

₱100,000.00
books

Record bank transfer on the

₱100,000.00 -₱100,000.00
books
Bank transfer clears bank drawn
-₱100,000.00
on
Figure 9.9 Proof of Cash or Reconciliation of Receipts and Disbursements
(Bank Balance to Book Balance Method)

X Company
Proof of Cash
For the month ended December 31, 2020

Nov. 30 December
Balance Receipts Disbursements
Balance per bank statement P xxx P xxx P xxx
Add (Deduct) Recnciling Items
1. Deposited in transit (received by
the bank in the succeeding month)
November 30 xxx (xxx)
December 31 xxx
2. Outstanding check (paid by the
bank in the succeeding month)
November 30 (xxx) (xxx)
December 31 xxx
3. Bank charges (recorded by the
company in the succeeding month)
November xxx xxx
December (xxx)
4. Notes collected by bank (recorded
by the company in the succeeding
month)
November (xxx) xxx
December (xxx)

5. Check of another company

erroneously credited by the bank
(corrected in the following month)
November xxx (xxx)
December (xxx)
6. Deposit of another company
erroneously credited by the bank
(corrected in the following moth)
 November (xxx) (xxx)
December (xxx)
Balance per books P xxx P xxx P xxx
and Disbursements Figure 9.10 Proof of Cash
(Book Balance to Bank Balance M

X Company
Proof of Cash
For the month ended December 31, 2020

Dec. 31 Nov. 30
Balance Balance
P xxx Balance per books P xxx
Add (Deduct) Recnciling Items
1. Deposited in transit (received by the
bank in the succeeding month)
November 30 (xxx)
xxx December 31
2. Outstanding check (paid by the bank
in the succeeding month)
November 30 xxx
(xxx) December 31
3. Bank charges (recorded by the
company in the succeeding month)
November (xxx)
xxx December

4. Notes collected by bank (recorded by

the company in the succeeding month)

November xxx
December

5. Check of another company

erroneously credited by the bank
(corrected in the following month)
November (xxx)
xxx December
6. Deposit of another company
erroneously credited by the bank
(corrected in the following moth)
 November xxx
(xxx) December
P xxx Balance per bank statement P xxx
Balance to Bank Balance Method)

X Company
roof of Cash
ended December 31, 2020

December Dec. 31
Receipts Disbursements Balance
P xxx P xxx P xxx

xxx
(xxx) (xxx)

xxx
(xxx) xxx

(xxx)
xxx (xxx)

(xxx)
xxx

xxx
xxx (xxx)
 xxx
xxx xxx
P xxx P xxx P xxx
Figure 9.11 Proof of Cash
(Adjusted Balances Method)

X Company
Proof of Cash
For the month ended December 31, 2020

Nov. 30 December
Balance Receipts Disbursements
Unadjusted book balance P xxx P xxx P xxx
Add (Deduct) Adjusments
Proceeds of note collected by bank
(recorded by he company in the
succeeding month)
November 30 xxx (xxx)
December 31 xxx
Bank charges (recorded by the
company in the succeeding month)
November (xxx) (xxx)
December xxx
Adjusted book balance P xxx P xxx P xxx
Unadjusted bank balance P xxx P xxx P xxx
Add (Deduct) Adjusments
Deposit in transit (paid by the bank in
the succeeding month)
November 30 xxx (xxx)
December 31 xxx
Outstanding checks (paid by the bank
in the succeeding month)
November 30 (xxx) (xxx)
December 31 xxx
Check of another company
erroneously credited by the bank
(corrected in the following month)
November xxx (xxx)
December (xxx)
6. Deposit of another company
erroneously credited by the bank
(corrected in the following moth)
November (xxx) (xxx)
December (xxx)
Adjusted bank balance P xxx P xxx P xxx
Dec. 31
Balance
P xxx

xxx

(xxx)
P xxx
P xxx

xxx

(xxx)

xxx
(xxx)
P xxx
Illustrative Audit Case 9.1: Petty Cash Fund and Undeposited Collection

