1.

The accountant of Santiago Company is in the process of preparing the company’s financial statements for
the year ended December 31, 2018. He is trying to determine the correct balance of cash and cash equivalents to
be reported as a current asset in the statement of financial position. The following items are being considered:
 Balances in the company’s accounts at the Metropolitan Bank:
Current account P81,000
Savings account 132,600
 Undeposited customer checks of P22,200 (including a customer check dated January 2, 2019, for
P3,000).
 Currency and coins on hand P3,480.
 Savings account at the Northern Philippines Bank with a balance of P2,400,000. this account is being
used to accumulate cash fro future plant expansion (in 2019).
 P120,000 in a current account at the Northern Philippines Bank. This represents a 20% compensating
balance for P600,000 loan with the bank. Santiago Company is legally restricted to withdraw funds
until the loan is due in 2021.
 Treasury Bills:
Two-month maturity bills P90,000
Seven-month bills 120,000
 Time deposit (placement term is 2 months), P100,000.

What total amount of cash and cash equivalents should be reported under current assets?
a) P547,480
b) P427,480
c) P430,280
d) P327,480

2. The following information has been extracted from the accounting records of Ursula Company at December
31, 2018:
a. Cash on hand (see note below) P230,000
b. Impukan Bank savings account (the required
minimum Monthly Average Daily Balance is P10,000) 9,500
c. 364-day Treasury Bills purchased March 1, 2018 400,000
d. Petty cash fund (see note below) 20,000
e. Tipid Bank current account (see notes below) 160,000
f. Time deposit placements:
Date Term
Dec 15, 2018 30 days 30,000
Oct 31, 2018 90 days 40,000
Nov 30, 2018 180 days 25,000
g. Employee travel advances 7,000
h. Cash in bond sinking fund 500,000
i. Customer’s note receivable 45,000
j. Postage stamps 2,400

The following are included in cash on hand:

 A customer check for P43,000 returned by the bank on December 28, 2018. it was redeposited and
cleared the bank on January 2, 20109.
 A customer check for P75,000 dated January 3, 2019, received December 27, 2018.
 PHILPost money orders received from customers, P30,000.

The petty cash fund consists of the following:

Currency and coins P13,500
IOUs from officers and employees 3,000
 Unreplenished petty cash disbursements 1,500
Currency in envelope with the notation:
“We were Bang Quay’s coworkers. Words may
not be adequate to express how sorry we feel.
Please accept our heartfelt sympathies on the
loss of your loved one.” 1,500
20,000

The following information pertains to Tipid Bank current account:

 A check for P13,000 was dated and recorded on December 29, 2018, but was delivered to payee on
January 5, 2019.
 A check for P5,000 dated January 10, 2019, payable to a supplier was recorded and released to payee
on December 19, 2018. Tipid Bank requires the current account depositors to maintain a monthly
average of daily balance of P50,000.

What total amount should be recorded as cash and cash equivalents on December 31, 2018?
a) P383,000
b) P373,500
c) P378,000
d) P408,000

3. The controller of the Lyric Co is trying to determine the amount of cash and cash equivalents to be reported
on its December 31, 2018, statement of financial position. The following information is provided:

1. Balances in the company’s accounts at the Monte Bank:

 Checking account - P540,000
 Savings account - P884,000
2. Undeposited customer checks of P208,000
3. Currency and coins on hand of P23,200.
4. Savings account at the Naic Bank with a balance of P350,000. This account is being used to
accumulate cash for future plant expansion (in 2020).
5. P800,000 balance in a checking account at the Naic Bank.
6. Treasury bills; 30-day maturity bills totaling P600,000, and 180-day bills totaling P800,000.

On December 31, 2018, what amount should be reported as cash and cash equivalent?
a) P3,055,200
b) P2,455,200
c) P2,955,200
d) P2,355,200

4. The following facts apply to Oto Company during 2018:

1. Savings account of P900,000 and a checking account balance of 1,200,000 are held at Manila Bank.
2. Money market placement with maturity of 3 months, P7,500,000.
3. Currency and coins on hand amounted to P11,550.
4. Travel advances of P27,000 for the first quarter of the next year (employee reimbursement will be
through salary deduction).
5. Oto Company has purchased P3,1650,000 of commercial paper of Mendez Corp which is due in 60 days.
6. A separate cash fund amounting to P2,250,000 is restricted for the retirement of long-term debt.
7. Petty cash fund of P1,500.
8. An IOU from an employee of Oto Company in the amount of P2,000.
9. Two certificates of deposit, each totaling P500,000. these CDs have a maturity of 120 days.
 10. Oto Company has received a check from a customer in the amount of P187,500 dated January 15, 2019.
11. On January 1, 2018, Oto Company purchased marketable equity securities to be held as “trading” for
P3,000,000. On December 31, 2018, its market value is P4,300,000.

What amount should be reported as cash and cash equivalents on December 31, 2018?
a) P13,763,050
b) P12,575,550
c) P12,751,500
d) P12,763,050

5. Your audit of the December 31, 2018, financial statements of Dionisio Corp reveals the following
Current account at Prime Bank (P30,000)
Current account at Prudent Bank 135,000
Treasury Bills (acquired 3 month before maturity) 300,000
Treasury bills (maturity date is Dec 31, 2019) 1,500,000
Payroll account 390,000
Foreign bank account - resticted (translated
using the Dec 31, 2018 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 P12,000) 15,000

What amount would be reported as “cash and cash equivalents” in the statement of financial position on
December 31, 2018?
a) P840,050
b) P873,900
c) P849,400
d) P861,900

6. The cash account of the BEA Corporation as of December 31, 2018, was composed of the following:

On deposit in current account account with the Bank of PI P900,000

Cash collection not yet deposited to the bank 350,000
A customer’s check returned by the bank for insufficient fund 150,000
A check drawn by the Vice-President of the company dated
January 15, 2019 70,000
A check drawn by a supplier dated December 28, 2018, for goods
returned by the company 60,000
A check dated May 31, 2018, drawn by the company against the
Bank of Manila in payment of customs duties.
Since the importation did not materialize, the check
was returned by the customs broker. This check was an
outstanding check in the reconciliation of the Bank of Manila 410,000
Petty cash fund of which P10,000 is in currency; P7,200 in form of
employees’ IOUs; and P2,800 is supported by approved petty
cash vouchers for expenses all dated prior to closing of the books
on December 31, 2018 20,000
 Total P1,960,000
Less: Overdraft with the Bank of Manila secured by a chattel mortgage
on the inventories 300,000
Cash balance per ledger P1,660,000

What is the amount of cash to be reported on the December 31, 2018, statement of financial position of Bea
Company?
a) P1,500,000
b) P1,430,000
c) P1,730,000
d) P1,370,000

7. In connection with your audit of the financial statements of Onor Company for the year ended December 31,
2018, you gathered the following information.

1. The company maintains its current account with Tsunami Bank. The bank statement on December 31,
2018, showed a balance P638,340.

