Cash and Cash Equivalents:

2-1. The statement of financial position of the Money Company shows cash of P330,280. The
following items were found to comprise this total amount:

Checking account in Metrobank, (outstanding check

As of year-end totaled P15,200) P105,200

Savings account at 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:

Traveler’s check 14,000

Manager’s check 23,120

Short-term treasury bills 52,000

REQUIRED:

What is the correct amount of cash?

Solution:

Cash Balance 330820

Checking Account 90000

Savings Account 30800

Petty cash fund 1250

Cash on hand 4200

Cash in Foreign Bank 65000

Traveler’s check 14000

Manager’s check 23120

Total Cash 559190

2-2. Cotton Company’s checkbook balance at December 31, 2013 was P180,000. In addition,
Cotton held the following items in its safe on that date.

Check payable to Cotton dated January 2,2014

in payment of a sale made in December 2013,

included in December 31 checkbook balance. P65, 000

Check payable to Cotton deposited December 15,

But returned by the bank on December 30 stamped

“DAIF.” 20,000

Check drawn on Cotton’s account, payable to a

vendor, dated and recorded on December 30 but

not yet mailed to payee as of December 31, 2013. 15, 000

REQUIRED:

What is the amount shown as Cash on Cotton’s December 31, 2013 statement of financial position?

Solution:

Cash Balance 180000

Check payable to Cotton in payment of a sale (65000)

DAIF (20000)

Check drawn on Cotton’s account, payable to a vendor 15000

Total Cash 110000

2-3. Grain Company’s general ledger showed a balance of P2,205,600 in its “Cash” account on
December 31, 2013. Included in this balance are the following items:

DAIF checks returned by bank P 20,000

Saving account 750,000

IOUs 1,200

Postage stamps 600

Bank draft 10, 000

Cash on Hand 30, 000

Cash in sinking fund 500,000

Customers’ checks dated January, 2014 5,400

Travel advances 4,000

Traveler’s Check 8,000

REQUIRED:

Determine total that should be included in cash balance at December 31, 2013.

Solution:

Saving account 750,000

Bank draft 10, 000

Cash on Hand 30, 000

Traveler’s Check 8,000

Total Cash 798000

2-4. Rod Company reported a cash balance of P2, 205,00 on December 31, 2013 which consisted
of the following:

Petty cash, including IOU from an employee of P 1,250 P10, 000

Cash on Hand, including a customer’s

Postdated check of P2,500 625,000

Cash in bank, General Account, net of P12,500

Bank overdraft in another bank’s account 750,000

Cash in bank, Payroll Account, net of P10,000

Check dated December 28, 2013 but

Unreleased as of December 31 320, 000

Saving deposit, restricted for the purchase

And intended for plant expansion 500, 000

REQUIRED:

What is the correct amount of cash that should be shown in Rod Company’s statement of financial
position at December 31, 2013?

Solution:

Petty cash, including IOU from an employee 8750

Cash on Hand` 622,500

Bank overdraft 750,000

Cash in bank, Payroll Account 330, 000

Total Cash 1711250

2-5. The chief accountant of Latte Company is determining the amount of cash and cash
equivalents to be reported on its December 31, 2013 statement of financial position. She found out
that the “Cash and Cash Equivalents” balance in the general ledger was composed of the following
items.

(a) Savings account of P900,000 and a commercial checking account with balance of
P1,400,000 are held at Allied Bank.

(b) Petty cash fund of P15,000; composed of expense receipts of P5,000; and bills and coins of
P9,850 at December 31.

(c) Cash fund in savings account with Metrobank, P1,500,000 held for retirement of bonds
payable, due December 31,2018.

(d) Money market fund account held at BDO which permits, Latte Company to write checks on
this balance, P2,000,000.

(e) Three certificates of deposit with Metrobank, each totaling P1,000,000, two of which have
maturity of 120 days from date of placement (November 30, 2013); one has a maturity of 90 days
(placed on December 29,2013).

She also obtained the following information:

(g) A customer’s check on hand dated January 10,2014 for P320,000. The check was
recorded as collected in December and was included in the P900,000 savings accounts with Allied
Bank.