Bills
9 one hundred, 25 fifties, 50 twenties, 120 tens
Coins
₱5.00 4 rolls and 5 loose
1.00 8 rolls and 15 loose
0.25 2 rolls and 2 loose
0.10 3 rolls and 40 loose
0.05 2 rolls

Checks
Maker Date
Rose Manalo, Asst. Manager 12/23/2020
Miss L. Reyes, Cashier 12/26/2020

I.O.U.s
A. David, Janitor 12/20/2020
R. Tirao, Clerk 12/22/2020
Pedro Munar, Bookkepeer 12/24/2020

Petty Cash Vouchers for Replenishment

Payee Date
L. Cruz, Messender 12/19/2020
Rosario & Co. 12/18/2020
Vicory Liner 12/18/2020
Bureau of Posts (stamps) 12/18/2020
A. Vallo, Carpenter 12/20/2020
B. Tello 12/21/2020

Solution: Illustrative Audit Case 9.1

Exhibit 1.1
Requirement (1)

Luzon Glass Company

Cash Count Sheet
January 4, 2020

Denomination Quantity
BILLS ₱100.00 9
50.00 25
20.00 50
 10.00 120
COINS ₱5.00 205
1.00 815
0.25 1002
0.10 1540
0.05 800
TOTAL BILLS AND COINS
CASH ITEMS
Checks for deposit
Date Maker Payee
12/23/19 R. Manalo Luzon Glass Co.
12/26/19 L. Reyes Luzon Glass Co.
Unreplenished vouchers
Date Payee Particulars
12/18/19 Rosario & Co. Supplies
12/18/19 Victory Liner Freight - in
12/18/19 Bureau of Posts Supplies
12/20/19 A. Vallo Repairs
12/21/19 B.Tello Miscellaneous
Advances or IOUs
Date Payee
12/16/19 L. Cruz
12/23/19 A. David
12/22/19 R. Tirao
12/24/19 P. Munar
Total Amount of Fund Per Count
Total Amount of Fund Per Books or Receipts
Petty Cash Fund per ledger
Unclaimed Wages per opened envelopes
Undeposited collections
Cash sales, 1/2/19 ₱8,650.00
Less: Amounted deposited,
7,650.00
1/3/19
Shortage

I certify that the above fund of P9,716.00 was counted in my presence by (name of auditor) ofSantos, Tan
Associates, CPAs on January4,2018 at 9:00am and was returned to me intact.

Prepared by: Reviewed by:

Initial Date Initial
nd and Undeposited Collection

(50 pieces to a roll)

(100 pieces to a roll)
(500 pieces to a roll)
(500 pieces to a roll)
400 pieces to a roll)

Payee Amount
Luzon Glass Co. ₱600.00
Luzon Glass Co. 400.00

₱350.00
$250.00
$150.00

Account Charged Amount

Advances to Employees ₱100.00
Supplies 145.00
Freight - in 182.50
supplies 300.00
Repairs 450.00
Miscellaneous Expense 154.00

mpany
Sheet
020

Amount Total
₱900.00
1,250.00
1,000.00
 1,200.00 ₱4,350.00
₱1,025.00
815.00
250.50
154.00
40.00 2,284.50
₱6,634.50

₱600.00
400.00 1,000.00

₱145.00
182.50
300.00
450.00
154.00 1,231.50

₱100.00
350.00
250.00
150.00 850.00
₱9,716.00

₱9,000.00
580.00

1,000.00 10,580.00
-₱864.00

esence by (name of auditor) ofSantos, Tan and

ed to me intact.

