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QUIZ - Cash (AP)

Problem

1. You were able to gather the following from the December 31, 2020 trial balance of Angel Corporation in
connection with your audit of the company:

Cash on hand P 500,000

Petty cash fund 10,000
BPI current account 1,000,000
Security Bank current account No. 01 1,080,000
Security Bank current account No. 02 (80,000)
PNB savings account 1,200,000
PNB time deposit 500,000

Cash on hand includes the following items:

a. Customer’s check for 40,000 returned by bank on December 26, 2020 due to insufficient fund but
subsequently redeposited and cleared by the bank on January 8, 2021.
b. Customer’s check for 20,000 dated January 2, 2021, received on December 29, 2020.
c. Postal money orders received from customers, 30,000.

The petty cash fund consisted of the following items as of December 31, 2020.

Currency and coins P 2,000

Employees’ vales 1,600
Currency in an envelope marked “collections for charity” with
names attached 1,200
Unreplenished petty cash vouchers 1,300
Check drawn by Angel Corporation, payable to the
petty cashier 4,000
P10,100

Included among the checks drawn by Angel Corporation against the BPI current account and recorded
in December 2020 are the following:

a. Check written and dated December 29, 2020 and delivered to payee on January 2, 2021,
80,000.

b. Check written on December 27, 2020, dated January 2, 2021, delivered to payee on December
29, 2020, 40,000.

The credit balance in the Security Bank current account No. 2 represents checks drawn in excess of the
deposit balance. These checks were still outstanding at December 31, 2020.

The savings account deposit in PNB has been set aside by the board of directors for acquisition of new
equipment. This account is expected to be disbursed in the next 3 months from the balance sheet date.

Questions:

Based on the above and the result of your audit, determine the adjusted balances of following:

1. Cash on hand
a. P410,000 c. P470,000
b. P530,000 d. P440,000

2. Petty cash fund

a. P6,000 c. P2,000
b. P7,200 d. P4,900
3. BPI current account
a. P1,000,000 c. P1,080,000
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b. P1,120,000 d. P1,040,000
4. Cash and cash equivalents
a. P2,917,200 c. P3,052,000
b. P3,074,900 d. P3,066,000

2. A count of the petty cash fund on January 3, 2021 revealed the following composition:

Bills and coins P 7,300

Vouchers:
December 2020 dates 850
January 2021 dates 200
IOUs (all dated December 2020) 4,200
Employee’s check dated December 27, 2020 2,800
Employee’s check dated January 14, 2021 4,250
Unsigned pay envelope payable to an employee (the envelope
has been opened and the money has been removed) 5,000

The balance of petty cash fund per books is P 15,000.

1. How much is the cash shortage or overage?

a. 350 b. 400 c. 500 d. 550

2. What is the correct amount of petty cash fund to be shown on the statement of financial
position as of December 31, 2020?
a. 9,500 b. 10,300 c. 2,800 d. 5,300

3. The accountant of Joshtin Company prepared the following bank reconciliation at December 31, 2020:
Balance per bank
statement   P350,000
Add: deposit in transit 150,000
note collected
by bank 15,000
Total P540,250
Less: outstanding checks 246,750
Balance per ledger   P293,500

In the course of your examination, you noted the following information:

a. At December 31, 2020, the bank statement and the general ledger showed balances of
350,000 and 293,500, respectively.

b. The cut-off bank statement showed a bank charge on January 2, 2021 for 25,000
representing a correction of an erroneous bank credit.

c. Included the list of outstanding checks were the following:

- a check payable to a supplier dated December 29, 2020, in the amount of P15,000
released on January 5, 2021.
- a check representing advance payment to a supplier in the amount of P37,200, the date
of which is January 4, 2021 and released in December 2020.

d. On December 31, 2020, the company received and recorded a customer’s check dated
January 2021 amounting to 50,000.

Questions:

1. What is the correct amount of deposit in transit on December 31, 2020?

a. 125,250 b. 225,250 c. 175,250 d. 185,250

2. What is the correct amount of outstanding checks as of December 31, 2020?

a. 261,750 b. 268,950 c. 209,550 d. 194,550
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3. What is the correct cash balance December 31, 2020?

a. 265,750 b. 255,700 c. 310,700 d. 394,300

4. How much was the cash shortage?

a. 55,000 b. 83,600 c. 44,950 d. 42,250

4. The Silver Company’s internal control over its cash transactions is very weak. Actually, the company’s
cash position at December 31, 2021 were as follows:
The cash book showed a balance of 15,000, which included cash on hand. A credit of P150 on the
bank’s records did not appear on the company’s books. The bank statement showed a balance of
12,300; and the outstanding books were: 0100-P120; 0201-P100; 0300-P230; 1501-P110; 1510-P140;
and 1515-P150.
The cashier removed all of the cash on hand in excess of 3,000 and then prepared the ff reconciliation.
Balance per books, Dec. 31, 2021 15,000
Add: Outstanding checks:
No. 1501 P110
1502 140
1515 150 300
P15, 300
Deduct - Cash on Hand 3, 000
Balance per bank, Dec 31, 2021 P12, 300
Deduct – Unrecorded credit 150
True Cash, Dec 31, 2021 P12, 150

1. The cash storage if any, is

a. P300
b. P400
c. P500
d. P700
e. None of the above.

2. A correct reconciliation will show that the cashier’s accountability for cash on hand is
a. P3, 300
b. P3, 400
c. P3, 500
d. P3, 700
e. None of the above.

