Cash and Cash Equivalents

Presentation: Current Assets

Line: Cash and Cash Equivalents
Measurement: Face Value, Foreign Currency - current exchange rate at reporting date

Cash includes money or its equivalent that is readily available for unrestricted use.
 Coins and Currencies  Payroll Fund
 Demand Deposits  Change Fund
 Bank Drafts  Dividend Fund
 Money orders  Tax Fund
 Checks  Travel Fund
 Cash set aside for current operations  Interest Fund
 Revolving fund

 Postdated checks - revert back to receivables, remove from cash

 IOUs or advances to employees - receivables
 Cash funds not available for use in current operations (sinking funds, plant expansion fund, contingency fund)
 Postage Stamps - unused are prepaid supplies
 Unused Credit line - disclosed in notes
 Unreleased checks and postdated checks drawn - revert back to payables, back to cash
 Stale checks - 6 mos., revert back to payables, back to cash
 Cash in bankrupt bank - remove from cash, revert to receivables at realizable value
 Deposit in foreign banks - unrestricted included in cash at face amount, current exchange rate at reporting date;
restricted are receivables.
 Compensating balance - minimum amount maintained in bank, not legally restricted - cash, restricted - other CA/
other NCA; disclosed in notes restricted or not
 Deposit in escrow - restricted, held in trust for another party.
 Bank overdraft - negative balance in cash in bank, current liabilities, same bank - offset

Cash equivalents - short term highly liquid investments that are readily convertible to cash and are subject to an insignificant
risk of changes in value.

CE: should be acquired 3 months or less before their maturity date

 Treasury bills - short term obligation issued by the government
 Money market instruments - investment in portfolios of short-term securities
 Commercial Papers - short term, unsecured, notes payable issued in large denominations by large companies
 Time Deposit - 3 month

 Equity securities - not CE because they do not have maturity dates

 Redeemable preference shares - are debt instruments, CE if acquired 3 months before redemption date

Internal Controls
 Segregation of duties - authorization, execution, recording, custody
 Imprest system - all cash receipts are deposited, all disbursements are through checks
 Bank reconciliation - regularly upon receipt of bank statement
 Cash counts - periodic and surprise
 Minimum cash balance - payroll, interest, taxes
 Lockbox accounts
 Non-encashment of personal checks from petty cash fund
 Voucher system

Cash shortages and overages (SD/ OC)

 Shortage: Dr. CS/O Cr. Cash then Dr. Rec Cr. CS/O if fault of employee; Dr. Loss Cr. CS/O if without merit
 Overage: Payable/ Gain

Concealment of cash shortages

 Lapping - collection from customer1 is misappropriated then collection from customer2 is applied. (recording +
custody)
 Kiting - cash shortage is concealed by overstating the cash balance, takes advantage of clearing time
 Window dressing - collections subsequent are included in the current period, payments are deferred.
 Petty Cash Fund
 Establishment/ Increase: Dr. PCF Cr. Cash
 Disbursement: No entry
 Replenishment: Dr. Exp Cr. Cash, if shortage and overage: SD/OC
 Decrease: Dr. Cash Cr. PCF

Bank Reconciliation

A bank reconciliation statement is a report that is prepared for the purpose of bringing the balances of cash per records and per
bank statement into agreement.

Books + CM -DM +/- errors = Adj. Bal Bank + DIT - OC +/- errors = Adj. Bal

CM - bank credits (collections, Interest income, proceeds from loan, unrolled matured time deposits)
DM - bank debits (service charge, NSF already recorded by the bank, automatic debits, payment of loans)
DIT - deposits made not yet credited by the bank
OC - checks drawn and released but not yet encashed, does not include certified checks, stale checks

Proof of cash - a proof of cash is an expanded bank reconciliation

Practical Accounting 1

1. Lipton Company shows the following account balances in their financial records as of December 31, 2018:

Checking account at Morgan Bank (20,000.00)

Checking account at Land Bank 500,000.00
Payroll account at National Bank 100,000.00
Foreign bank account-resticted 750,000.00
Postage Stamps 22,000.00
Employees' postdated checks 30,000.00
IOU from president's brother 75,000.00
Traveler's check 50,000.00
NSF check 18,000.00
Petty cash fund (16,000 in currency and expenses receipts for 84,000) 100,000.00
Cashier's check 36,000.00

Q1: what is the correct cash balance to be reported in the statement of financial position of Lipton Company on December
31, 2018?

Q2: What is the correct cash balance to be reported in the statement of financial position of Lipton Company on December
31, 2018 assuming the bank overdraft is repayable on demand and it’s integral to the entity’s cash management?