(h) A check for P300,000 was issued to a supplier on December 29,2013 and drawn from
Allied Bank account. The check was dated January 8,2014 and was traced to have been
entered in the December check register

(i) Latte maintains a P5,000,000 cash balance at all times at BPI to ensure future credit
availability.

(j) A check for P50,000 for adjustment in salaries of an employee for the month of November
was still on hand at December 31,2013. The check was verified to have been recorded in the cash
disbursements journal in December.

REQUIRED:

(a)Compute the amount of cash and cash equivalents to be reported on December 31,2013
statement of financial position. It is the policy of the company to treat as cash
equivalents instruments with maturity date of 90 days.

(b) Indicate the proper reporting for items that are not reported as cash and cash equivalents at
December 31,2013.
Cash and cash equivalents: Savings account with Allied Bank

Per books P900,000

Customer’s postdated check (320,000) P580,000

Checking account with Allied Bank

Per books P1,400,000

Issued postdated check 300,000 1,700,000

Bills and coins in the petty cash fund 9,850

Money market fund which allows check writing (see above correction) 2,000,000

Certificate of deposit with term of 90 days 1,000,000

Payroll fund with BDO

Per books P6,000,000

Unissued but recorded check 50,000 6,050,000

Cash balance with BPI 5,000,000

Correct cash and cash equivalents P16,339,850

The non-cash and non-cash equivalents shall be presented as

Expenses in the statement of comprehensive income (P150

cash shortage in petty cash fund + expense receipts of P5,000) P 5,150

Current assets:

Trading securities or FVPL (certificates of deposit) 2,000,000

Accounts receivable (customer’s postdated check) 320,000

Non-current assets:

Cash fund for retirement of bonds payable 1,500,000

Current liabilities

Accounts payable (PDC issued to supplier) 300,000

Salaries payable (unissued check to employee) 50,000

2-6. As a step to safeguard the company’s cash balance, the Jessie Company established an
imprest petty cash fund in November 2013. The company, from November 2013 through January
2014 completed the following transactions related to petty cash.

2013

Nov.20The company established an imprest petty cash fund amounting to P5,000. Issued a check
payable to the petty cash custodian.

Nov. 20 The petty cash custodian paid the following from petty cash fund, all supported by

Dec. 15 properly approved petty cash vouchers:

Transportation P1,500

Representation 1,200

Freight for merchandise purchased 1,300

Computer repairs 920

Dec. 16 The petty cash custodian submitted the above paid petty cash vouchers to request for
replenishment of the fund. A check amounting to P4,920 was issued to the petty cash custodian.

Dec.16-31 The petty cash custodian paid the following for petty cash fund.

Transportation P 340

Office Supplies 1,400

Dec.31 A count of the petty cash fund revealed the following composition:

Bills and coins P3,260

Paid petty cash vouchers for

Transportaion 340

Office supplies 1,400

The fund was not replenished on this date.

2014

Jan. 1-8 The petty cash custodian paid the following:

Representation P1,800

Office Supplies 1,300

Transportation 120

Jan.9 The petty cash custodian submitted the petty cash vouchers evidencing payments from
December 16 through January 8. A check was issued to the petty cash fund for its replenishment
and to increase its balance by P3,000.

REQUIRED:

Prepare journal entries for the given transactions. Include any appropriate adjusting entries on
December 31, the end of the company’s accounting period, and reversing entries on January 1.

Solution:

Nov. 20 Petty Cash Fund 5000

Cash in Bank 5000

Dec. 16 Transportation 1500

Representation 1200

Freight purchased 1300

Computer repairs 920

Cash in Bank 4920

Dec. 1 Transportation 340

Office Supplies 1400

Petty Cash Fund 1740

Jan. 1 Petty Cash Fund 1740

Transportation 340

Office Supplies 1400

2-7. Coral established a petty cash fund of P5,000 for incidental expenses on June 1,2013. At the
end of the month, the count of cash on hand indicated that P670.40 remained in the fund. A review
of the petty cash vouchers disclosed the following expenses had been incurred during the month.

Office Supplies P 341.60

Transportation 1,321.40

Postage 780.00

Miscellaneous 837.60

Representation 1,000.00

REQUIRED:

(a) What is the amount of shortage in the petty cash fund?