3. The adjusted cash to bank balance for the balance sheet on December 31, 2021 is
a. P11, 300
b. P11, 450
c. P11, 600
d. P11, 850
e. None of the above.

5.
The following information pertains to the cash of Oz Company:

Nov 31 Dec. 31
Balance shown on bank statement P 27,380 P 26,960
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Balance shown in general ledger before

reconciling the bank account 25,780 25,000
Outstanding checks 8,630 10,150
Deposits in transit 6,850 12,450

For Dec.
Deposits shown in bank statement P 55,880
Charges shown on bank statement 56,300
Cash receipts shown in company’s books 53,980
Cash payments shown in company’s books 54,760

The bank service charge was P180 in November (recorded by the company during December) and
P240 in December (not yet recorded by the company).

Included with the December bank statement was a check for 5,000 that had been received on
December 25 from a customer on account. The returned check marked “NSF” by the bank, has not yet
been recorded on the company’s books.

During December the bank collected 7,500 of bond interest for the company and credited the proceeds
to the company’s account. The company earned the interest during the current accounting period but
has not yet recorded it.

During December the company issued a check for 6,960 for equipment. The check, which cleared the
bank during December, was incorrectly recorded by the company for 8,960.

1. The adjusted cash receipts of Oz COMPANY at December 31 is:

a. P 61,480 b. P 53,980 c. P 50,280 d. P 46,480

2. The adjusted cash disbursements of Oz COMPANY at December 31 is:

a. P 63,980 b. P 61,980 c. P 57,820 d. P 54,780

3. In a proof of cash, the NSF check:

a. Should be added in the December 31 column since this was returned back by the bank.

b. Should be deducted in the December 31 column since this was returned back by the bank.

c. Should be deducted in the December 31 column since this was returned back and not paid by
the bank, thus not considered as receipts.

d. Should be added in the December 31 column since this was returned back and not paid by the
bank, thus not considered as receipts.

4. The adjusted December 31 cash balance of Oz COMPANY is:

a. P 29,760 b. P 29,260 c. P 27,260 d. P 25,600
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5. The adjusted November 31 cash balance of Oz COMPANY is:

a. P 29,160 b. P 27,260 c. P 26,160 d. P 25,600

6. The check issued but was incorrectly recorded as 8,960 should be adjusted by:
a. Accounts payable 2,000 c. Cash 2,000
Cash 2,000 Accounts payable 2,000
b. Equipment 2,000 d. Cash 2,000
Cash 2,000 Equipment 2,000

6. You examined the petty cash fund of the B & W Company immediately after the close of business,
December 31, 2020, the end of its fiscal year. The following fund composition was arrived at:
Currency P3,020.00

Checks:
12-29-2020 Judith Cruz, Employee 1,200.00
12-29-2020 U Company, Customer 2,500.00
12-30-2020 Alvin Taipan, Employee 1,100.00
01-15-2021 Judith Cruz, Employee 1,380.00
(Cashed, December 30, 2020)
12-31-2020 I Company, Customer 3,500.00

Vouchers: (All dated on or before 12-31-2020)

Office Supplies 390.00
Transportation Expense 206.00
Freight on Purchase 220.00

Estimated unused office supplies 150.00

Unsigned pay envelope payable to Dante Santos, a resigned employee
(the envelope has been opened and the money has been removed) 2,600.00

The checks from U Company and I Company represent collections on account.

The petty cash fund kept on an imprest system has a balance of 5,000.00.
Questions:
1. What is the adjusted balance of the Petty Cash Fund as of December 31, 2020?
a. P13,750.00 b. P2,720.000
c. P2,280.00 d. P13, 666.00

2. What is the amount of cash shortage or overage?

a. P48.00 b. P44.00
c. P88.00 d. P84. 00

7. You obtained the following information on the current account of Magtanggol Company during your
examination of its financial statements for the year ended December 31, 2021.

The bank statement on November 30, 2021 showed a balance of 76,500. Among the bank credits in
November was customer’s note for 25,000 collected for the account of the company which the company
recognized in December among its receipts. Included in the bank debits were cost of checkbooks
amounting to P300 and a 10,000 check which was charged by the bank in error against Magtanggol Co.
account. Also in November you ascertained that there were deposits in transit amounting to 20,000 and
outstanding checks totaling P42,500.
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The bank statement for the month of December showed total credits of 104,000 and total charges of
51,000. The company’s books for December showed total receipts of 183,900, disbursements of
101,800 and a balance of P121,400. Bank debit memos for December were: No. 143 for service
charges, P400 and No. 145 on a customer’s returned check marked “DAIF” for 6,000.

On December 31, 2021 the company placed with the bank a customer’s promissory note with a face
value of 30,000 for collection. The company treated this note as part of its receipts although the bank
was able to collect on the note only in January, 2022.

A check for P990 was recorded in the company cash payments books in cash payments book as 9,900.

1. How much is the adjusted cash balance as of November 30?

a. 54,000 c. 63,700
b. 64,000 d. 64,300

2. How much is the deposit in transit as of December 31, 2021?

a. 54,000 c. 54,900
b. 44,000 d. 44,900

3. How much is the outstanding checks as of December 31, 2021?

a. 90,490 c. 90,940
b. 90,790 d 90,890

4. How much is the adjusted cash balance as of December 31?

a. 94,000 c. 94,310
b. 94,010. D. 93,910
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