2. The cash account in the current asset section of the balance sheet of Heater Company showed a balance of P555,000. It was
found to include the following items:

Petty cash fund (P1,000 is in the form of paid vouchers) 5,000.00

Chacking account balance, per bank statement
(A P25,000 check is still outstanding) 255,000.00
Undeposited receipts, including a post-dated check for P5,000 120,000.00
Currencies and coins awaiting deposit 55,000.00
Bond sinking fund - cash 100,000.00
Check drawn by manager, returned by bank marked NSF 20,000.00

What is the correct cash balance for Heater Company’s statement of financial position?

3. On December 31, 2018, Agenda Company has the following information concerning its cash and cash equivalents and some
other items:
 Coins and Currency 50,000.00
Checks received from customers 600,000.00
Certificated of deposit, term: 12 months 800,000.00
Petty cash fund 4,000.00
Postage Stamps 600.00
Bank A, checking account balance 2,100,000.00
Post-dated check, customer 10,000.00
Money order from customer 15,000.00
Cash in savings account 100,000.00
Bank draft from customer 40,000.00
Utility deposit to gas company, refundable 5,000.00
Cash advance received form customer 8,000.00
Cash advance to company executive, collectible upon demoand 200,000.00
NSF check, C Company 20,000.00
Bank B, checking account, overdraft 20,000.00
IOUs from employees 12,000.00

What amount of cash and cash equivalents should Agenda Company report in its Dec 31, 2018 statement of financial
position?

4. Delta Corporation has supplied you with the following list of its bank accounts and cash at December 31, 2018:

Checking account (compensating balance of P15,000 with no restriction) 48,000.00

Savings account, 2% 30,000.00
Certificate of deposit, 6 months, 10% due April 20, 2019 60,000.00
Money market (30-day certificate), current rate, 9.75% 40,000.00
Payroll account 20,000.00
Certificate of deposit, 3 months, 10% due February 15, 2019 75,000.00
Petty cash 1,500.00
274,500.00
What should be the reported balance of cash and Cash equivalents in the December 31, 2018 statement of financial
position of Delta Corporation?

5. Angelic Corporation had the following account balances at December 31, 2018:

Cash on hand and in banks 975,000.00

Cash resticted for additions to plant (expected to be disbursed in 2020) 600,000.00
Bank certificates of deposit (due January 16, 2019) 250,000.00

In the current assets section of Angelic’s December 31, 2018 statement of financial position, what is the total amount that
should be reported under the caption “cash and cash equivalents”?

6. The cash account in the current asset section of the December 31, 2018 balance sheet of King Company consists of:

Cash in banks 2,250,000.00

Cash resticted for additions to plant 9expected to be disbursed in 2020) 3,000,000.00
Petty cash funds (all funds were replenished on December 31, 2018) 30,000.00

Included in the cash in banks is a compensating balance of 750,000 against short-term borrowing arrangements at
December 31, 2018. The compensating balance is not legally limited as to withdrawal by King Company.

What is the correct cash balance of King Company at December 31, 2018?

7. Following were the account balances of Born Company at December 31, 2018:

Cash on hand 187,500.00

Cash in current and savings accounts 3,375,000.00
Cash set aside for plant expansion (expexted for payment in 2019) 2,400,000.00

Cash in current and savings accounts includes P900,000 as holdout against short-term loan arrangements. There are no
legal restrictions as to withdrawal by Born on these holdouts.
 What is the total cash that should be reported in the current assets section of Born’s December 31, 2018 statement of
financial position?

8. On December 31, 2018, First Company had the following cash balances:

Cash in banks 1,800,000.00

Petty cash funds (all funds were reimbursed in December 31, 2018) 50,000.00

Cash in banks included a P600,000 in a separate bank where-in the company is required to maintain a minimum average of
P800,000 of P10 workings on a rolling basis.

In the current assets section of the company’s December 31, 2018 statement of financial position, what total amount
should be shown as cash?

9. PCU Corporation’s check book balance on December 31, 2018 was P160,000. On the same date, PCU held the following in
its safe:
 A P5,000 check payable to PCU, dated January 2, 2019, was not included in the December 31 check book balance
 A P3,500 check payable to PCU which was deposited December 19 and included in the December 31 check book
balance, was returned by the bank on December 30 marked NSF. The check was re-deposited on January 2, 2019
and cleared on January 9.
 A P25,000 check payable to a supplier and drawn on PCU’s account, was dated and recorded on December 31, but
was not mailed until January 19, 2019.

In its December 31, 2018 statement of financial position, how much should PCU report as cash?