Lina Reyes
LINA REYES
Cashier

Reviewed by:
Date
Requirement (2)
Adjusting Journal Entries - 12/31/2019
1. Supplies expense (P145 + P300) ₱445.00
Freight - in 182.50
Repairs and maintenance 450.00
Miscellaneous expense 154.00
Petty cash fund 1,231.50

2. Advances to employees 850.00

Petty cash fund 850.00

3. Cash in bank 580.00

Salaries payable 580.00

4. Accounts receivable - Cashier 864.00

Petty cash fund 864.00

Requirement (3)
Luzon Glass Company
Petty Cash Fund
December 31, 2019

Balance per ledger

Add (Deduct) Adjustments
AJE (1) To take up unreplenished expenses
(2) To take up advances to employees
(3) To take up shortage per cash count
Net adjustment
Balance s adjusted
Proof:
Bills and coins ₱6,634.50
Checks for deposit 1,000.00
Total cash counted ₱7,634.50
Less: Non-fund items
Unclaimed wages ₱580.00
Undeposited collections 1,000.00 1,580.00
Balance for Petty Cash Fund ₱6,054.50
EXHIBIT 2.1 Illustrates a bank reconciliation based on the foregoing data.
EXHIBIT 2.1 Bank Reconciliation

BULACAN CORPORATION
Bank Reconciliation
June 30, 2019

Balance per bank statement ₱249,223.00

Add: Deposit in transit ₱22,857.40
Checks on hand 6,548.00 29,405.40
Deduct: Outstanding checks
#862 1,923.80
#864 2,943.60
#865 5,265.00 10,132.40
Ajusted cash balance ₱268,496.00

Balance per company records ₱248,758.80

Add: Note collected by bank ₱24,000.00
Interest on note 240.00 24,240.00
Deduct: Bank service charge ₱300.00 ₱272,998.80
NSF check returned 2,762.80
Error in recording check #843 1,440.00 4,502.80
Adjusted cash balance ₱268,496.00

1. Cash 24,240.00
Notes Receivables (note cllected) 24,000.00
Interest Revenue (interest collected) 240.00
2. Miscellaneous Expense (bank service charge) 300.00
Accounts Receivables (NSF check) 2,762.80
Accounts Payable (error) 1,440.00
Cash 4,502.80
₱9,000.00

-1,231.50
-850.00
-864.00
-2,945.50
₱6,054.50
Figure 9.2 Confirmation Form

STANDARD FORM TO CONFIRM ACCOUNT BALANCE INFORMATI

WITH FINANCIAL INSTITUTIONS

ORIGINAL The Seaview Corp

To be mailed to accountant CUSTOMER NA

Financial Eastern Bank and Trust Co. We have provided to our accountants the following information as of the c
Institution's Name Intramuros Manila and loan balances. Please confirm the accuracy of the information, noting
and Address have been left blank, please complete this form by the balances have been
in the appropriate space below.* Although we do not request nor expect y
records, if during the process of completing this confirmation additional in
with you comes to your attention, please include such information below.
our accountants.

1. At the close of business on the date listed above, our records indicated the following deposit balance (s):
ACCOUNT NAME ACCOUNT TO INTEREST RATE
General Account 266-7850 None
Payroll Account 266-7850 None
2. We are directly liable to the financial institution for loans at the close of business on the date listed above as follows:
ACCOUNT NO.
/DESCRIPTION BALANCE DATE DUE

55-8965T ₱4,000,000 6/15/2020

Credit Line 2,000,000.00 3/31/2020

Robert Dizon
(Client Authorized Signature)

The information presented above by the customer is in agreement with our records. Although we have not conducted a comp
loan acounts have come to our attention except as noted below.

Arlene Cabrera
(Financial Institution authorized Signature)

Controller
(Title)

EXCEPTIONS AND/OR COMMENTS

Please return this form directly to our accountants:

Ordinarily, balances are intentionally left blank if they are not available at the time the form is
prepared.
 M ACCOUNT BALANCE INFORMATION
NCIAL INSTITUTIONS

The Seaview Corporation

CUSTOMER NAME

he following information as of the close of business on December 31, 2019 regarding our deposit
accuracy of the information, noting any exceptions to the information provided. If the balances
his form by the balances have been left blank, please complete this form by furnishing the balance
ugh we do not request nor expect you to conduct a comprehensive, detailed search of your
eting this confirmation additional information about other deposit and loan accounts we may have
se include such information below. Please use the enclosed envelope to return the form directly to

posit balance (s):

BALANCE
P 90,000
11,500
date listed above as follows:
DATE THROUGH WHICH INTEREST IS DESCRIPTIVE OF
INTEREST RATE PAID COLLATERAL
5% 12/15/2019 San Miguel Corp.
Shares
6% 12/31/2019