Your audit of the company’s account with Tsunami Bank disclosed the following:

 A check for P22,500 received from a customer whose account is current had been deposited and then
returned by the bank on December 28, 2018. No entry was made for the return of this check. The
customer replaced the check on January 15, 2019.
 A check for P5,720 was cleared by the bank as P7,520. the bank made the correction on January 2,
2019.
 A check for P3,500 representing payment of an employee advance was received and deposited on
December 27, 2018, but was not recorded until January 3, 2019.
 Postdated checks totaling P67,300 were included in the deposit in transit. These represent collections of
current accounts receivable from customers. The checks were actually deposited on January 5, 2019.
 Various debit memos for drafts purchased for payment of importation of equipment totaling P230,000
were not yet recorded. These purchases were set up as accounts payable. Said equipment arrived in
December 2018.
 Interest earned on the bank balance for the 4th quarter of 2018, amounting to P1,950 was not recorded.
 Bank service charges totaling P1,260 were not recorded.
 Deposit in transit and outstanding checks at December 31, 2018 totaled P136,250 and P276,380
respectively.

2. Various expenses from the company’s imprest petty cash fund dated December 2018, totaled P16,250,
while those dated January 2019, amounted to P5,903. Another disbursement from the fund dated December
2018 was a cash advance to an employee amounting to P3,500. a replenishment if the petty cash fund was
made on January 8, 2019.

3. The company’s trial balance on December 31, 2018, includes the following accounts:
Cash in bank - Tsunami Bank P748,320
Cash in bank - Earthquake bank restricted account for
plant expansion, expected to be disbursed in 2019) 700,000
Petty cash fund 30,000
Time deposit, placed December 20, 2018, and due
March 20, 2019 1,000,000
Money market placement - Prudential Bank 4,000,000
 1. What is the adjusted petty cash fund balance on December 31, 2018?
a) P4,347
b) P10,250
c) P30,000
d) P24,097

2. The petty cash shortage on December 31, 2018 is

a) P0
b) P5,903
c) P3,500
d) P4,347

3. What is the adjusted Cash in Bank - Tsunami Bank balance on December 31, 2018?
a) P500,010
b) P748,320
c) P432,710
d) P429,110

4. The entry to adjust the Cash in Bank - Tsunami Bank account should include a debit to
a) Accounts receivable for P89,800
b) Accounts receivable for P86,300
c) Accounts payable for P228,200
d) Interest expense for P1,950

5. The December 31, 2018, statement of financial position should show “Cash and cash equivalents” at
a) P6,142,960
b) P5,439,360
c) P4,442,960
d) P5,442,960

8. The auditor for Samantha Inc examined the petty cash fund immediately after the close of business, July 31,
2018, 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 Samantha Inc,
payable to the petty cash custodian 7,200
Postage stamps 300
An employee’s check, returned by the bank,
marked NSF 1,000
An envelope containing currency of P1,890
for a gift for a retiring employee 1,890
16,000

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
b) P2,190 shortage
c) P1,890 shortage
d) P1,890 overage

2. What is the adjusted balance of the petty cash fund at July 31, 2018?
a) P10,740
b) P3,540
c) P7,200
d) P8,850

9. On January 1, Tanya Co establishes a petty cash account and designates Orly Reyes as petty cash custodian.
The original amount included in the petty cash fund is P10,000. The following disbursements are made from the
fund:

Office supplies P3,460

Postage 2,240
Entertainment 840

The balance in the petty cash box is P3,200.

1. The person responsible, at all times for the petty cash fund is the
a) Chairman of the board of directors
b) President of the company
c) Petty cash custodian
d) General cashier

2. The following are appropriate procedures for controlling the petty cash fund, except
a) To monitor variations in different types of expenditures, the petty cash custodian files petty cash
vouchers by category of expenditure after replenishing the fund.
b) To replenish the fund, the general cashier issues a company check to the petty cash custodian, rather
than cash.
c) To determine that the fund is being accounted for satisfactorily, surprise counts of the fund are made
from time to time by the internal auditor or other responsible official.
d) Each individual to whom petty cash is paid is required to present signed receipts to the petty cash
custodian.

3. The entry to replenish the fund is

a) Office supplies expense 3,460
Postage expense 2,240
Entertainment expense 840
Cash 6,540

b) Office supplies expense 3,460

Postage expense 2,240
Entertainment expense 840
Cash over and short 260
Petty cash 6,800

c) Office supplies expense 3,460

 Postage expense 2,240
Entertainment expense 840
Cash over and short 260
Cash 6,800

d) Office supplies expense 3,460

Postage expense 2,240
Entertainment expense 840
Petty cash 6,540

4. The objective of establishing a petty cash fund is to

a) Cash checks for employees
b) Account for all cash receipts and disbursements
c) Account for cash sales
d) Facilitate payment of small, miscellaneous items

5. What is the effect of not replenishing the petty cash at year-end and not making the appropriate adjusting
entry?
a) A detailed audit is essential
b) The petty cash custodian should turn over the petty cash to the general cashier
c) Cash will be overstated and expenses understated
d) Expenses will be overstated and cash will be understated

10. In connection with your audit of the financial statements of Benjamin Corp for the year ended December 31,
2018, you conducted a surprise count of the company’s petty cash fund and undeposited collections at 8:20a.m.
on January 3, 2019. Your count disclosed the following:

Bills and coins

Bills Coins
P100 .00 5 pieces 5.00 18 pieces
P50.00 40 pieces 1.00 206 pieces
P20.00 48 pieces 0.25 32 pieces

Checks
Date Payee Maker Amount
Dec 30 Cash Custodian P1,200
Dec 30 Benjamin Corp SLV Inc 14,000
Dec 31 Benjamin Corp Mario Lansang, sales manager 1,680
Dec 31 Benjamin Corp MSU Corp 17,800
Dec 31 Benjamin Corp Ateneo Inc 8,300
Dec 31 Taiwan Corp Benjamin Corp 27,000

Unreimbursed vouchers
Date Payee Desciption Amount
Dec 23 Mario Lansang, sales managerAdvance for trip to Tagaytay P20,000
Dec 28 Central Post Office Postage Stamps 1,620
Dec 29 Messengers Transportation 150
Dec 29 Byte Inc Computer repair 800

Other items found inside the cash box:

1. Unclaimed pay envelope of Juan MacDonut. Indicated on the pay slip is his net salary of P7,500. your
inquiry revealed that Juan’s salary is mingled with the petty cash fund.
2. The sales manager’s liquidation report for his Tagaytay City trip.

Cash advance received on Dec 23 P20,000

Less: Hotel accommodation, meals, etc. P16,000
Bus fare for two 1,200
Cash given to Pablo, salesman 1,000 18,200
Balance P1,800

Accounted for as follows:

Cash returned by Pablo to the sales manager P120
Personal check of the sales manager 1,680
Total P1,800

Additional information:
1. The custodian is not authorized to cash checks.
2. The last official receipt included in the deposit on December 30 is No. 4351 and the last official receipt
issued for the current year is No. 4355. the following official receipts are all dated December 31, 2018.
OR No Amount Form of Payment
4352 P13,600 Cash
4353 17,800 Check
4354 3,600 Cash
4355 8,300 Check
3. The petty cash balance per general ledger is P25,000. the last replenishment of the fund was made on
December 22, 2018.

1. What is the amount of shortage due from the sales manager?

a) P240
b) P1,800
c) P120
d) P0

2. What is the amount of undeposited collections on December 31, 2018?

a) P44,300
b) P84,300
c) P57,300
d) P41,000

3. The adjusting entries on December 31, 2018, should include a net debit to Travel Expenses of
a) P17,320
b) P18,320
c) P18,200
d) P18,080

4. The cash count should include total checks of

a) P69,980
b) P42,980
c) P41,780
d) P41,300

5. What is the total cash shortage?

a) P22,166
b) P8,166
 c) P22.406
d) P20,486

11. Anying Velsaco is reviewing the cash accounting for ABX, Inc. Anying’s review will focus on the petty
cash fund account and the bank reconciliation for the month ended May 31, 2018. She has collected the
following information from ABX’s bookkeeper for this task.