10. Volume Company had the following cash balance at December 31, 2018:

Undeposited coins and currency 35,000.00

Unrestricted demand deposits 1,450,000.00
Company checks written (and deducted from the demand deposits amount)
but not scheduled to be mailed until January 2 270,000.00
Time deposits restricted for use (expected use in 2019) 3,000,000.00

In exchange for a guaranteed line of credit, volume has agreed to maintain a minimum balance of P150,000 in its restricted
demand deposits account. What is the amount of cash to be reported in its December 31, 2018 statement of financial
position?

11. Western Company reported a total cash and cash equivalent of P6,325,000 on December31, 2018, which includes the
following information:
 Two certificates of deposits, each totalling P500,000. These certificates of deposit have a maturity of 120 days
 A check that is dated January 12, 2019 in the amount of P125,000
 A commercial paper of P2,100.000 which is due in 120 days.
 Currency and coins on hand amounted to P7,700.

Western Company agreed to maintain a cash balance of P500,000 in one of its banks at all times and it is not available for
withdrawal and to ensure future credit availability (this amount was included in the above balance).

How much is the correct amount of cash and cash equivalents that Western Company should report in its December 31,
2018 statement of financial position?

12. Eastern Co. provided the following information about the composition of its cash on December 31, 2018
 Commercial savings account of P600,000 and a commercial checking account balance of P900,000 are held at BPI.
 Money market fund account held by Citibank that permits Eastern to write checks in this balance, P5,000,000
 Travel advances of P180,000 for executive travel for the first quarter of next year (employee to pay through salary
deduction)
 A separate cash fund in that amount of P1,500,000 is restricted for the retirement of long term assets.
 Petty cash fund, P10,000

What is the correct amount of cash and cash equivalents Eastern Company should report in its December 31, 2018
statement of financial position?

13. Real Company had the following transactions all throughout the year 2018 which is its first year of operations:
 Sales (90% collected in the first year) 1,500,000.00
Bad debts written-off 60,000.00
Disbursements for cost and expenses 1,200,000.00
Disbursements for income taxes 90,000.00
Purchases of fised assets 400,000.00
Depreciation on fixed assets 80,000.00
Proceeds from issuance of ordinary shares 500,000.00
Proceeds from short-term borrowings 100,000.00
Payments on short-term borrowings 50,000.00
What is the cash balance at December 31, 2018?

14. The following is shown in the accounting records of Container Company:

1-Jan 31-Dec
Cash 186,000.00 -
Accounts Receivable 201,000.00 273,000.00
Merchandise Inventory 258,000.00 234,000.00
Accounts Payable 159,000.00 144,000.00
Total sales and cost of goods sold for 2018 were P2,394,000 and P1,749,000 respectively. All sales and purchases were
made on credit. Various operating expenses of P321,000 were paid in cash. Assume that there were no other pertinent
transactions.
What is the cash balance on December 31, 2018 of Container Company?

15. In preparing its bank reconciliation at December 31, 2018, Smiley Company has the following available data:

Balance per bank statement, December 31, 2018 38,075.00

Deposit in transit, December 31, 2018 5,200.00
Outstanding checks, December 31, 2018 6,750.00
Amount erroneuosly credited by bank to Smiley's
account, December 28, 2018 400.00
Bank Service charge for December 75.00
How much is Smiley’s adjusted cash in bank balance at December 31, 2018?

16. While checking the cash accounts of Ruler Company on December 31, 2018, you find the following information:
Balance per books 67,760.00
Balance in checking account (outstanding checks
per books of P9,876) 65,323.00
Deposit in bank closed by BSP 16,000.00
Deposit in transit 12,345.00
Currency and coins counted 9,500.00
Petty cash fund (of which P450 is in the form of
paid vouchers) 1,000.00
Bank charges not yet taken up in the books 58.00
Bond sinking fund- cash 10,000.00
Receivables from employees 700.00
Book error in recording a check, the correct
amount as paid by the bank is P890 instead of
P980 as recorded in the books, a difference of 90.00
Q1: What is the correct cash in bank balance for Ruler Company on December 31, 2018?
Q2: What is the correct cash on hand balance for Ruler Company on December 31, 2018?

17. Shown below is the bank reconciliation for LENT Company for May 2014:

Balance per bank, May 31, 2018 75,000.00

Add: Deposit in transit 12,000.00
Total 87,000.00
Less: Outstanding Checks 14,000.00
Bank credit recorded in error 5,000.00 19,000.00
Cash balance per book, May 31, 2018 68,000.00

The bank statement for June 2018 contains the following data:
 Total deposits 55,000.00
Total charges, including NSF check of P4,000 and
a service charge of P200 48,000.00

All outstanding checks on May 31, 2018, including the bank credit, were cleared in the bank in June 2018. There were
outstanding checks of P15,000 and deposits in transit of P19000 on June 30, 2018.