January 6, 2018
Date

ugh we have not conducted a comprehensive, detailed search of our records, no other deposit or

January 31, 2018

(Date)

Cruz & Cortel, CPAs 2775 Ayala Avenue Makati City

Figure 9.3 Cash Count Sheet

Company
Name of Fund
Cash Count Date

Bills Denomination Quantiry Amount Total

₱100.00
50.00
20.00
10.00
Fractional Denomnations ₱5.00
1.00
0.25
0.10
0.05
Total Bills and Fractional Denomination
CASH ITEMS
Checks and PMO's for deposit
Vouchers not yet replenished
Advances or IOU's
Others
Amount of Fund Pe Count
Amount of Fund Per Books or Receipts
Difference, if any

I hereby certify that the above fund of was counted in my presence

by (name of auditor) of on and was returned to me
intact. There are no other funds for which I am accountable for except as
noted below:
Other Funds: (simultaneously counted or physically controlled)

(Signature of Cashier)

Prepared by: Reviewed by:

Initial Date Initial Date

9.4 Adjusted Balance of Petty Cash Fund

X Company
 Petty Cash Fund
12/31/2019

Balance per ledger P xxx

Add (Deduct) Adjusments
AJE (1) to take up enreplenished expenses (xxx)
(2) to take up advances to employees (xxx)
Balance as adjusted P xxx
Figure 13.1 Lead Schedule for Property and Equipment

Marlo, Inc.
Property and Equipment
12.31.20

Description WP# Final Balance

12/31/2016
ASSETS
Land G.1
₱130,000.00
Land Improvements G.2
50,000.00
Buildings G.3
786,000.00
Machinery and Equipment G.4
345,000.00
Autos and Trucks G.5
120,000.00
Office Furniture and Equipment G.6
86,000.00
₱1,517,000.00
ACCUMULTED AND DEPRECIATION AND AMORTIZATION
Land Improvements G.2 ₱20,000.00
Buildings G.3 453,000.00
Machinery and Equipment G.4 126,000.00
Autos and Trucks G.5 65,000.00
Office Furniture and Equipment G.6 43,000.00

Prepared by:
Initial Date

Haven Corpoation
Analysis of Property, Plant, and equipmet, and
Related accumulated Depreciation Accounts
Year ended December 31, 2018
(In P000's)

Depreciation Final Assets

12/31/2017 Additions
Land ₱422,500.00 ₱5,000.00
Buildings 120,000.00 17,500.00
Machinery and equipment 385,000.00 40,400.00
₱927,500.00 ₱62,900.00

Description Final Accumulated Depreciation

 12/31/2017 Additions
Buildings ₱60,000.00 ₱5,150.00
Machinery and equipment 173,250.00 39,220.00
₱233,250.00 ₱44,370.00
 Solution: Illustrative Aud
Adjusting Journal Entrie
rlo, Inc.
and Equipment 1
2.31.20

Additions Disposals Final Balance

12/31/2010

₱60,000.00 ₱30,000.00 ₱160,000.00 2

50,000.00
160,000.00 86,000.00 860,000.00
85,000.00 45,000.00 385,000.00
30,000.00 28,000.00 122,000.00 3
12,000.00 6,000.00 92,000.00
₱347,000.00 ₱195,000.00 ₱1,669,000.00

₱5,000.00 ₱25,000.00 4
40,000.00 ₱72,000.00 421,000.00
35,000.00 42,000.00 119,000.00
24,000.00 25,000.00 64,000.00
17,000.00 3,000.00 57,000.00

Reviewed by: 5
Initial Date

on
d equipmet, and
ation Accounts 7
31, 2018

Assets Per Ledger

Retirements 12/31/2018
₱427,500.00
137,500.00
₱26,000.00 399,400.00
₱26,000.00 ₱927,500.00

cumulated Depreciation Per Ledger

Retirements 12/31/2018
₱651,500.00 8
2,124,700.00
₱277,620.00
Solution: Illustrative Audit Case 13.1
Adjusting Journal Entries 12.31.2018 (P000's)

Prepaid rent
Rent expense
Lease contract payable
Machinery and equipment
To correct April 1, 2018 entry for lease of die casting machine

Accumulated depreciation: Machinery and equipment

Depreciaion expense
To reverse provision for depreciation on leased machine.