Petty Cash Fund

1. The petty cash fund was established on May 2, 2018, in the amount of P10,000.
2. Expenditure from the fund by the custodian as of May 31, 2018, were evidenced by approved petty cash
vouchers for the following:
Various office supplies P3,920
IOU from employees 1,200
Shipping charges 2,298
Miscellaneous Expense 1,526

On May 31, 2018, the petty cash fund was replenished and increased to P12,000; currency and coins in the fund
at that time totaled P756.

Bank Reconciliation

Shore Bank
Bank Statement

Disbursements Receipts Balance

Balance, May 1, 2018 P350,760
Deposits P1,120,000
Note payment direct from customer (interest of P1,200) 37,200
Checks cleared during may P1,246,000
Bank service charges 1,080
Balance, May 31, 2018 260,880

ABX, Inc’s Cash Account P354,000

Deposits during May 2018 1,240,000
Checks written during May 2018 1,273,400

Deposit in transit are determined to be P120,000 and checks outstanding at May 31 total P34,000. Cash on hand
(besides petty cash fund) at May 31, 2018, is P9,840.

1. What is the amount of petty cash shortage?

a) P2,300
b) P11,244
c) P300
d) P0
2. The journal entry to record the replenishment of, and increase in the petty cash fund includes a credit to
a) Cash of P10,944
b) Cash of P11,244
c) Petty cash fund of P10,944
d) Petty cash fund of P11,244
3. What amount of cash should be reported in the May 31, 2018, statement of financial position?
a) P368,720
b) P356,720
 c) P368,420
d) P358,880

12. Presented below are a series of unrelated situations. Answer the question at the end of each situation.
1. The accountant of NARCISA Co. Provided the following data in reconciling the April 30 cash in bank
balance:
Balance per bank, April 30 P130,350
Balance per books, April 30 85,000
Bank service charge 2,000
Deposit in transit 49,000
Outstanding checks 17,650
Note collected by bank including P11,200 interest (Narcisa Co.
not yet informed) 136,000
Check drawn by XYZ Co erroneously charged by bank to Narcissa’s
account 54,600

A transposition error was made in recording a sale and deposit in the sales journal and cash receipts journal in
April.
Correct Amount P13,658
Recorded as 16,358

What is the adjusted cash balance on April 30?

2. The following information is included in EMIL Corporation’s bank statement for the month of March:
A customer’s check has been marked “NSF” by the bank and returned P13,000
Bank service charge for March 1,200

In comparing the bank statement to the company’s cash records, you found:
Outstanding checks on March 31 P184,000
Deposits made but are not yet shown in the April bank statement 14,000

The deposits in transit and outstanding checks have been correctly taken up in the company’s books. You also
found a customer’s check for P17,400 that had not yet been deposited and had not been recorded in Emil’s
books. Your client’s books show a cash balance of P36,420.

What is Emil Corporation’s correct cash balance at March 31?

3. The following information pertains to a checking account of a company at June 30, 2018.
Balance per bank statement P200,000
Interest earned for the second quarter 500
Outstanding checks 15,000
Customer’s checks returned for insufficient funds 5,000
Deposit in transit 25,000

What is the cash balance per books at June 30, 2018?

4. A company is reconciling its bank statement with internal records. The cash balance per the company’s
books is P45,000. there are P5,000 of bank charges not yet recorded, P7,500 of outstanding checks,
P12,500 of deposits in transit and P15,000 of bank credits and collections not yet taken up in the company’s
books.

What is the cash balance per bank?

 5. A company shows a cash balance of P175,000 on its bank statement dated June 30. As of June 30, there
are P55,000 of outstanding checks and P37,500 of deposits in transit.

What is the adjusted cash balance on June 30?

6. The cash account shows a balance of P225,000 before reconciliation. The bank statement does not
include a deposit of P11,500 made on the last day of the month. The bank statement shows a collection by
the bank of P4,700 and a customer’s check for P1,600 was returned because it was NSF. A customer’s for
P2,250 was recorded on the books as P2,700 and a check written for P395 was recorded as P485.

What should be the correct cash balance?

7. On July 5, 2018, Emilia Corp received its bank statement for the month ending June 30. the statement
showed a P209,500 balance while the cash account balance on June 30 was P35,000. in reconciling the
balances, the auditor discovered that:

1. The June 30 collection of P176,000 were recorded on the books but were not deposited until July.
2. The bank service charges for the month of June totaled P3,000.
3. A paid check for P24,300 was entered incorrectly in the cash payments journal as P34,200.

What is the total outstanding checks at June 30, 2018?

13. The bank statement for the current account of IAN Co showed a December 31, 2018, balance of P585,284.
information that might be useful in preparing a bank reconciliation is as follows:

a) Outstanding checks were P52,810.

b) The December 31, 2018, cash receipts of P23,000 were not deposited in the bank until January 2, 2019.
c) Our check written in payment of rent P8,940 was correctly recorded by the bank but was recorded by
Ian Con as a P9,840 disbursement.
d) In accordance with prior authorization, the bank withdrew P18,000 directly from the current account as
payment on a mortgage note payable. The interest portion of that payment was P14,000. Ian Co has
made no entry to record the automatic payment.
e) Bank service charges of P740 were listed on the bank statement.
f) A deposit of P35,000 was recorded by the bank on December 12, but it did nto belong to Ian Co.
g) The bank statement included a charge of P3,400 for a not-sufficient-fund check. The company will
seek payment from the customer.
h) Ian Co maintains an P8,000 petty cash fund that was appropriately reimbursed at the end of December.
i) According to instructions from Ian Co on December 31, the bank withdrew P40,000 from the account
and purchased treasury bills for Ian Co. The company recorded the transactions in its books on
December 31 when it received notice from the bank. Half of the treasury bills mature in three months
and the other half in six months.

1. What is the cash in bank balance per books on December 31, 2018?
a) P549,714
b) P543,514
c) P534,914
d) P541,714
2. What is the adjusted cash in bank balance on December 31, 2018?
a) P520,474
b) P527,274
c) P518,674
 d) P520,154
3. What amount of cash and cash equivalents should be shown under current assets on December 31, 2018?
a) P928,474
b) P728,474
c) P720,474
d) P735,274

16. Edgardo Co was organized on January 2, 2018. the following items are from the company’s trial balance on
December 31, 2018.
Ordinary share capital P1,500,000
Share Premium 150,000
Merchandise Inventory 69,000
Land 1,000,000
Building 1,400,000
Furniture and fixtures 367,000
Accounts receivables 165,400
Accounts payable 389,650
Notes payable - bank 500,000
Sales 6,235,200
Operating expenses (including depreciation of
P400,000) 1,005,150

Additional information is as follows:

1. Deposits in transit, December 31 P384,660
2. Service charge for December 2,000
3. Outstanding checks, December 31 475,000
4. Bank balance, December 31 892,000
5. Edgardo Co’s mark up on sales is 30%

