CHAPTER 15 PROOF OF CASH problem 15-1 (IAA) Bay Company provided the following information on December 31: Credit memo for November recorded in December Credit memo for December not yet recorded Deposit in transit ~ November 30 Erroneous bank charge in December corrected by bank in December Erroneous receipt by Bay Company in December not corrected until the following year Total company receipts for December Total bank credits in December What is the deposit in transit on December 31? a. 1,600,000 b. 1,300,000 ec. 1,500,000 d. 1,200,000 Soluton 15-1 Answer c Deposit in transit - November 30 Deposits made by entity during December Total deposits to be acknowledged by bank Deposits acknowledged by bank in Decémber Deposit in transit - December 31 Total company receipts during December Credit memo in November recorded in December Erroneous receipt by entity in December not, corrected Deposits made by entity in December Total bank credits in December Credit memo in December Erroneous bank charge corrected’ by bank December Deposits acknowledged.by bank in December 193 600,000 800,000 700,000 200,000 100,000 8,500,000 8,000,000 700,000 7,800,000 8,500,000 (7,000,000) 1,500,030 8,500,000 ( 600,000) (_100,000) 7,800,000 8,000,000 (800,000) (200,000) 7,000,000Problem 15-2 (IAA) Gray Company provided the following information for October and November. Checks and charges recorded by bank in November, including a November service charge of P5,000 and NSF check of P20,000 550,000 Service charge made by bank in October and recorded . by depositor in November 10,000 Total credits to cash in all journals during November 620,000 Customer NSF check returned in October and redeposited in November but no entry made by depositor in either October or November 40,000 Outstanding checks on October 31 that cleared in November 230,000 What amount was reported as outstanding checks on November 30? a. 275,000 b. 300,000 ce. 315,000 d. 290,000 Solution 15-2 Answer c Outstanding checks — October 31 230,000 Checks issued by depositor in November 610,000 Total checks to be paid by bank 840,000 Checks paid by bank in November (825,000) Outstanding checks - November 30 315,000 Total credits to cash in all journal during November 620,000 Service charge in October recorded in November (10,000) Checks issued by depositor in November 610,000 Checks and charges by bank in November 550,000 November service charge 7 (5,000) November NSF check (20,000) Checks paid by bank in November 525,000 The customer NSF check of P40,000 returned in October and redeposited in November is ignored because no entry was made by the depositor in either October or November., 194problem 15-3 (AICPA Adapted) Lazer Company had the following bank reconciliation on June 30: Balance per bank Statement, June 30 Deposit in transit a oon 400,000 Total Outstanding checks C500 000) Balance per bock, June 30 2,500,000 2,500,000 ‘The bank statement for the month of July showed the fol lowing: Deposits, including P200,000 note collected for Lazer 9,000,000 Disbursements, including P140,000 NSF customer check and P10,000 service charge 7,000,000 Allreconciling items on June 30 cleared through the bank in July. The outstanding checks totaled P600,000 and the deposit in transit amounted to P1,000,000 on July 31, 1, Whatis the adjusted cash in bank on July 31? a. 2,500,000 b. 5,400,000 c. 2,900,000 d. 5,000,000 2. What is the cash balance per book on hily 31? a. 5,400,000 b. 5,350,000 ¢. 5,550,000 d. 4,500,000 3. What is the amount of cash receipts per book in July? a. 9,400,000 b. 9,600,000 c. 8,600,000 d. 9,800,000 4. What is the amount of cash disbursements per book in July? a. 6,550,000 b. 6,700,000 ce. 7,300,000 d. 6,850,000 195Solution 15-3 Question 1 Answer b Balance per bank ~ June 30 July bank deposits July bank disbursements Balance per bank - July 31 July deposit in transit July outstanding checks Adjusted bank balance Question 2 Answer b Balance per book — July 31 (SQUEEZE) Note collected by bank in July NSF customer check in July Service charge in July Adjusted book balance 3,000,000 9,000,000 (7,000,000) 1,000,000 (600,000) 5,400,000 5,350,000 200,000 (140,000) (10,000) 5,400,000 The balance per book on July 31 is “squeezed” by working back from the adjusted balance. Question 3 Answer a Deposits per bank statement for July Note collected by bank in July Deposit in transit — June 30 Deposit in transit - July 31 Cash receipts per book for July Question 4 Answer a Disbursements per bank statement for July NSF check in July Service charge in July ‘ Outstanding checks — June 30 Outstanding checks — July 31 Cash disbursements per book for July Proof of the cash balance per book ~ July 31 Balance per book - June 30 Book receipts for July Book disbursements for July 3alance per book — July 31 196 9,000,000 (200,000) (400,000) 1,000,000 9,400,000 7,000,000 (140,000) (10,000) ( 900,000) 600,000 6,550,000 2,500,000 9,400,000 (6,550,000) 5,350,000problem 15-4 (AICPA Adapted) Chris Company presented the fol ' fo, month of November; ‘ollowing bank reconciliation for Balance per bank statement, November 30 3,600,000 Add: Deposit in transit * _ 800,000 : 4,400,000 Less: Outstanding checks 1,200,000 Bank credit recorded in error 200,000 1,400,000 Balance per book, November 30 3,000,000 Data per bank statement for the month of December follow: December deposits, including note collected of P1,000,000 for Chris 5,500,000 December disbursements, including NSF customer check P350,000 and service charge P50,000 4,400,000 All items that were outstanding on November 30 cleared through the bank in December, including the bank credit. In addition, checks amounting to P500,000 were outstanding and deposits of P700,000 were in transit on December 31. 1, What amount should be reported as adjusted cash in bank on December 31? 2, What is the cash balance per ledger on December 31? : a 4,100,000 197Solution 15-4 Question 1 Answer b Balance per bank — November 30 December deposits Total ' December disbursements Balance per bank ; December 31 Deposit in transit - December Outstanding checks - December Adjusted bank balance — December 31 Question 2 Answer d Balance per book — December 31 (SQUEEZE) Note collected by bank NSF customer check Service charge Adjusted book balance Question 3 Answer b December bank deposits Note collected by bank in December Deposit in transit - November 30 Deposit in transit - December 31 December book receipts Question 4 Answer c December bank disbursements NSF check in December Service charge in December Outstanding checks — November 30 Erroneous bank credit in November Outstanding checks - December 31 December book disbursements Proof of cash balance per book — December 31 Balance per book - November 30 December book receipts December book disbursements ° Balance per book — December 31 198 3,600,000 5,500,000 9,100,000 (4,400,000) 4,700,000 700,000 500,000) 4,900,000: 4,300,000 1,000,000 (350,000) (__ 50,000) 4,900,000 5,500,000 (1,000,000) ( 800,000) 700,000 4,400,000 4,400,000 ( 350,000) (50,000) (1,200,000) ( 200,000) 500,000 3,100,000 3,000,000 4,400,000 (3,100,000) 4,300,000’ problem 15-5 (AICPA Adapted) Lira Company prepared the following bank reconciliation on June 30: Balance per bank 9,800,000 Deposits in transit 400,000 Outstanding checks ; 1,400,000 Balance per book 8,800,000 There were total deposits of 6,500,000 and charges for disbursements of P9,000,000 for July per bank statement. All reconciliation items on June 30 cleared the bank on July 31, Checks outstanding amounted to P1 ,000,000 and deposits in transit totaled P1,200,000 on July 31. 1. Whatis the amount of cash receipts per book in July? a. 6,500,000 b. 7,300,000 ce. 5,700,000 d. 7,900,000 2.. What is the amount of cash disbursements per book in July? a. 8,600,000 b. 7,600,000 c. 9,400,000 d. 8,400,000 3. What amount should be reported as adjusted cash in bank on July31? a. 7,300,000 b. 6,300,000 ¢. 7,500,000 d. 6,500,000 4, What is the cash balance per ledger on July 31? a. 8,800,000 b. 8;500,000 c. 6,300,000 d. 7,500,000 199Solution 15-5 Question 1 Answer 6 Bank receipts for July Deposits in transit - June 30 Deposits in transit -July 31 Book receipts in July Question 2 Answer a Bank disbursements for July Outstanding checks — June 30 Outstanding checks - July 31 Book disbursements for July Question 3 Answer c¢ Balance per bank - June 30 Bank receipts for July Bank disbursements for July Balance per bank - July 31 Deposits in transit — July 31 Outstanding checks — July 31 Adjusted bank balance — July 31 -Question 4 Answer d Balance per book — June 30 Book receipts for July Book disbursements for July Balance per book — July 31 6,500,000 (400,000). 