Gain on construction of building addition

Buildings
To correct June 30, 2018 entry for addition

Depreciation expense
Accumulated depreciation - building
To correct depreciation on addition
Per audit (16,000/12)x1/2 P667
Per client 350
Additional provision P317

Land improvement
Land improvement
To correct August 13, 2018 entry for paving and fencing parking lot

Depreciation expense
Accumulated depreciation - land
To provide depreciation on land improvement (1/10 x 1/2 x P5,000)

Accumulated depreciation: Machinery and equipment

Loss on sale of machinery and equipment
Machinery and equipment
Depreciaion expense
To correct Sept. 5, 2018 entry for sale of machinery and
depreciation thereon, and to take up loss on disposal as follows:
Cost P48,000
Accumulated Depreciation
Through 2017 P16,800
For 2018 2,400 19,200
Net Book Value P28,800
Proceeds of Sale 26,000
Loss on Sale P 2,800
Land
Building
Depreciation expense
Paid-in capital from donated assets
Accumulated Depreciation: Buildings
To record at appraised value land and building donated to the client
and to take up depreciation on building as Follows: (1/25 x 1/2 x
P400,000)
 1,250.00
3,750.00
35,400.00
40,400.00

2,020.00
2,020.00

1,500.00
1500

317.00
317.00

5,000.00
5,000.00

250.00
250.00

20,300.00
2,800.00
22,000.00
1,100.00

19,200
P28,800
26,000
P 2,800
100,000.00
400,000.00
800.00
500,000.00
8,000.00
Figure 12.2 Securities Count Sheet

X Company
Securities Count Sheet
1.2.2019

Certificate Date Issued in Per Value Number

Number issued Description the name of Per Share of Shares

I certify that the above listed securities were inspected on my presence by on

and same were returned to me intact.

Custodian

Prepared by: Reviewed by:

Initial Date Initial Date
Illustrative Audit Case 12.2: Audit of Trading Securities

Carrying value of Azul investment

Carrying value of Western investment
Income on Income Statement
Azul investment
Western investmen
Other comprehensive income
Azul investment
Western investment

Solution: Illustrative Case 12.2

Requirement 1

1 Investment in Azul Co ###

Cash ###

2 Cash ###
Investment in Azul Co ###
(200,000x20% = 160,000)

3 Investment in Azul Co ###

Income from Azul ###
(800,000x20% = 160,000)
of Trading Securities

P 1,320,000
P 800,000

P 160,000
P 24,000

P-
P 200,000

Explanation of Solution

Carrying Vlue of Azul

Statement of financial position - Amarillo reported its inv
1,320,000
Calculation:
Equity in earnings = P160,000 (P
Dividend rec'd = P40,000 (200,0
Carrying amount = P1,200,000 +

Carrying Value of Western

Statement of financial position - Amarillo reported its inv
P800,000
Calculations:
20,000 shares x P40 per share =
Income Statement Amounts
Income from Azul P800,000 x 20% = P160,000
Income from Western P24,000 dividend income
Dividend income P24,000
Calculation:
P120,000 x 20% = P24,000

Other Comprehensive Income

Azul Investment P0
Western Investment Unrealized gain P200,000
Calculation:
P800,000 - P600,000 = P200, 00
Amarillo reported its investment in Azul at a carrying amount of P

on:
earnings = P160,000 (P800,000 x 20%)
rec'd = P40,000 (200,000 x 20%)
amount = P1,200,000 + 160,000 - P40,000 = P1,320,000

Amarillo reported its investment in Western at a fair value of

ons:
hares x P40 per share = P800,000
0 x 20% = P160,000
dividend income
income P24,000
on:
0 x 20% = P24,000

ed gain P200,000
on:
0 - P600,000 = P200, 000