1. What is the total collections from sales?

a) P6,114,967
b) P4,119,240
c) P6,235,200
d) P6,069,800
2. What is the total payments for merchandise purchases?
a) P3,905,990
b) P4,649,140
c) P4,043,990
d) P5,914,550
3. What is the total cash receipts per books?
a) P7,819,800
b) P8,169,800
c) P8,219,800
d) P8,069,800
4. What is the total cash disbursements per books?
a) P7,816,140
b) P7,416,140
c) P8,021,290
d) P7,278,140
5. What is the cash balance per books on December 31?
a) P653,660
b) P803,660
 c) P1,203,660
d) P707,060
6. What is the adjusted cash balance on December 31?
a) P801,660
b) P651,660
c) P1,201,660
d) P803,660

17. In connection with your audit of the cash account of Annie Corp, you gathered the following information.
a) Balance per bank, December 1, 2018 P145,000
b) Total bank receipts (credits) in December 346,000
c) Balance per bank, December 31, 2018 114,500
d) Outstanding checks, Nov 30, 2018 (including P12,000 paid by bank in December) 67,000
e) Outstanding checks, December 31, 2018 (including checks issued in November) 94,162
f) Deposit in transit, Nov 30, 2018 39,458
g) A customer’s check received on December 4, 2018, was returned by bank on
December 7 marked NSF. It was redeposited on December 8, 2018.
The only entry made was to take up the collection on December 4, 2018 11,143

1. What is the total book receipts in December?

a) P295,399
b) P306,542
c) P334,857
d) P346,000
2. What is the total bank disbursements in December?
a) P315,500
b) P376,500
c) P231,500
d) P201,000
3. What is the total book disbursements in December?
a) P447,519
b) P331,519
c) P403,662
d) P392,519

18. Your audit of the cash account of Junie Corp, disclosed the following information:
1. Cash in bank balance per books, Dec 31, 2018 P35,000
2. Bank statement balance, Dec 31, 2018 60,000
3. Note collected by bank in December (principal plus interest of
P800, less collection fee of P200) 27,600
4. Debit memo for a checkbook ?
5. Deposits in transit, Dec 31, 2018 15,200
6. Transposition error made by bank in recording deposit of
December 28:
Correct amount P45,000
Recorded as 54,000 9,000
7. Erroneous bank debit 26,700
8. Included in the Cash in bank account is petty cash fund of P10,000, Your count on December 31, 2018,
revealed the following fund items:
Currency and coins P3,000
Supplies 2,400
Transportation 100
 IOUs 4,000 9500
9. Erroneous bank credit 11,000
10. Outstanding checks (including a certified check of P10,000) 39,400

1. What is the principal amount of the note collected by bank in December?

2. What is the adjusted cash in bank balance at December 31, 2018?
3. The cost of checkbook is -
4. What is the amount of petty cash shortage at December 31, 2018?
5. What is the adjusted petty cash balance?

20. Fermin Company’s check register shows the following entries for the month of December:
Date Checks Deposits Balance
Dec 2018

1 Beginning balance P89,300

5 Deposit P65,000 154,300
7 Check 14344 P32,500 120,800
11 Check 14345 14000 106,800
26 Deposit 49,000 155,800
29 Check 14346 8,600 147,200

Fermin’s bank reconciliation fro November revealed one outstanding check (14343) for P12,000 (written on
November 28), and one deposit in transit for P5,550 (made on November 29).

The following is from Fermin’s bank statement for December 2018:

Date Checks Deposits Balance

Dec 2018

1 Beginning balance P95,750

1 Deposit P5,550 101,300
4 Check 14344 P32,500 68,800
5 Deposit 56,000 124,800
14 Check 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 Fermin Company, not the bank.

Based on the preceding information, determine the following:

1. Adjusted cash balance on November 30
a) P89,300
b) P95,750
c) P102,200
d) P101,300
2. Outstanding checks on December 31
a) P46,500
b) P45,500
c) P8,600
d) P20,600
 3. Deposit in transit on December 31
a) P52,600
b) P49,000
c) P5,550
d) P43,450
4. Total bank receipts in December
a) P114,000
b) P119,550
c) P565,150
d) P61,550
5. Adjustsed cash balance on december 31
a) P663,800
b) P634,200
c) P748,200
d) P597,200

21. In connection with and audit, you are given the following bank reconciliation.

BANK RECONCILIATION
December 31, 2018

Balance per ledger, December 31, 2018 ₱ 34, 350

ADD: Collections received on the last day of December
and charged to “ Cash in Bank” on books but
not deposited 5,325
Debit memo for customer’s check returned unpaid (check
is on hand but no entry has been made on the books) 4,000
Debit memo for bank services charge for December 1,000
₱46,675

Deduct:
Outstanding checks
(see detailed list below) ₱18,625
Credit memo for proceeds of a note
receivable which had been left at the bank
for collection but which has not been
recorded as collected 8,000
Check for an account payable entered
on books as ₱12,625 but drawn and
paid by bank as ₱16,225 3,600 32, 225
Computed balance ₱14,450
Unlocated difference 36,600
Balance per bank (checked to confirmation) ₱51,050

LIST OF OUTSTANDING CHECKS, DEC. 31, 2018

Check No. Amount
14344 ₱ 5,820
14358 1,295
14367 3,543
14399 2,001
 14401 4,892
14407 5,074
₱18,625

1. What is the correct amount of outstanding checks on December 31?

A. ₱18,625 C. ₱17,625
B. ₱22,625 D. ₱21,625

2. The journal entry to correct the outstanding checks should include a

A. Debit to Cash in bank of ₱4,000
B. Credit to Cash in bank of ₱4,000
C. Debit to accounts payable of ₱4,000
D. No journal entry is necessary

3. The correct amount of “unlocated difference” is

A.₱32,600 C. ₱36,600
B. ₱35,600 D. ₱ 0

4. The Cash in bank to be shown on the company’s December 31, 2018, statement of financial position is
A. ₱34,750 C. ₱33,750
B. ₱37,350 D. ₱37,750

5. The journal entry to adjust the Cash in bank account as of December 31 should include a
A. Debit to Cash in bank of ₱8,000
B. Credit to Cash in bank of ₱8,600
C. Net credit to Cash in bank of ₱600
D. Net debit to Cash in bank of ₱600

SOLUTION 1-21
1. Outstanding checks, Dec. 31 (correct total of the list) ₱22,625
Answer: B

2. No journal entry is necessary. There is no information in the problem that will indicate that those included
in the list of outstanding checks were not taken up properly on books.
Answer: D

3.A correct reconciliation (see no. 4) shows that there is actually no “ unlocated difference’.
Answer: D

4. Book Bank
Unadjusted balances ₱34,350 ₱51,050
Deposit in transit 5,325
Customer’s check returned (4,000)
Bank service charge (1,000)
Outstanding checks (22,625)
Credit memo for note collected 8,000
Understatement of book disbursement (3,600)
Adjusted balances ₱33,750 ₱33,750
Answer: C
5. ADJUSTING JOURNAL ENTRIES
December 31, 2018
a. Account receivable 4,000
Cash in bank 4,000
b. Bank service charges 1,000
Cash in bank 1,000
c. Cash in bank 8,000
Notes receivable 8,000
d. Accounts payable 3,600
Cash in bank 3,600

Debit to cash in bank ₱8,000

Credit to cash in bank (₱4,000 + ₱1,000 + ₱ 3,600) (8,600)
Net credit to cash in bank (₱600)
Answer: C

22. In connection with your audit of the MARCELO COMPANY at December 31, 2018, the following bank
reconciliation was submitted to you by an employee of your client:

Balance per bank ₱30,534

Deposits in transit 37,856
₱68,390
Outstanding checks (42,756)
Balance per books P25,634

As part of your verification, you obtained the bank statement and cancelled checks from the bank on January
15, 2019. According to the records of the company, checks issued from January 1 to January 15, 2019,
amounted to ₱22,482. Checks returned by the bank on January 15, 2019, totalled ₱58,438. Of the checks
outstanding on December 31, 2018, ₱9,600 were not returned by the bank with the January 15, 2019, bank
statement; and of those issued, according to the records of the company, in January 2019, ₱7,200 were not
returned by the bank.