Q1: What is the cash balance per bank on June 30, 2018?
Q2: What is the cash balance per books on June 30, 2018?

18. As of June 30, 2018, the bank statement of Marine Trading had an ending balance of P373,612. The following data were
assembles in the course of reconciling the bank balance:
 The bank erroneously credited Marine Trading for P2,150 on June 19
 During the month, the bank charged NSF checks amounting to P2,340 of which P800 had been redeposited on the
24th of June.
 Collection for June 30 totalling P10,330 was deposited the following month
 Checks outstanding as of June 30 were P30,205
 Notes collected by the bank for Marine Trading were P8,150 and the corresponding bank charges were P50

What is the adjusted bank balance on June 30, 2014?

19. Rich Company had the following bank reconciliation at March 30, 2018:

Balance per bank statement, March 31, 2018 46,500.00

Add: Deposit in transit 10,300.00
56,800.00
Less: Outstanding Checks 12,600.00
Balance per book, March 31, 2018 44,200.00
Data per bank statement for the month of April 2018 follow:
Deposits P58,400
Disbursements 49,700
All reconciliation items at March 31, 2018 cleared through the bank in April. Outstanding checks at April 30, 2018 totalled
P7,500.
Q1: What is the amount of cash disbursements per book in April?
Q2: What is the cash balance per books as April 30, 2018?

20. Everlasting Company is preparing its March 31 bank reconciliation. The following data are available:

From the February 28 bank reconciliation:

Deposits in transit 1,700.00
Outstanding checks 3,900.00
March data:
Per Bank Per Book
Balance, February 28 74,140.00 71,940.00
March deposits reflected 47,600.00 49,000.00
March checks reflected (61,700.00) (61,000.00)
Note collected (including P200 interest) 20,000.00
Service charge (120.00)
Balance, March 31 79,920.00 59,940.00
March checks reflected per bank erroneously includes a check drawn by Ever Company for P1,500.

Q1: How much is the deposits in transit at March 31?

Q2: How much is the outstanding checks at March 31?

21. Thesaurus Inc. reported a balance of P43,000 in its cash account at the end of the month. There were P20,000 deposits in
transit and p15,000 outstanding checks. The bank statement showed a balance of P50,000, including a note with face value
of P15,000 and a P6,000 service charge.

How much is the interest on the note collected by the bank?

22. In preparing its bank reconciliation for the month of December 2018, Promotion Company has the following information:

Balance per bank statement, December 31 396,550.00

Deposit in transit, December 31 68,750.00
Outstanding checks, December 31 63,250.00
Promotion's account erroneously credited by
bank on December 19 2,750.00
Bank service charges for December 550.00

What should be the balance of cash at December 31?

23. Reconciliation of Baron Company’s bank account at May 31 was as follows:

Balance per bank statement 105,000.00

Deposits in transit 15,000.00
Checks outstanding (1,500.00)
Correct cash balance 118,500.00

Balance per book 118,640.00

Bank service charge (140.00)
Correct cash balance, May 31 118,500.00

June data are as follows:

Bank Book
Checks recorded 115,000.00 118,000.00
Deposits recorded 81,000.00 90,000.00
Service charges recorded 120.00
Collection by bank (P20,000 note plus interest) 21,000.00
NSF check returned with June 30 statement
(for redeposit, assumed to be good) 500.00
Balances, June 30 91,380.00 90,500.00

How much is the outstanding checks at June 30?

24. The cashier of Fraud Company misplaced all the bank statements for the past years. You reviewed the accounting records
and discovered that the following journal entries were made to reconcile the June 30, 2014 bank records and accounting
records.

Accounts Receivable 76,012.00

Miscellaneous Expense 625.00
Notes Receivable 10,000.00
Interest Revenue 500.00
Cash 66,137.00

Pre-adjustment cash balance in the accounting records was P371,023.50, outstanding checks were P10,375 and no other
adjustments were required.

What is the balance if the cash account per bank statement as of June 30, 2014?

25. Abacus Company prepares a 4-column bank reconciliation. Check No. 143 was written for P66,700 in the books but the
check cleared the bank for the correct amount of P75,700. What would be the correct treatment in the reconciliation?