(b) Prepare the necessary adjusting entry on June 30, the company’s reporting date, to remove
the non-cash items from the Petty Cash Fund.

(a) Petty cash fund P5,000.0

0
Total petty cash vouchers:

Postage 780.00
Representation 1,000.00
Transportation 1,321.40
Miscellaneous 837.60 4,280.60 4,951.00
Shortage in the petty cash fund P 49.00

Postage expense 780.00

Representation expense 1,000.00
Transportation expense 1,321.40
Miscellaneous expense 837.60
Cash short and over 49.00
Petty cash fund 4,329.60
2.8. Prada Company established a petty cash fund to help ensure internal control over its small
expenditures. The following are the transactions affecting the petty cash fund for the month of
May,2013:

1. On May 2, the company established a petty cash fund in the amount of P8,000.

2. The following were paid by the petty cash custodian from May 2 through May 20:

Freight on merchandise purchases P2,500

Freight on merchandise sold 3,000

Supplies purchased 800

IOUs from employees 1,200

3. On May 18, the employees paid their IOUs as indicated above (the advances were granted
on May 10; the proceeds from such collection were returned to the petty cash fund).

4. On May 20, the fund was replenished.

5. Payments from petty cash fund from May 20 through May 31 are as follows:

Freight on merchandise purchases P1,200

Transportation of messenger 150

Medicines for employees 320

IOUs from employees 500

6. A count of the fund on May 31 revealed bills and coins in the petty cash fund amounting to
P5,700.

The company’s reporting period ends May 31.

REQUIRED:

Prepare journal entries for the above transactions, including any adjustments at May 31,2013.

1. May 2 Petty cash fund 8,000

Cash in bank 8,000

2. May 2-20 No entry

3. No entry
4. May 20 Freight-in 2,500
Freight-out 3,000
Supplies Expense 800
Cash in Bank 6,300

5. No entry

6. May 31 Freight-in 1,200

Transportation expense 150
Employee Benefit expense 320
Advances to Employees 630
Petty Cash Fund 2,300
Per count

Bills and coins P5,700

Paid petty cash vouchers

(1,200 + 150 + 320 + 500) 2,170

Total P7,870

Petty cash fund, imprest balance 8,000

Cash shortage P 130

2-9. In your cash count of the petty cash fund of Canon Company as of July 4,2013, you found
the following composition of its petty cash fund:

Bills and coins counted P 2,450

Approved and signed petty cash vouchers

Dated June 2013 3,300

Date July 1-4, 2013 800

IOU from Joe Santos, an employee 1,400

A check drawn by Juvy Victoria, an employee,

dated July 15,2013 2,000

The petty cash fund has an imprest balance of P10,000. The company’s reporting period ends on
June 30.

REQUIRED:

(a) Determine the amount of petty cash fund that will be included in the cash balance at June
30, 2013.

(b) Determine the amount of cash shortage or overage.

(c) Prepare the necessary adjusting entry to bring the petty cash fund to its correct amount at
June 30,2013.
 (a) Bills and coins 2,450
PCVs dated July 2012 (undisbursed as of June 30) 800
Adjusted balance of PCF 3,250

(b) Per count

PCVs dated June 3,300
PCVs dated July 800
IOUs 1,400
PDC drawn by Juvy Victoria 2,000
Total 9,950
Petty cash fund, per ledger 10,000
Cash shortage 50

Receivable from employees (IOU + PDC) 3,400

Cash short/over 50

2-10. The December 31,2013 bank statement for Giordano Corp. showed a P199,925 balance. On
this date, the company’s Cash account reflected a P32,560 overdraft. In reconciling these amounts,
the following information is discovered:

a. Cash on hand for undeposited sales receipts, December 31,2013, P13,025.

b. Customer’s NSF check returned with bank statement, P42,040.

c. Cash sales of P64,025 for the week ended December 18,2013 were recorded in the books.
The cashier reports this amount missing, and it was not deposited in the bank.

d. Note receivable of P250,000 and interest of P2,500 were collected by the bank and not
recorded in the books.

e. Deposit in transit December 31,2013, P35,000.

f. A customer’s check for P29,040 in payment of its account was recorded in the books at
P94,020.

g. Outstanding checks, P204,055, include a duplicate check of P7,085 to C. Santos, who

notified Giordano that the original was lost. Giordano stopped payment on the original check and
has already adjusted the cash account in its accounting records for this amount.

h. The cash account includes petty cash fund in the amount of P5,000. When the fund is
counted on December 31, it was found to include paid petty cash voucher totaling P1,800.