Based on the above data, calculate the disbursements per company records.

1. The difference between the disbursements per books as computed and as reported is
A. ₱ 61,912 C. ₱10,000
B. ₱2,800 D. ₱29,874

2. Suggest three possible explanations for the difference between the disbursements per company as computed
and as reported.

SOLUTION 1-22

1. Outstanding checks, January 15; 800

From December or before ₱9,600
From January 7,200 ₱16,
Add: Disbursements per bank statement 58,438
Total: 75,238
Less: Outstanding checks, December 31 42,756
 Disbursements per books as computed ₱32,482

Disbursements per books as computed ₱32,482

Disbursements per books as reported 22,482
Difference in disbursements ₱10,000
Answer: C

2. Three possible explanations for the above difference:

a. The bank disbursements (₱58,438) may be overstated by ₱10,000. Another company check for ₱10,000
may have been charged erroneously by the bank against the client’s account.
b. The December 31 outstanding checks may be understated by ₱10,000. Since the bank reconciliation given
in the problem was prepared by a company employee, there is no assurance that it is correct.
c. The client’s employee may have failed to record check/s issued in January, thus, understating the book
disbursements (₱22,482).

23. In auditing the HECTOR COMPANY, you obtained the bank statement canceled checks, and other
memoranda which relate to the company’s bank account for December 2018. In reconciling the bank balance
which that shown us the company’s, books, you observed the facts set forth below:

[1] Balance per bank statement, Dec. 31, 2019 P47, 174
[2] Balance per books, Dec 31, 2018 19,289
[3] Outstanding checks, Dec.31, 2018, 63, 000
[4] Receipts of Dec. 31, 2018, deposited Jan. 2, 2019 6,260
[5] Service charge for November, per bank memo of Dec. 15, 2018 1,000
[6] Proceeds of bank loan, Dec. 15, 2018, discounted for 3 months
At 18% per annum, omitted from company books 47,750

[7] Deposit of Dec. 22, 2018 omitted from bank statement 9,170

[8] Check of Milano Company, returned on Dec. 21, 2018, for absence
of counter-signature and redeposited with complete signature on Jan. 3,
2019, no entry on the books having been made of the return or redeposit 77,320
[9] Error of bank statement in entering deposit od Dec. 28, 2018:
correct amount P1, 600
entered statement 160 1,440
[10] Check no. 021261 of Yek Company,
charge by bank in error to
company’s account 13,600
[11] Proceeds of note of Harthur Co,.
collected by bank, Dec 10, 2018, note entered in cash
book (principal amount of P25,000 plus interest of
P1,125 less collection fee 25,625
[12] Erroneous debit memo of Dec 28,2018, to charge the company’s
account with settlement of bank loan which was paid by check no. 112170
on same date 5,000

[13] Error on bank statement in entering deposit Dec. 4, 2018:

entered as P14,200.62
Correct amount 12,400.62 1,800
[14] Deposit of Bunso Co. of Dec 2, 2018 credited in error to this company 3,500
 1. What is the principal amount of the loan obtained from the bank in December?
A. P50, 000 C. P48,12
B. P47, 750 D. P49,625

2. What amount of prepaid interest should be shown on Hector’s December 31, 2018, statement
of financial position?
A. P2,250 C. P375
B. P 0 D. P1875

3. The amount of collection fee is

A. P625 C. P500
B. P1,625 D. P 0
4. What is the adjusted Cash in bank balance as of December 31, 2018?
A. P14,344 C. P17,944
B. P11,464 D. P9,344
5. The Cash in bank per ledge as of December 31, 2018, should be increased (decreased) by
A. P4,945 C. P(4,945)
B. P5,945 D. P(5,945)

SOLUTION 1-23
1. Proceeds = Principal – Interest
47,750 = P – (Px18% x 3/12)
47, 750 = P – 0.045P
47, 750 = 0.955 P
P = 47, 750/ 0.955
P = P50,000
Answer: A

2. Prepaid interest, Dec. 31, (P2,250 x 2.5/3) P1,875

Answer: D

3. Principal P25,000
Interest Income 1,125
Maturity Value 26,125
Collection fee (SQUEEZE) (500)
Proceeds P25,625

Answer: C

4. Books Bank
Unadjusted Balances P19,289 P47,174
Outstanding Checks (63,000)
Receipts of 12/31/18, deposited 1/02/19 6,260
Service charge for November (1,000)
Proceeds of bank loan 47,750
Deposit of 12/22/18, omitted from the bank statement 9,170
Check of Milano Company, charged back (77,320)
Error in entering deposit of 12/18/18 1,440
Check of Yek Company charged in error to Hector Company 13,600
Proceeds of note of Harthur Co. 25,625
Erroneous debit memo of 12/28/18, charged by bank in
settlement of loan paid by check no. 112170 5,000
 Error in entering deposit of 12/08/18 (1,800)
Deposit of Bunso Co., credited in error to Hector Company _______ (3,500)
ADJUSTED BALANCES P14,344 P14,344
Answer: A

5. Adjusted Cash in bank balance (see no.4) P14,344

Cash in bank balance per ledger 19,289
Net credit adjustment – decrease P4,945
Answer: C

24. You are auditing general cash for the DION COMPANY for the fiscal year ended July 31,2018. The
client has not prepared by the Jly 31 bank reconciliation. After a brief discussion, with assistance from one
of Dion Company’s clerks. You obtained the following information:

General Bank
Ledger Statement
Beginning balance P46,110 P57,530
Deposits 250,150
Cash receipts journal 254,560
Cleared checks (236,150)
Cash disbursement journal (218,110)
July bank service charge (870)
Note paid directly (61,000)
NSF check (3,110)
Ending balance P82,560 P6,960

JUNE 30 BANK RECONCILIATION

Information in General Ledger and Bank Statement

Balance per bank P57,530

Deposits in transit 6,000
Outstanding checks 17,420
Balance per books 46,110

Additional information obtained is:

1. Checks clearing that were outstanding on June 30 totaled P16,920
2. Checks clearing that were recorded in the July disbursements journal totaled P204,670
3. A checks for P10,600 cleared the bank but had not been recorded in the cash disbursement journal. It
was for an acquisition of inventory. Dion uses the periodic, inventory method.
4. A checks for P4,960 was charged to Dion Company but had been recorded written on a different
company’s bank account.
5. Deposited included P6,000 from June and P244,560 for July.
6. The bank charged Dion Company’s account for a not-sufficient fund checks totaling P3,110. The credit
manager conclude that the customer international closed its account and the owner left the city. The
checks was turned to over to a collection agency.
7. A note for P58,000, plus interest, was paid directly to the bank under an agreement four months ago.
The note payable was recorded at P58,000 on Dion Company’s books.