26. Cocoon Corporation keeps all its cash in checking account. An examination of the Company’s accounting records and bank
statement for the month ended December 31, 2018 revealed the following information:

The cash balance as of December 31, 2018 represents:

Bank statement balance 84,690.00

Book balance 85,240.00
 A deposit of P9,500 through the bank’s night depository box on December 29, 2018 did not appear on the bank statement.
The bank statement that shows that on December 28, 2018, the bank collected a note for Cocoon and credited the
proceeds of P9,350 to the Company’s account. The proceeds include P350 interest, all of which Cocoon earned during the
current accounting period. Cocoon has not yet recorded the collection.

Checks outstanding on December 31, 2018:

No.504 1,500.00
No.509 480.00
No.519 720.00
 Cocoon discovered that check no.523 written in December 2018 for P1,830 in payment to a supplier, had been
recorded in the company’s records at P1,380.
 Included with the December 31, 2018 bank statement was an NSF check for P2,500 that Cocoon had received from
Riverside Company on account on December 19. Cocoon has not yet recorded the returned check. The bank
statement shows a P150 service charge for December.

What should be the journal entry to adjust the cash balance as of December 31, 2018?

27. Shown below is the bank reconciliation for Central Company for May 2018:

Balance per bank, May 31, 2018 300,000.00

Deposit in Transit 48,000.00
Outstanding checks (56,000.00)
Bank credit recorded in error (20,000.00)
Cash balance per book, May 31, 2018 272,000.00

The bank statement for June 2018 contains the following data:
Total deposits 220,000.00
Total charges, including an NSF of P16,000 192,000.00
and service charge of P800
All outstanding checks on April 30, including the bank credit, were cleared in the bank on May 31. There were outstanding
checks of P60,000 and deposits in transit of P76,000 on May 31, 2018.

What is the cash balance per bank on June 30, 2018?

28. In reconciling the Cash in Bank of Inner Company with the bank statement balance for the month of November 2018, the
following data were summarized:

Book debits for November, including October CM for note collected, P60,000 P800,000
Book credits for November, including NSF of P20,000 and service charge of P800 for October P620,000
Bank credits for November, including CM for November for bank loan of P100,000 and
October deposit in transit for P80,000 P700,000

Bank debits for November including October outstanding checks of P170,800 and November
service charge of P200 P600,000

Q1: What is the amount for outstanding checks for November?

Q2: How much is the deposit in transit for the month of November?

29. The following information was included in the bank reconciliation for Internet Company for June:

Checks and charges recorded by bank in June (including a June service charge of P300), P172,100
Service charge made by bank in May and recorded on the books in June, P200
Total credits to cash in all journals during June, P198,020
Customer’s NSF check returned as a bank charge in June (no entry made on books), P1,000
Customer’s NSF check returned in May and redeposited in June (no entry made on books in either May or June), P2,500
Outstanding checks at June, P80,600
Deposit in transit in June, P6,000

What were the outstanding checks at the beginning of June?

30. The following information was included in the bank reconciliation for Roman Company for July 2018:
 Checks and charges recorded by bank in July (including a July service charge of P2,800), P932,600
Service charge made by bank in June and recorded on the books in July, P1,200
Customer’s NSF check returned as a bank charge in July (no entry made on books), P6,000
Customer’s NSF check returned in June and recorded by the company in July P15,000
Outstanding checks at July 31, P300,000
Outstanding checks for June, P255,000
Checks issued in July for P20,000 recorded by the company as P2,000
Erroneous bank charge in July, P20,000
Erroneous bank credit in June corrected in July, P30,000
Erroneous book receipt in June corrected in July P5,000

What is the unadjusted disbursement per book on July 31, 2018?

Audit Problems

Problem 1
In connection with your audit of BIG Brother Corp for the year ended December 31, 2014, you gathered the following information:

Current account at BPI 6,000,000

Current account at Equitable PCI Bank (300,000)
Payroll account 1,500,000
Foreign Bank Account- restricted (in USD) 60,000
Current exchange rate as of December 31, 2014 is at P50 for every USD1
Postage Stamps 3,000
Employee’s Post-dated check 12,000
IOU from a key officer 30,000
Credit memo from a vendor for a purchase return 60,000
Traveler’s check 150,000
Customer’s NSF check 45,000
Money orders 90,000
PCF (12,000 in currency and 18,000 expense vouchers) 30,000
Treasury bills, due 3/31/15 (purchased 12/31/14) 600,000
Treasury bills, due 1/31/15 (purchased 1/1/14) 900,000
Change fund 10,000
Bond sinking fund 1,000,000

What is the total cash and cash equivalent to be reported by the company in its December 31, 2014 balance sheet?
How much from the list above should be presented as part of NCA?