REQUIRED:

(a) Prepare a bank reconciliation at December 31,2013 that brings both the bank and book
balances to a corrected figure.
(b) Prepare adjusting entries for the foregoing.

Giordano Corporation
Bank Reconciliation
December 31, 2013

Balance per bank statement P199,925

Add: Cash on hand for undeposited receipts P13,025
Deposit in transit 35,000 48,025

Total P252,950
Deduct: Outstanding Checks (204,055)
Adjusted Balance P 43,895

Balance per books P(32,560)

Add: Note Receivable collected by bank, incl interest of P 2,500 252,500
Total P219,940
Deduct: Customer’s NSF check returned by bank P42,040
Customer’s check of P29,040 erroneously
recorded as P94,020 64,980
Cash sales missing 64,025
Petty Cash Fund 5,000 (176,045)

Adjusted balance P 43,895

(b) Adjusting entries:

Cash 252,500
Notes Receivable 250,0
Interest Income 00
2,500

Accounts Receivable (42,040 + 64,980) 107,02

Loss from Theft 064,025
Petty cash fund 5,000
Cash 176,04
5
Miscellaneous Expenses 1,800
Petty Cash Fund 1,800

Total Cash on the statement of fnancial position

Petty cash fund of P3,200 + Cash in bank of P43,895 P47,095
2-11. The following data pertaining to the cash transactions and bank accounts of Pound
Company for July 2013 are as follows:

Cash balance per accounting records, July 31,2013, P17,194

Cash balance per bank statement, July 31,2013, P31,848

Bank service charge for July, P109

Debit memo for printed checks delivered by the bank; the charge has not been recorded in the
accounting records, P225.

Outstanding checks, July 31,2013, P6,728.

Deposit of July 31 not recorded by the bank until August 1,P4,880.

Proceeds of a bank loan on July 31 not recorded in the accounting records, net of P300 interest,
P5,700.

Proceeds from customer’s promissory note, principal amount, P8,000, collected by the bank, not
taken up in the books, with P100 interest, P8,1000.

Check #1210 payable to a supplier entered in the accounting records as P2,100 deducted in the bank
statement the erroneous amount of P1,200.

Stolen check lacking an authorized signature deducted from Pound’s account by the bank in error,
P800.

Customer’s check returned by the bank marked DAIF, indicating that the customer’s balance was
not adequate to cover the check. No entry has been made in the accounting records to record the
returned check, P760.

REQUIRED:

(a) What is the correct cash balance as of July 31,2013?

(b) Prepare the necessary adjusting entries at July 31,2013.

Solution:

Book Balance 17194 Bank Balance 31848

Bank Service Charge <109> Outstanding Check <6728>

Debit Memo <225> Deposit In Transit 4880

Note Collection 5700 Error <900>

Error 8100

DAIF <760>

Correct Cash Balance 29,900 Correct Cash Balance 29,900

2-12. In comparing the balance per books of Bench Company with the bank statement obtained
from the bank, together with the canceled checks and other memoranda at December 31,2013, you
observe the following:

a. Balance per bank statement P892,346.30

b. Balance per books 590,884.60

c. Outstanding checks, 12/31/2013 333,788.20

d. Receipts of 12/31/2013 deposited on 1/02/2014 53,172.00

e. Service charge for December 2013 225

f. Proceeds of bank loan, 12/15/2013 omitted from

company records (discounted for 3 months at 12%

per year) 97,000.00

g. Deposit of 12/23/2013 omitted from the bank

statement 28,924.10

h. Check of Rome Products charged back on 12/22/2013

for lack of counter signature, redeposited on 1/5/2014.