1,200,000 7,300,000 9,000,000 (1,400,000) 000,000 8,600,000 9,800,000 6,500,000 (9,000,000) 7,300,000 1,200,000 1,000,000 7,500,000 8,800,000 7,300,000 (8,600,000) 7,500,000 The balance per book on July 31 is also the adjusted book balance because there are no book reconciling items. 200problem 15-6 (AICPA Adapted) Oro Company had the following bank reconciliation on March 31: Balance per bank statement, March 31 4,650,000 Add: Deposits in transit 1,030,000 Total : 5,680,000 Less: Outstanding checks 1,260,000 Balance per book, March 31 100 Data per bank statement for the month of April: Deposits 5,840,000 Disbursements 4,970,000 Allreconciliation items on March 31 cleared through the bank in April Outstanding checks on April 30 totaled P700,000 and there were no deposits in transit on April 30. What is the cash balance per book on April 30? 4,820,000 5,290,000 5,520,000 5,850,000 peop Solution 15-6 Answer a Balance per bank — March 31 4,650,000 Bank deposits — April 5,840,000 Bank disbursements — April (4,970,000) Balance per bank — April 30 5,520,000 Outstanding checks — April 30 (700,000) Adjusted cash in bank — April 30 4,820,000 The adjusted cash in bank on April 30 is also the cash balance per book on April 30 because there are no book reconciling items. 201Problem 15-7 (AICPA Adapted) Queen Company reported the following bank reconciliati month of! Noverber anette Balance per bank statement November 30 2,000,000 Deposit in transit : 415,000 Outstanding checks ( 630,000) Bank credit recorded in error C 5,000) —— Balance per book November 30 - 1,780,000 —_ Data per bank statement for the month of December: December deposits 2,600,000 December disbursements 2,200,000 All items that were outstanding on November 30 cleared through the bank in December, including the bank credit. Inaddition, checks of P250,000 were outstanding on December 31. What is the balance of cash per book on December 31? a. 2,150,000 b. 2,650,000 c. 2,400,000 d. 1,780,000 Solution 15-7 Answer a Balance per bank — November 30 2,000,000 December bank deposits 2,600,000 December bank disbursements (2,200,000) Balance per bank — December 31 2,400,000 Outstanding checks — December 31 (250,000) Adjusted cash in bank — December 31 2,150,000 The adjusted cash in bank on December 31 is also the cash balance per book on December 31 because there are no book reconciling items. 202Problem 15-8 (PHILCPA, Adapted) Jam Company provided the following bank reconciliation on May 31: Balance per bank statement Deposits outstanding: Checks outstanding Correct cash balance Balance per book Bank service charge Correct cash balance Data for the month of June: Bank Book Checks recorded 2,300,000 2,400,000 Deposits recorded 1,700,000 1,800,000 Collection by bank, P500,000 note plus interest 550,000 a NSF check returned with June 30 statement 100,000 Balances “1,950,000 1,750;000 1. What is the amount of checks outstanding on June 30? « a. 200,000 b. 150,000 c. 100,000 d. 0 2. What is the amount of deposits in transit on June 30? a. 400,000 b. 100,000 ¢. 200,000 d. 0 3. What amount should be reported as adjusted cash in bank on June 30? a. 1,760,000 b. 2,200,000 ¢. 1,950,000 d. 2,250,000 203Solution 15-8 Question I Answer b Checks outstanding — May 31 ‘ 50,000 Checks recorded by book in June 2,400,000 Total checks to be paid by bank 2,450,009 Checks recorded by bank in June (2,300,000) Checks outstanding — June 30 150,000 Question 2 Answer a Deposits in transit - May 31 300,000 Deposits recorded by book — June 1,800,000 Total deposits to be acknowledged by bank 2,100,000" Deposits recorded by bank — June 1,700,000) Deposits in transit - June 30 400,000 => Question 3 Answer b Balance per bank — June 30 1,950,000 Deposits in transit — June 30 400,000 Outstanding checks — June 30 (_ 150,000) Adjusted bank balance 2,200,000 Balance per book 1,750,000 Note collected by bank plus interest $50,000 NSF check (__ 100,000) Adjusted book balance 2,200,000 204