Problem 2
Uhawsaiyo Company
General and petty cash count
Audit year: 2014
Date of count - January 5, 2015, 9:10AM

Bills and coins

Denom. Bundles of 100pcs Rolls of 50 coins Loose
500 1 9
100 2 27
50 3 5
20 5 4
10 10
5 6 4
1 10 20
.25 40 16

Checks
Maker Payee Date Amount
T. Otis - customer Uhawsaiyo 12/30/14 11,920
R. Eyes - customer Uhawsaiyo 12/26/14 12,505
O. Liever - customer Uhawsaiyo 1/2/15 5,707
F. Rancisco - customer Uhawsaiyo 12/21/14 13,350
Uhawsaiyo ABC. Co 12/27/14 14,500
M. Doza Cash 1/5/15 310
N. Campo* Cash 12/29/15 260

*amount is for a return of travel advance made to the employee in an earlier period

Vouchers and IOUs

Paid to Date Amount
 PNR - transportation expense 1/2/15 35
Post office - postage stamps 12/20/14 150
Italian village - Christmas party 12/23/14 6,290
I. Dio - IOU 12/27/14 300

Others
1. Cash sales invoices, P100,500
2. Official receipts
Number Amount Form of Collection
31250 560 Cash
31251 12,505 Check
31252 1,202 Cash
31253 11,920 Check
31254 13,350 Check

3. Stamps of various denomination amounted to P80

4. A notation on a sheet of paper was as follows: “Proceeds from employee contribution for Christmas Party, P9,500”
5. Petty cash per ledger, P15,000

How much is the petty cash shortage as of January 5, 2015?

The adjustment to correct the petty cash fund involves a credit to petty cash fund at _____
What is the adjusted petty cash fund as of December 31, 2014?

Problem 3
The Silver Company’s internal control over its cash transaction is very weak. The company’s cash position at December 31, 2014
were as follows:

The cash book showed a balance of P15,000, 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 P12,300; and the outstanding checks were: 0100 - P120, 0201 -
P100; 0300 - P230; 1501 - P110; 1510 - P140; and 151 - P150.

The cashier removed all of the cash on hand in excess of P3,000 and then prepared the following reconciliation:
Balance per books, Dec 31, 2014 15,000
Add: Outstanding Checks 1501 110
1510 140
1515 150 300
15,300
Deduct: Cash on Hand 3,000
Balance per bank, Dec 31, 2014 12,300
Deduct: Unrecorded credit 150
True cash, Dec 31, 2014 12,150

What is the cash shortage?

A correct reconciliation will show that the cashier’s accountability for cash on hand is ___
The adjusted cash in bank excluding cash on hand as of Dec 31, 2014 is __
The adjusted cash balance to be reported in the Statement of Financial Position as of December 31, 2014 is __

Problem 4
You are auditing the cash account of Carrera Inc for the fiscal year ended July 31, 2014. the client has not prepared the July 31 bank
reconciliation. The following information were made available:

General Ledger Bank Statement

Beginning balances 140,330 172,590
Deposits 751,680
Cash receipts journal 763,680
Checks clearing the bank (708,450)
Cash disbursements
Journal (654,330)
July bank service charge (2,610)
Note paid by the bank (183,000)
NSF Check (9,330)
Ending balances 249,680 20,880

Audit notes:
a. Bank reconciliation in June included the following information: bank statement balance June2: P172,590; Deposits
in transit: P18,000; Outstanding checks: P52,260; and balance per general ledger June: P140,330.
b. Checks clearing the bank in July outstanding by the end of June was at P50,760.
c. Checks clearing the bank in July and were recorded in the July cash disbursement journal was at P614,010.
d. A check for P31,800 cleared the bank but had not been recorded in the cash disbursement journal. It was for a
payment of an accounts payable.
 e. A check for P11,880 was erroneously charged by the bank to Carrera Inc
f. Deposits included P18,000 from June and P733,680 from July
g. The bank charged Carrera Inc’s account for a NSF check totaling P9,330. 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.
h. A note for P174,000 plus interest was paid directly by the bank under an agreement signed four months ago. The
note payable was recorded at P174,000 on Carrera Inc’s books.

How much is the total outstanding checks as of July 31?

How much is the deposit in transit as of July 31?
What is the correct cash in bank balance as of July 31?
How much is the cash in bank shortage as of June 31?

Problem 5
In the course of our audit of Edilberto Inc’s cash in bank for the year ended December 31, 2014, you ascertained the following
information:

November 30 December 31
Cash per books 82,350 201,425
Cash per bank statement 535,410 689,085
Undeposited Collections 41,005 64,400
Outstanding Checks 138,590 150,560
Bank service charges 3,600 3,000
Insufficient fund check 41,250
Company’s notes receivable
Collected by the bank 359,075 404,500

The insufficient fund check was redeposited in the same month. No entries are made to take up the return and redeposit.