No entry was made for the charge back or the redeposit. 8,737.40

i. Error on bank statement in entering deposit of

12/16/2013:

Correct amount P31,824.00

Entered in statement 31,814.00 10.00

j. Check #3917 of Birch Company charged in error

to the company’s account 26,900

k. Proceeds of note J. Sumera & Co. collected by bank on 12/1/2013

not entered on books:

Principal P20,000.00

Interest 400.00

Total P20,400.00

Less collection charge 50.00 20,350.00

l. Erroneous debit memo of 12/23/2013 to charge company’s account

with settlement of bank loan which was paid by check #4020 on same date 50,000.00

m. Error on bank statement in entering deposit of 12/4/2013

Entered as P48,171.00

Correct amount 48,071.00 100.00

n. Deposit of Birch Company on 12/7/2013

credited in error the company’s account 18,192.00

REQUIRED:

Determine the correct cash balance of Bench Company at December 31,2013.

Solution:

Book Bank

Unadjusted Balance 590884.60 892346.30

Outstanding Check (333788.20)

Deposit in Transit 53172

Service Charge (225)

Proceeds (100000-3000) 97000

Omission of Deposit 28924.10

Returned Checks (8737.40)

Understatement of Deposit 10

Erroneous Deduction 26900

Note collection (20000+400-50) 20350

Erroneous charge 50000

Overstatement of Deposit (100)

Erroneous credit (18192)

Adjusted balance 699272.20 699272.20

2-13. The bank statement of Amethyst Corporation for April, 2013 showed an ending balance of
P169,263. Deposit in transit on April 30 was P18,200. Outstanding checks as of April 30 were
P59,435. During the amount of April, the bank charged back NSF checks in the amount of P3,435
of which P1,835 had been redeposited by April 30. The company made no entry for the return and
for the redeposit of the checks.

On April 23, the bank charge Amethyst Corporation’s account for a P2,200 item which should have
been charged against the account of Ametite Corporation; the error was not detected by the bank.
During April, the proceeds from notes collected by the bank for Amethyst Corporation were P7,548
and bank charges for this were P180.

REQUIRED:

What is the unadjusted book balance for “Cash” of Amethyst Corporation at April 30,2013?

Solution:

Balance per book 124095

Add: Outstanding Check 59435

Income 7548

Less: Deposit in Transit (18200)

Bank Charge (3435)

Service Charge (180)

Balance per bank 199263

2-14. In preparing its bank reconciliation at December 31,2013, Silver Company had made
available the following information:

Balance per bank statement P380,750

Deposits in transit 52,000

Outstanding checks 67,500

Amount erroneously credited by bank to Silver’s account 4,000

Bank service charge for December 750

Check drawn, dated and recorded December 31, 2013,

but now mailed until January 10, 2014 (included in

the total outstanding checks above) 9,000

Check for Silver Lining Company charged by ban

to the accont of Silver Company 12,000

REQUIRED:

What is the amount of the suspected cash shortage?

Solution:

Balance Per Bank 380,750

Deposit In Transit 52,000

Outstanding Check (67,000-9000) <58,500>

Error <4,000>

Check Charge 12,000

Cash 382,250

2-15. You are attempting to determine an apparent cash shortage that you believe resulted from an
employee’s theft. You have assembled the following information for the month of March:

Cash balance per books, March 1 P115,963.70

Cash receipts for March, per books 246,475.10

Cash disbursements for March 334,709.10

Cash balance, per bank statement, March 31 15,341.40

Deposit in transit, March 31 9,000.00

Outstanding checks, March 31 2,703.80

Bank service charge for March 92.00

REQUIRED:

What is the amount of suspected cash shortage?

Solution:

Balance Per Book 115,963.70

Receipt 246,475.00

Disbursement <334,709.10>

Bank Service Charge <92>

27637.6

Less: Balance Per Bank 15,341.40

Deposit In Transit 9,000.00

Outstanding Check <2707.90> <21637.6>

Cash Shortage 6000

2-16. In reconciling the book and bank balances of the Cash account of Pearl Corporation, you
discover the following for the month of December 2013:

Balance per bank statement P400,000

Balance per books 387,000

Receipts of 12/31/2013 not yet deposited 100,000

Bank service charges for December 1,000

A paid check for P40,000 was recorded in the

cash book as P4000

Customer’s check returned by bank marked “DAIF” 22,000

REQUIRED:

Assuming no other errors except as noted, what is the amount of the outstanding checks at
December 31, 2013?