Based on facts given, answer the following:

 1. The checks outstanding on June 30 amount to:
A. P9,980 C. P13,940
B. P10,830 D. P3,340

2. The deposits in transit on June 30 amount to

A. P6,890 C. P6,000
B. P10,000 D. P9,110
3. The adjusted cash balance on July 31 is
A. P6,890 C. P3,87
B. P10,940 D. P3,030
4. Which of the following audit procedures world used to verify, the payment of note in July?
A. Check the arithmetical accuracy of the July 31 reconciliation.
B. Check for absence of note on July 31 bank confirmation.
C. Trace payment to duplicatedeposit slip
D. Obtain cutoff bank statement.
5. The auditor would perform the following procedures to verify the unrecorded check of P10,600,
excepts
A. Obtain cutoff bank statement
B. Examine checks returned with July bank statement
C. Trace check number to absence in July cash disbursements journal and recording in August.
D. Examine supporting documentations.

SOLUTION 1- 24
1. Outstanding checks, June 30 P17,420
Add: Checks issued by July (P218,110 per cash disbursements
journal + P10,600 unrecorded checks) 228,710

Total
Less: Checks [aid by bank in July
(P236,150 – P3,960) erroneous check charged by bank) 232,190
Outstanding checks July 31 P13,940
Answer: C

Alternative computation:
Checks outstanding on June 30 that dit not clear in July
(P17,420 – P16,920) P500
Checks issued in July that did not clear in July
(P218,110- P204,670) 13,440
Outstanding checks, July 31 P13,940

2. Deposits in transit, June 30 P6,000

Add: July deposits per cash receipts journal 254,560
total 260,560
Less: Deposits credited by bank in July 250,560
Deposits in transit, July 31 P10,000
Answer: B

3. Book Bank
Unadjusted balances P82,560 P6,960
Outstanding checks (see no. 1) (13,940)
 Deposits transit (see no. 2) 10,000
Bank service charge (870)
Unrecorded check (10, 600)
check erroneously charged to Dion 3,960
NSF check (3,110)
Note payment (P58,000) principal +
P3,000 interest) (61,000)
Adjusted balances P6,980 P6,980
Answer: A

4. The following audit procedures would be performed to verify the note payment:
1. Examine cancelled check.
2. Recompute interest
3. Check for the absence of note on July 31 bank reconciliation.
Answer: B

5. The following audit procedures would be performed to verify the unrecorded check:
1. Examine check returned with July statement.
2. Trace number to absence in July cash disbursement journal and recording in August.
3. Examine reposting documentation.
4. Investigate why it was unrecorded.

The cutoff bank statement will no longer show the unrecorded check because it was already paid by the
bank in July.
Answer: A

25. The cash account of VELASCO COMPANY shows the following activities:
Date: Debit Credit Balance
Nov.30 Balance P 115,000
Dec. 02 November Bank Charges P 50 114,950
04 November Bank Credit for Notes
Receivable collected P 10,000 124,950
15 NSF Check 1,300 123,650
20 Loan Proceeds 48,500 172,150
21 December Bank Charges 60 172,090
31 Cash receipts book 707,300 879,390
31 Cash disbursements book 408,000 471,390

CASH BOOKS
RECEIPTS PAYMENTS
Date: OR No. Amount Check No. Amount
Dec. 1 110-120 P11,000 801 P 2,000
2 121-136 21,300 802 3,000
3 137-150 20,000 803 1,000
4 151-165 56,000 804 3,000
5 166-190 39,000 805 12,000
8 191-210 66,000 806 19,000
9 211-232 88,000 807 26,000
10 233-250 77,000 808 30,000
11 251-275 21,000 809 61,000
12 276-300 30,000 810 7,000
 15 301-309 55,000 811 8,000
16 310-350 8,000 812 16,000
17 351-390 19,000 813 20,000
18 391-420 9,000 814 22,000
19 421-480 17,000 816 36,000
22 481-500 21,000 817 11,000
23 501-525 32,000 818 50,000
23 - - 819 7,000
23 - - 820 4,000
26 526-555 74,000 821 3,000
28 556-611 5,000 822 12,000
28 - - 823 13,000
29 612-630 38,000 824 29,000
29 - - 825 2,000
29 - - 826 11,000
Totals P707,000 P408,000

BANK STATEMENT
Date Check No. Charges Credits
Dec.1 792 P2,500 P8,500
2 802 3,000 11,000
3 - - 21,300
4 804 3,000 20,000
5 EC 81,000 81,000
8 805 12,000 95,000
9 CM16 - 12,000
10 799 7,050 154,000
11 DM57 1,300 77,000
12 808 30,000 21,000
15 803 1,000 -
16 809 61,000 85,000
17 DM61 60 8,000
18 813 20,000 19,000
19 CM20 - 48,500
22 815 6,000 -
23 816 36,000 47,000
23 811 8,000 -
23 801 2,000 -
26 814 22,000 32,000
28 818 50,000 74,000
28 DM112 120 -
29 821 3,000 5,000
29 CM36 - 12,000
29 820 4,000 -
Totals P353,030 P831,300

Additional Information:
a. DMs 61 and 112 are for service charges.
b. EC is error collected.
c. DM 57 is for an NSF Check.
d. CM 20 is for loan proceeds, net of 150 interest charges for 90 days.
e. CM 16 is for the correction of an erroneous November bank charge.
f. CM 36 is for customer’s notes collected by bank in December.
g. Bank balance on December 31 is P 592,270.

1. The total outstanding checks at November 30 should be

A. P9,950
B. P7,050
C. P13,050
D. P15,550
2. The total outstanding checks at December 31 should be
A. P147,000
B. P162,550
C. P153,000
D. P159,000
3. The deposit in transit at November 30 should be
A. P8,500
B. P19,500
C. P48,500
D. P0
4. The deposit in transit at December 31 should be
A. P44,000
B. P0
C. P46,500
D. P38,000
5. The adjusted book balance at November 30 should be
A. P125,000
B. P124,950
C. P115,000
D. P136,950
6. The adjusted bank receipts for the month of December should be
A. P763,800
B. P773,800
C. P765,800
D. P767,800
7. The adjusted book disbursements for the month of December should be
A. P403,480
B. P415,540
C. P415,480
D. P409,480
8. The adjusted Bank balance at December 31 should be
A. P592,270
B. P477,270
C. P558,270
D. P483,270

SOLUTION 1-25 ____________________________________

1. Outstanding Checks, November 30:
Check No. 792 P2,500
799 7,050
Total P9,550
Answer: A

2. Outstanding checks, December 31:

Check#806 P19,000
807 26,000
810 7,000
812 16,000
817 11,000
819 7,000
822 12,000
823 13,000
824 29,000
825 2,000
826 11,000
TOTAL P153,000
Answer: C

3. Deposit in Transit, November 30 P 8,500

Answer: A

4. Deposit in Transit, November 30 (See no. 3) P8,500

Add: Collections per cash receipts book 707,300
Total P 715,800
Less: Deposits Credited by bank: Bank Receipts P831,300
Correction of erroneous bank charge in December (81,000)
Correction of erroneous bank charge in November (12,000)
Loan Proceeds (48,500)
Note Collected (12,000) 677,800
Deposit in Transit, December 31 P38,000
Answer: D

PROOF OF CASH
December 1-31
Balance Balance
Nov.30 Receipts Disbursements Dec.31
Balances per bank P114,000 P831,300 P353,030 P592,270
Bank Error corrected
the same date (81,000) (81,000)
Erroneous Bank Charge
in November 12,000 (12,000)
Deposit in Transit:
November 30 8,500 (8,500)
December 31 38,000 38,000
Outstanding Checks:
November 30 (9,550) (9,550)
December 31 153,000 (153,000)
Adj. bank balances P124,950 P767,800 P415,480 P477,270