What is the unadjusted book receipts in December?

What is the unadjusted book disbursements in December?
What is the adjusted book balance on November 30?
The adjusted bank receipts in December should be ___
The adjusted bank disbursements in December should be ___
What is the adjusted book balance on December 31?

Problem 6
Shown below is the May 31, 2014 bank reconciliation prepared by Halalan Corp’s staff:

Bank balance 652,000

Add: Deposit in Transit 10,000
Total 662,000
Less: Outstanding checks
No. 640 10,000
652 8,000
653 2,000 20,000
Adjusted balance 642,000

Book balance 570,800

Add: Proceeds of note receivable collected in May 70,000
Deposit on May 31 not recorded on books until June 2,000 72,000
Total 642,800
Less: Bank service charge 800
Adjusted balance 642,000

The June 2014 bank statement is shown below:

Date Checks Deposit

June1 8,000 10,000
June8 2,000
June11 14,000 20,000
June13 1,000 DM 1,000
June16 4,000
June21 12,000 56,000
June27 18,000
June29 1,000 EC 1,000 EC
June30 200 SV
June30 3,000 DM

SV Service Charge EC Error Corrected DM Debit Memo CM Credit Memo

The paid checks accompanying this bank statement (all clearing in June) are the following:

No. 652 8,000

653 2,000
654 14,000
655 4,000
657 12,000
658 18,000

The check register reveals that the last check issued in June is No. 659 for P5,000 and that check no. 656 is for P2,600. cash received
for the period June22 through June30 of P70,000 was deposited in the bank on July1. the bank erroneously charged the company
P1,000 on Juune29 but immediately corrected the error on the same date.

The debit memos in June13 and June30 represent customers’ NSF checks returned by the bank. The June13 NSF check was
immediately redeposited without entry. The June30 NSF check was redeposited on July1 without entry.

What is the total bank receipts in June per bank statement?

What is the total bank disbursements in June per bank statement?
What is the balance per bank statement on June 30, 2014?
What is the total receipts in June per books?
What is the total disbursements in June per books?
What is the cash balance per books in June 30, 2014?

Problem 7
You are auditing the cash of Saluyot Corp for the fiscal year ended September 30, 2014.

The bank reconciliation prepared by the accountant of Saluyot Corp for the month:
Bank balance, per bank statement 156,000
Add: Deposit in transit, August 31 2,700
Total 158,700
Less: Outstanding checks
No. 547 600
561 5,400
562 4,200
565 1,800 12,000
Adjusted balance 146,700

Book balance, per general ledger 120,000

Add: Proceeds of Notes Receivable
Collected by the bank in August 24,000
Deposit made in bank on August 31
Not recorded on books until
September 3,000
Total 147,000
Less: Bank service charge 300
Adjusted balance 146,700

There was no available bank reconciliation for the month of September, instead the accountant provided you a copy of the
September bank statement to aid you in your audit.

The September bank statement included the following bank debits and credits
Date Particulars Debits Credits
Aug31
Sept1 Chk#561 5,400 2,700
Sept6 Chk#562 4,200
Sept9 Chk#565 1,800 30,000
Sept12 420 DebitMemo 420
Sept15 Chk#566 3,000
Sept17 600
Sept20 Chk#567 2,100 42,000
Sept27 Chk#569 4,320
Sept29 300 ErrorCorrected 300 ErrorCorrected
Sept30 1,320 ServiceCharges
Sept30 900 DebitMemo
Sept30 Chk#570 5,460 DebitMemo

Further investigation revealed the following information:

 a) All book reconciling items during August has been recorded in September
b) The check register revealed that the last check issued in September was No. 571 for P3,000 and that check No.
568 was P7,200
c) Cash received for the period September 25 through 31 of P28,200 was deposited in the bank on October 1
d) The debit memo on September 12 and September 30 were customer NSF checks returned by the bank. The
check on September 12 was immediately redeposited without entry. The check returned on September 31 was
redeposited by the client in the bank on October 1 also without entry
e) Among the bank credits for the month was P600 deposit of Baluyot Corp credited by the bank to the company’s
account

How much is the unadjusted bank balance as of September 30, 2014?

How much is the total book receipts for September?
How much is the total book disbursements for September?
How much is the unadjusted book balance as of September 30, 2014?
How much is the adjusted cash balance as of September 31, 2014?