Balance per bank statement P400,000

Add: Deposit in Transit 100,000

TOTAL 500,000

Less: Outstanding Checks 77,000

Error 36,000 113,000

Balance per books 387,000

Answer: 77,000
2-17. The following data related to ABC Services, Inc:

Nov. 30, 2013 Dec. 31, 2013

Balance per books P270311.00

Balance per bank statement 294771.00 P148,986.00

Receipts not yet deposited 21,270.00 32,925.00

Outstanding checks 40,525.00 35,191.00

Bank services charges 295.00 158.00

Interest credit by bank 5,500.00 4,925.00

Other information:

Receipts and disbursements per books during December are P1,072,850.00 and P1,195,536.50,
respectively

Total deposits/credits reflected in the bank statement amounted to P1,065,620.00.

Check No. 137412 for P2,300.00 recorded by depositor as P3,200 in error.

Customer’s check for the P5,947.00 deposited on December 28, 2013 was found to be uncollectible.

Interest for P625.00 chargeable to ABC Trading, Inc. was erroneously charged by the bank to ABC
Services, Inc.

No sufficient fund check in the amount of P5,000.00 was returned by the bank and redeposited by
ABC Services, Inc. during December. No entry was made on the books for the return or redeposit.

REQUIRED:

Prepare a four-column reconciliation for ABC Services, Inc.

Solution:
 Nov. 30 December Dec. 31

Receipts Disbursements

Unadjusted bank balance 294771 1072850 195536.5 148986

DIT: Nov. 30 21270 (21270)

Dec. 31 32925 32925

OC: Nov. 30 (40525) (40525)

Dec. 31 35191.5 (35191.5)

Interest (625)
625

Adjusted bank balance 275516 1072275 1200446.5 147344.5

Unadjusted book balance 270311 1072850 1195536.5 147344.5

BSC: Nov. 30 (295) (295)

Dec. 31 158 (158)

Cr. Memo Nov 5500 (5500)

Cr Memo Dec 4925 4925

NSF: Dec. 31 5000 (5000)

Error 2300

Unearned 5947 (5947)

Adjusted book balance 275516 1074575 1200446.50 14734.50

2-18. The accountant of Bruins Company gathered the following data in his attempt to reconcile its
records with the data from the bank statements sent by Banco de Plata (BDP) for the months of
March and April.

March April

Cash in BDP per ledger 2,055,300 3,002,500

Balances per bank statement 2,203,500 3,097,250

Credits to Cash in BDP account 4,619,800

Deposits and credit memos per bank statement 5,251,500

Outstanding checks 275,000 580,000

Deposit in transit 125,000 670,000

Erroneous bank credit 20,000

Note collected by bank 17,000

Bank service charge 1,800 2,450

Bruins Company discounted its own note for the P200,000 with the bank in April at the
discount rate of 12%. The note is due in 6 months. The net proceeds was credited by the bank in
April but has not yet been recorded in the books.

Book receipt for April is understated for P4,500

Book disbursement for April is overstated for P2,700

Loan amortization for April amounting P45,000 was covered by a check payment but a debit
memo for the same amount was issued by the bank in April.

REQUIRED:

Prepare a four-column reconciliation for Bruins Company

Bruins Company
Proof of Cash
March 31 – April 30, 2013

April April
March 31 Receipts Disbursements April 30
Balances per bank statement P2,203,500 P5,251,500 P4,357,750 P3,097,250
Outstanding checks:
March 31 (275,000) (275,000)
April 30 580,000 (580,000)
Deposits in transit
March 31 125,000 (125,000)
April 30 670,000 670,000
Erroneous bank credit (20,000) (20,000)
Undeposited receipts
Erroneous bank debit memo (45,000) 45,000
Adjusted balances P2,053,500 P5,776,500 P4,617,750 P3,212,250
April April
March 31 Receipts Disbursements April 30
 Balances per books P2,055,300 P5,567,000 P4,619,800
P3,002,500
Note collected by bank in April 17,000
17,000
Bank service charges
March (1,800) (1,800)
April 2,450
(2,450)
Company’s note discounted with the
bank 200,000 – (200,000 x 12%x 6/12) 188,000 188,000
Overstatement in book disbursements (2,700) 2,700
Understatement of April receipts 4,500 4,500
Adjusted balances P2,053,500 P5,776,500 P4,617,750 P3,212,250

