Problem 1-1

The accountant of A Company is in the process of preparing the company is in the process of preparing
the company’s financial statements for the year ended December 31, 2022. He is trying to determine
the correct balance of cash and cash equivalents to be reported as a current asset on the statement of
financial position. The following items are being considered:

 Balances in the company’s accounts at the Metropolitan Bank:

o Current P81,000.00
o Savings account P132,000.00
 Undeposited customer checks of 22,000 (including a customer check dated January 2, 2023 for
3,000)
 Currency and coins on hand of P3,480.00
 Savings account at the Northern Philippines Bank with a balance of P2,400,00.00 . This account
is being used to accumulate cash for future plant expansion (in 2023)
 Petty cash of P4,000.00 (currency of 1,200 and unreplenished vouchers for 2,800).
 P120,000. In a current account at the Northern Philippines Bank.
This represents a 20% compensating balance for 600,000.00 loan with the bank. Santiago
Company is legally restricted to withdraw the bank. A company is legally restricted to withdraw
the funds until the loan is due in 2025.
 Treasury bills:
Two-month maturity bills P90,000.00
Seven-month bills 120,000.00
 Time deposit P100,000.00

What is the correct balance of cash and cash equivalents to be reported in the current assets section
of the statement of financial position?

A. P547,480.00 C.P430,280.00
B. P427,480.00 D.P327,480.00
Problem 1-2
Your audit of the December 31, 2022, financial statements of DDD Corp reveals the following:
Current account at Prime Bank P (30,000)
Current account at Prudent Bank 135,000
Treasury bills (acquired 3 months before maturity ) 300,000
Treasury bills (maturity date is Dec 31, 2023) 1,500,000
Payroll account 390,000
Foreign bank account-restricted (translated
using the December 31, 2022,exchange rate 2,000,000
Postage stamps 1,250
Employee’s postdated check 4,500
IOU from the vice-president 8,000
Credit memo from a supplier for a purchase return 8,100
Traveler’s check 21,000
Money Order 12,900
Petty cash fund (P3,000 in currency and expense
Receipts for 12,000) 15,000
What amount would be reported as “cash and cash equivalents” in the statement of financial position
on December 31, 2022?

A.P840,050 C. P849,400

B.P873,900 D.P861,900

Problem 1-3

The auditor for B INC. Examined the petty cash fund immediately after the close of business, July 31,
2022, the end of the company’s natural business year. The petty cash custodian presented the following
during the count:

Currency P1,650
Petty cash vouchers:
Postage 420
Office supplies expense 900
Transportation expense 340
Computer repairs 800
Advances to office staff 1,500
A check drawn by B inc payable to the
Petty cash custodian 7,200
Postage stamps 300
An employee’s check, returned by bank, Marked NSF 1,000
An envelope containing currency of P1,890 for a
gift for a retiring employee 1,890
P16,000

The general ledger shows an imprest petty cash fund balance of P16,000.
 1. How much is the petty cash shortage or overage?
A.P2,190 overage C. P1,890 shortage
B.P2190 shortage D. P1,890 overage

2. What is the adjusted balance of the petty cash fund at July 31, 2022?

A. P10,740 C. 7,200

B. P3,540 D.P8,850

Problem 1-4
CCC Company’s check register shows the following entries for the month of December
Date Checks Deposits Balance
2012
Dec. 1 Beginning Balance P89,000
5 Deposit P65,000 154,300
7 Check #14344 P32,500 120,800
11 Check#14345 P14,000 106,800
26 Deposit 49,000 155,800
29 Check #14346 8,600 147,200
CCC’s bank reconciliation for November revealed one outstanding check (No.14343) for P12,000 (written
on November 28), and one deposit in transit for P5,550 (written on November 28), and one deposit in
transit for P5,550 (made on November 29)
The following is from CCC’s bank statement for December 2022:

Date Checks Deposit Balance

2012
Dec. 1 Beginning Balance P95,750
1 Deposit P5,550 101,300
4 Check No. 14344 P32,500 68,800
5 Deposit 56,000 124,800
14 Check No.14345 14,000 110,800
15 Loan proceeds 500,000 610,800
20 NSF check 7,600 603,200
29 Service Charge 1,000 602,200
31 Interest 3,600 605,800
Assume that all errors were committed by CCC Company, not the bank
Based on the preceding information, determine the following:

1. Adjusted cash balance on November 30

A. P89,300 C.P102,200
B. P95,750 D.P101,300
2. Outstanding checks on December 31
A. P46,500 C.P8,600
B. P45,500 D.P20,600
3. Deposit in transit on December 31
A. P52,600 C.P5,550
B. P49,000 D.P43,450

4. Total bank receipts in December

A.P114,000 C.P565,150
B.P634,200 D.P597,200