Problem 8
The following information was obtained in connection with the audit of Wise Company’s cash account as of December 31, 2014:
Outstanding checks, 11/30/2014 16,250
Outstanding checks, 12/31/2014 12,500
Deposit in transit, 11/30/2014 12,500
Cash balance per general ledger 12/31/2014 37,500
Actual company collections from its customers
During December 152,500
Company checks paid by bank in December 130,000
Bank service charges recorded on the company
Books in December 2,500
Bank service charge 3,250
Deposits credited by bank during December 145,000
November bank service charges recorded on
company books in December 1,500

The cash receipts book of December is underfooted by P2,500

The bank erroneously charged the company’s account for a P3,750 check of another depositor. This bank error was corrected in
January 2015.

How much is the deposit in transit on December 31, 2014?

The total unrecorded bank service charges as of December 31, 2014 is ____
What is the total amount of company checks issued in December?
What is the total book disbursements in December?
What is the book balance on November 30, 2014?
What is the bank balance on November 30, 2014?
What is the total bank receipts in December?
What is the total bank disbursements in December?
What is the bank balance on December 31, 2014?

Problem 9
In your audit of I-Bot Inc’s cash account as of December 31, 2014, you ascertained the following information:

The bookkeeper’s bank reconciliation on November 30, 2014, is as follows:

Bank balance per bank statement, November 30 24,298
Add: Deposit in transit 3,648
Total 27,946
Less: Outstanding checks
No. 3408 440
3413 300
3414 6,820
3416 3,924
3417 800 12,284
Balance 15,662
Add: bank service charge for November 36*
Balance per books 15698

*entered in check register in December

The cash receipts journal shows a total receipts for December of P371,766. The check register reflects total checks issued in
December 31 of P377,632. a collection of P5,912 was recorded on company books on December 31 but was not deposited until
January 2, 2015.
The balance per bank statement at December 31, 2014 is P17,516. this statement shows total receipts of P373,502 and checks
and other charges paid of P380,284.

Your examination revealed the following additional information:

a) Check no. 3413 dated November 24, 2014, was entered in the check register as P300. Your examination of the
paid returned with the December bank statement reveals that the amount of the check is P30.
b) Check no. 3417 was mutilated and returned by the payee. A replacement check (no. 3453) was issued. Both
checks were entered in the check register but no entry was made to cancel check no. 3417.
c) The December bank statement includes an erroneous bank charge of P480
d) On January 3, 2015, the bank informed your client that a December bank charge of P42 was omitted from the
statement
e) Your examination of the bank credit memo accompanying the December bank statement discloses that it
represents proceeds from the note collection in December for P4,000
f) The outstanding checks at December 31, 2014, are as follows:
No. 3408 P440
3417 800
3418 2,814
3419 5,788

What is the total book disbursements for the month of December?

What is the book balance at December 31?
What is the total outstanding checks at December 31?
What is the adjusted bank balance on November 30?
What is the adjusted book receipts for the month of December?
What is the adjusted book disbursements for the month of December?
What is the adjusted book balance on December 31?

Problem 10
Halal Corp has a current account in PNB. Your audit of the company’s cash account reveals the following:

a) Balances taken from the company’s general ledger:

Cash balance, November 30, 2014 637,860
Cash balance, December 31, 2014 576,420
Receipts, December 1-31, 2014 306,220

b) Balances taken from the December bank statement:

Bank balance, November 30, 2014 685,180
Bank balance, December 31, 2014 637,220
Disbursements (debit) 356,080

c) Outstanding checks, November 30, 2014 (26,140 was paid by the bank in December), P64,140
d) Checks written and recorded in December; not included in the checks returned with the December bank
statement, P36,080
e) Deposit in transit, November 30, 2014, P15,260
f) Deposit in transit, December 31, 2014, P16,140
g) A bank credit memo was issued in December to correct an erroneous charge made in November, P1,500
h) Note collected by bank in December (company was not informed of the collection) P2,060
i) A check for P2,020 (payable to a supplier) was recorded in the check register in December as P3,000
j) A check for P2,240 was charged by the bank as P2,420
k) Halal Co issued a stop payment order to bank in December. This pertains to a check written in December which
was not received received by the payee. A new check was written and recorded in the check register in
December. The old check was written off by a journal entry also in December, P780
l) Bank service charge, November 30, 2014, P60

What is the total book disbursements in December?

What is the total bank receipts in December?
What is the total outstanding check on December 31?
What is the adjusted bank balance in November 30?
What is the adjusted book receipts in December?
What is the adjusted bank disbursements in December?
What is the adjusted book balance on December 31?