2-19. The following bank reconciliation is presented for Lily Company for the month of July,
2013:

Balance per bank statement, 7/31 P180,000

Add deposits in transit 40,000

Total P220,000

Less: Outstanding checks P60,000

Bank credit recorded in error 10,000 70,000

Balance per books, 7/31 P150,000

Data per bank statement for the month of August, 2013 follow:

August deposits, including note for P50,000

collected in behalf of Lily Company P275,000

August disbursements (including NSF for P35,000

and service charges of P1,500) 220,000

All items that were outstanding as of July 31 cleared through the bank in August, including the
bank credit. In addition, P25,000 in checks were outstanding and deposits of P35,000 were in
transit as of August 31, 2013
REQUIRED:

Compute the following:

Cash receipts per books during August

Cash disbursements per books during August

Unadjusted cash balance per ledger at August 31, 2013

Correct cash balance at August 31, 2013

Receipts Per Bank, August 275,000

Add: Deposit in Transit, August 35,000

Less: Deposit in Transit, July (40,000)

Receipts Per Book, August 270,000

Disbursements Per Bank, August 220,000

Add: Outstanding Checks, August 25,000

Less: Outstanding Checks, July (60,000)

Error (10,000)

Disbursement Per Book, August 175,000

Balance Per Bank Statement

Balance, July 31 180,000

Add: Deposits 275,000

Less: Disbursements (220,000)

Balance, August 31 235,000

 BOOK BANK

Unadjusted Balance 281,500 235,000

Deposit in Transit 35,000

Outstanding Checks (25,000)

Return Checks (35,000)

Bank Service Charge (1,500)

TOTAL 245,000 245,000

Answers: (a) 270,000

(b) 175,000

(c) 281,500

(d) 245,000

2-20. Leo Company has just received the August 31,2013 bank statement which is summarized
below:

Balance, August 1 P 93,690

Deposits during August 320,000

Note collected for depositor, including P360 interest 10,360

Checks cleared during August (344,000)

Bank service charges (500)

Balance, August 31 P79,550

The general ledger cash account had the following entries for the month of August,2013:

Cash

Balance, August 1 97,290 Disbursements in August 349,000

Receipts during August 350,000

All outstanding checks as of July 31,2013 amounting to P6,400 cleared the bank in August.
Deposits in transit at August 31, totaled P40,000.

REQUIRED:

Determine the following:

(a) Outstanding checks at August 31,2013

(b) Deposits in transit at July 31,2013

Bank Checks 344,000

Less: Outstanding Checks, Beginning (6,400)

TOTAL 337,600

Add: Outstanding Checks, End 11,400

Book Checks 349,000

Book Deposits 350,000

Less: Deposit in Transit, End (40,000)

Total 310,000

Add: Deposit in transit, Beginning 10,000

Bank Deposits 320,000

Answer: (a) 11,400

(b) 10,000
2-21 The following information was included in the bank reconciliation for Vab, Inc. Assume
all other reconciling item are listed below:

Checks and charges recorded by bank in May

P80,000

Including a May service charge of P500

Service charge made by bank in April and

Recorded in the books in May 1,000

Total credits to cash in all journals during May

90,000

Customer’s NSF check returned as a bank

Charge in May (no entry made in the books)

10,000

Customer’s NSF check returned in April and

Redeposited in May (no entry made in the books

In either April or May) 5,000

Outstanding checks at April 30

30,000

REQUIRED:

How much were the total outstanding checks at May 31?

OC, Apr 30 30,000

Book credits: Total credits 90,000

NSF 10,000

BC (1,000)

Total 129,000
 Less: Bank Balance (79,500)

OC, May 31
49,500

2-22 Lorna Hearing Aid Clinic uses four-column reconciliation. The bank reconciliation for
July shows P4,500 for deposits still in transit. The bank statement for August showed that the
bank recorded receipts totalling P30,600, P6,300 of which was a note collected from one of its
clients.