Balance Balance
Nov.30 Receipts Disbursements Dec.31
Balances per book P115,000 P765,800 P409,410 P471,390
Bank Service Charges:
November 30 (50) (50)
December 31 120 (120)
Notes Collected by bank:
November 30 10,000 (10,000)
December 31 12,000 12,000
Unrecorded Disbursement
Check no. 815 6,000 (6,000)
Adj. bank balances P124,950 P767,800 P415,480 P477,270

5. Adjusted book balance, November 30 P124,950

Answer: B

6. Adjusted Bank receipts in December P767,800

Answer: D

7. Adjusted Book disbursement in December P415,480

Answer: C

8. Adjusted Bank Balance, December 31 P477,270

Answer: B

26. Shown below is the May 31, 2018, bank reconciliation prepared by your client’s staff.
RECONCILIATION
May 31,2018
Bank Balance P652,000
Add: Deposit in Transit 10,000
Total: P662,000
Less: Outstanding Checks
No. 640 P 10,000
652 8,000
653 2,000 20,000
Adjusted Bank Balance P642,000

Book Balance P570,800

Add: Proceeds of Notes Receivable
collected in May P 70,000
Deposits on May 31 not
recorded on books until June 2,000 72,000
Total P642,800
Less: Bank Service Charge 800
Adjusted Book Balance P642,000

The June 2018 bank statement is showm below:

Pasig Bank
Period Covered: May 31, 2018 – June 30, 2018
Account No. 0021261

Date Checks: Deposits

June 1 8,000 10,000
June 8 2,000
June 11 14,000 20,000
June 13 1,000 DM 1,000
June 16 4,000
June 21 12,000 56,000
June 27 18,000
June 29 1,000 EC 1,000 EC
June 30 200 SV
June 30 3,000 DM
SV- Service Charges
EC- Error Collected
DM- Debit Memo
CM- Credit Memo

The paid checks accompanying this bank statement (all clearing in June) are the following:
No.652 P8,000 No.653 P2,000 No.654 P14,000
No.655 P 4,000 No.657 P12,000 No.658 P18,000
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 June 22 through June 30 of P70,000 was deposited in the bank on July 1.
The debit memos on June 13 and June 30 represent customers NSF Checks returned by the bank, The June 13
NSF check was immediately redeposited without entry. The June 30 NSF Check was redeposited on July 1
without entry.

1. What is the total Bank receipts in June?

A. P87,000
B. P88,000
C. P77,000
D. P78,000
2. What is the total Bank disbursement in June?
A. P59,200
B. P58,000
C. P58,200
D. P63,200
3. What is the balance per bank statement on June 30, 2018?
A. P676,800
B. P627,200
C. P732,400
D. P729,200
4. What is the total book receipts in June?
A. P88,000
B. P220,000
C. P146,000
D. P218,000
5. What is the total book disbursements in June?
A. P53,000
B. P57,400
C. P56,400
D. P63,200
6. What is the book balance in June 30, 2018?
A. P732,200
B. P728,200
C. P732,400
D. P676,80

SOLUTION 1-26 ___________________________________

1. Bank receipts in June (arrived at by footing the Deposits column of the bank statement) P88,000
Answer: B
2. Bank disbursements in June(arrived at by footing the checks column of the bank statement). P63,200
Answer: D

3. Bank Balance, May 31 P652,000

Add:Cash receipts in June 88,000
Total P740,000
Less: Bank disbursements in June 63,200
Bank Balance, June 30 P676,800
Answer: A
PROOF OF CASH
June 1-30, 2018
Balance June Balance
May 31 Receipts Disbursements June 30
Bank Balances P652,000 P88,000 P63,200 P676,800
Deposit in Transit:
May 31 10,000 (10,000)
June 30 70,000 70,000
Outstanding Checks:
May 31 (20,000) (20,000)
June 30 17,600 (17,600)
Bank Service Charges:
May 31 800 800
June 30 (200) 200
Bank Collection in May (70,000) 70,000
May deposited recorded
by the company in June (2,000) 2,000
NSF CHECKS:
Already redeposited (1,000) (1,000)
Not yet redeposited (3,000) 3,000
Bank Error corrected
on the same date (1,000) (1,000)
Book Balances P570,800 P218,000 P56,400 P732,400

4. Total book receipts in June P218,000

Answer: D
5. Total book disbursements in June P56,400
Answer: C
6. Book Balance on June 30, 2018 P732,400
Answer: C

27. The following information was obtained in an audit of the cash account of CHELSEE COMPANY as of
December 31, 2018. Assume that the CPA has satisfied himself as to the propriety of the cash book, the bank
statements, and the returned checks, except as noted:

1. The bookkeeper's bank reconciliation at November 30, 2018.

Balance per bank statement P194,000

Add: Deposit in transit 11,000
Total P205,000
Less: Outstanding checks
No. 1434 P1,400
1562 7,500
 1571 5,800
1584 8,000
1591 300 23,000
Balance per bocks P182.000

2. A summary of the bank statement for December 2018.

Balance brought forward P 194,000
Deposits 1,487,000
Total P1,681,000
Charges (1,325,000)
Balance, December 31, 2018 P356,000

3. Included in cancelled checks returned with the December bank statement were the checks listed
below.
4. The Chelsee Company discounted its own 60-day note for P90,000 with the bank on December 1,
2018. The discount rate was 6 percent. The accountant recorded the proceeds as a cash receipt at the
face value of the note.
5. The accountant records customers' dishonored checks as a reduction of cash receipts. When the
dishonored checks are redeposited they are recorded as a regular cash receipt. Two NSF checks for
P1,800 and P2,200 were returned by the bank during December. Both checks were redeposited and
were recorded by the accountant.
6. Cancellations of Chelsee Company checks are recorded by a reduction of cash disbursements.
7. December bank charges were P200. In addition, a P100 service charge was made in December for
the collection of a note receivable in November. These charges were not recorded on the books.
8. Check no. 1434 listed in the November outstanding checks was drawn in 2016. Since the payee
cannot be located, the president of Chelsee Company agreed to the CPẤ'S suggestion that the check
be written back into the accounts by a journal entry.
9. Outstanding checks at December 31, 2018, totaled P49,400, including checks 1434 and 1584.
10. The cutoff bank statement disclosed that the bank had recorded 10. a deposit of P24.000 on fanuary
2, 2019. The accountant had recorded this deposit on the books on December 31, 2018, and then
mailed the deposit to the bank.

Cancelled Checks Returned with the December Bank Statement

Number Date of Check Amount of Check Comments _______

1562 11/28/18 P 750 This check was in payment of an
invoice for P7,500 and was recorded in the cash
book as P7,500.

1571 11/28/18 5,800 This check was in payment of an

invoice for P5,800 and was recorded in the cash
book as P5,800.

1583 12/04/18 1,500 Examination of this check revealed

that it was unsigned. A discussion with the client
disclosed that it had been mailed inadvertently
before it was signed. The check was endorsed and
deposited by the payee and processed by the bank
even though it was a legal nullity. The check was
recorded in the cash disbursements journal.
1588 12/12/18 8,000 This check replaced 1584, which
 was returned by the payee because it was mutilated.
Check 1584 was not cancelled on the books.
---- 12/19/18 2,000 This was a counter check drawn at
the bank by the president of the company as a cash
advance for travel expense. The president the
informing overlooked bookkeeper about the check.