During August, the clinic recorder in it books total receipts of P2,700. Included in these receipts
were P3,120 proceeds of note collected by the bank in July which the company recorded
only in August.

REQUIRED:

What is the amount of deposits still in transit for August 31 reconciliation?

DIT, July 31 4,500

Book receipts 30,600

Balance 35,100

Bank receipts (27,000)

DIT, Aug 31 8,100

2-23 Presented below is the November 30, 2013 reconcilation of the cash account of Real Gem
Company:

Balance per bank statement, 11/30/13 P39,375.00

Add: DIT 18,207.50

Total P57,582.50

Less: OC P24,750.00
 Erroneous bank credit 9,218.00 33,968.00

Balance per books, 11/30/13 P23,614.50

Additional information:

Balance per bank statement, 12/31/13 P46,828.50

Bank receipts (credits) during December 69,730.50

Bank disbursements (debits during December

Including all outstanding checks on 11/30/13

And the erroneous bank credit in November 62,277.00

Outstanding checks, 12/31/13 37,855.00

REQUIRED:

What is the amount of the total disbursements per books for the month of December 2013?

OC, Nov 31 24,750

Book disbursements 66,164

Balance 90,914

Bank disbursements (53,059)

OC, Dec 31 37,855

2-24 At September 30, 2013, cash receipts and cash disbursements per general ledger Cash in
Bank account of Lira Company are P30,500 and P24,000, respectively. The bank
statement for the same month indicates that only P30,200 in deposits were received
during the month and checks clearing the bank were P23,600.

The August 31, 2013 bank reconciliation showed deposits in transit of P9,500.
Outstanding checks at September 30, 2013 were P2,000.
 REQUIRED:

How much were the deposited in transit at September 30, 2013 and the outstanding
checks at August 31, 2013?

DIT, Aug 31 9,500 OC, Aug 31 2,400

Book receipts 30,200 Book dis.. 23,600

Balance 39,700 Balance 26,000

Bank receipts (30,500) Book dis..

(24,000)

DIT, Sept 30 9,200 OC, Sept 30 2,000

2-25 The trial balance of Euro Company at December 31, 2013 includes the ff. balances
accounts:

Petty Cash fund P 5,000

Cash On Hand 19,700

Metrobank, Current Account 110,200

Allied Bank, General Account 162,000

Allied Bank, Payroll Account (credit balance) 4,000

Security Bank, Savings Account 65,000

The PCF consisted of the following items as of December 31, 2013:

Currency and coins, P1,490

Employees’ advances, with no supporting Vouchers, P880

Currency in an envelope marked “collections for charity” with employee’s names attached, P160

Unreplenished petty cash vouchers

Replenishment check drawn by Euro payable to the petty cashier, P1,830

Cash on hand includes the ff:

Customer’s check for P5,000 returned by bank on December 26, 2013 due to insufficient funds,
but subsequently redeposited and cleared by the bank on January 10, 2014

Postal Money orders received from customers, P2,800

Customer’s check for P1,500 dated January 10, 2014 received December 23, 2013.

Included among the checks drawn by Euro against the Metrobank current account and recorder
in December 2013 are the ff:

Check #1214 written and dated December 23, 2013 and delivered to payee on January 3, 2014,
P2,500

Check #1219 written December 26, 2013, dated January 30, 2014, delivered to payee on
December 28, 2013, P4,300.

The credit balance in Allied Bank payroll account represents checks drawn in excess of the
deposit balance. The checks are still outstanding at December 31, 2013. A right of offset exist in
the agreemet between Allied Bank and its depositors.

The savings account deposit in Security Bank was a fund set aside by the Board of Directors for
the acquisition of new equipment. The company expects to disburse this amount in March 2014.

REQUIRED:

Determine the correct amount of cash reported as current assets in Euro’s December 31, 2013
statement of financial position:

A. 1,490

B. 19,700
(5,000) 14,700

C. 110,200
2,500 112,700

D. 162,000
(4,000) 158,000

E. ---------

Cash, Dec. 31 286,890