---- 12/20/18 3,000 The drawer of this check was the

Chelsea Company.

1595 12/20/18 3,500 This check hád been labeled NS and

returned to the payee because had the
bank h erroneously believed that the
S check was drawn by Chelseen.
Subsequently, the payee was advised
to redeposit the check.

1599 01/05/19 100,000 This check was given to the payee on

December 30, 2018, as a postdated
check with the understanding that it
would not be deposited until January
5. The check was not recorded on the
books in December.

1. What is the correct amount of outstanding checks on December 31?

a. P41,400
b. P33,250
c. P48,000
d. P40,000
2. What is the amount of cash receipts per book in December?
a. P1,496,900
b. P1,504,900
c. P1,495,100
d. P1,487,000
3. What is the amount of cash disbursements per book in December?
a. P1,254,850
b. P1,252,850
c. P1,256,850
d. P1,248,850
4. What is the cash in bank balance per book as of December 31?
a. P426,050
b. P428,250
c. P430,050
d. P343,050
5. What is the adjusted cash balance as of December 31?
a. P343,000
b. P340,200
c. P347,000
d. P344,200

SOLUTION 1-27
 1. Outstandingdi checks, December 31
(P49,400 - P1,400 - P8,000) P40.000

Answer. D

Balance December Balance

Nov. 30 Receipts Disbursements Dec, 31

Per bank statement P194,000 P1,487,000 P1,325,000 P356,000 Outstanding

checks:
Nov. 30 (23,000) (23,000)
Dec. 31 40,000 (40,000)
Deposits in transit:
Nov. 30 11,000 (11,000)
Dec. 31 24,000 24,000
Interest on note discounted
(P90,000 x 6% 60/360) 900 900
NSF checks (4,000) (4,000)
Bank service charge (300) 300
Cancellation of check no. 1434 1,400 (1,400)
Error in recording check no. 1562
(P7,500 - P750) 6,750 (6,750)
Cancellation of check no. 1584 8,000 (8,000)
Counter check drawn by president (2,000) 2,000
Check of Chelsea charged in error (3,000) 3,000
Postdated check presented
for payment (100,000) 100,000
Per book balances PI82,000 P1,496,900 P1248.850 P430,050

2. Book receipts in December P1,496,900

Answer: A
3. Book disbursements in December P1,248,850
Answer: D
4. Book balance on December 31 P430.050
Answer: C

5
Book Bank

Unadjusted balances P430,050 P356,000

Outstanding checks (40,000)
Deposits in transit 24,000
Interest on note discounted (900)
Bank service charge (300)
Cancellation of check no. 1434 1,400
Error in recording check no. 1562 6,750
Cancellation of check no. 1584 8,000
Counter check (2,000)
Check of Chelsea charged in error 3,000
Postdated check presented for payment (100,000)_ _________
Adjusted balance P343,000 P343,000
Answer: A

28. The following information was obtained in connection with the audit of PINKY COMPANY's cash account
as of December 31, 2018.

Outstanding checks, Nov. 30, 2018 P16,250

Outstanding checks, Dec. 31, 2018 12,500
Deposit in transit, Nov. 30, 2018 12,500
Cash balance per general ledger Dec. 31, 2018 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
company books in December 2,500
Bank service charges per December bank statement 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 2019.

1 How much is the deposit in transit on December 31, 2018?

a. P5,000
b. P20,000
c. P22,500
d. P17,500
2 The total unrecorded bank service charges as of December 31, 2018, is
a. P 750
b. P2,250
c. P1,750
d. P4,250
3 What is the total book receipts in December?
a. P150,000
b. P152,500
c. P155,000
d. P147,500
4 What is the total amount of company checks issued in December?
a. P130,000
b. P123,000
c. P133,750
d. P126,250
5. What is the total book disbursements in December?
 a. P123,750
b. P128,500
c. P126,250
d. P128,750
6. What is the book balance on November 30, 2018?
a. P16,250
b. P21,250
c. P37,500
d. P35,000
7. What is the bank balance on November 30, 2018?
a. P23,000
b. P18,500
c. P43,500
d. P16,250
8. What is the total bank receipts in December?
a. P120,000
b. P140,000
c. P145,000
d. P150,000
9. What is the total bank disbursements in December?
a. P154,500
b. P132,500
c. P129,500
d. P137,000
10. What is the bank balance on December 31, 2018?
a. P21,500
b. P26,500
c. P31,000
d. P33,250

SOLUTION 1-28
1
Deposit in transit, November 30 P12,500
Add: Company collections in December 152,500
Total 165,000
Less: Deposits credited by bank in December 145,000
Deposit in transit, December 31 P20.000
Answer: B

2
Bank service charges per December bank statement P3,250
Less: December bank service charges recorded
on company books in December
(P2,500 - P1,500) 1,000
Unrecorded December bank service charges P2,250
Answer: B

3
Actual company collections in December P152,500
Less: Underfooting of December cash
receipts book 2,500
Book receipts in December P150,000
Answer: A

4
Outstanding checks, December 31 P12,500
Add: Checks paid by bank in December 130,000
Total 142,500
Less: Outstanding checks, November 30 16,250
Checks issued in December P126,250
Answer: D

5
Checks issued in December (see no. 4) P126,250
Add: Bank service charges recorded in December 2,500
Book disbursements in December P128,750
Answer: D

6
Book balance, December 31 P37,500
Add: Book disbursements in December (see no. 5) 128,750
Total 166,250
Less: Book receipts in December (see no. 3) 150,000
Book balance, November 30 P16,250
Answer: A

Pinky Co.
PROOF OF CASH
For the Month of December 2018
Balance December Balance
Nov. 30 Receipts Disbursement Dec. 31
Book balances P16,250 P150,000 P128,750 P37,500
Outstanding checks:
Nov. 30 16,250 16,250
Dec. 31 (12,500) 12,500
Deposits in transit:
Nov. 30 (12,500) 12,500
Dec. 31 (20,000) (20,000)
Bank service charges:
Nov. 30 (1,500) (1,500)
Dec. 31 (2,250) 2,250
Under footing of
December book receipts 2,500 2,500
Erroneous bank charge
in December 3,750 (3,750)
Bank balances P18,500 P145,000 P137,000 P26,500

7. Bank balance, November 30, 2018 P18,500

Answer: B
8. Total bank receipts in December P145,000
Answer: C
 9. Total bank disbursements in December P137,000
Answer: D
10. Bank balance, December 31, 2018 P26,500
Answer: B

29. In your audit of HARRY INC.’s cash account as of December 31, 2018, you ascertain the following
information:
The bookkeeper’s bank reconciliation on November 30, 2018, is as follows:
Balance per bank statement, November 30 P24, 298
Add: Deposits in transit 3, 648
Total P27, 946
Less: Outstanding checks
No. 3408 P440
No. 3413 300
No. 3414 6,820
No. 3416 3,924
No. 3417 800 12, 284
Balance P15, 662
Add: Bank service charge for November 36*
Balance per general ledger, November 30 P15, 698

*Entered in Check Register in December

The Cash Receipts Journal shows total receipts for December of P371, 766. The Check Register reflects total
checks issued in December of P377, 632. A collection of P5, 912 was recorded on company books on
December 31 but was not deposited until January 2, 2019.
The balance per bank statement at December 31, 2018, is P17, 516. This statement shows total receipts of P373,
502 and checks paid of P380, 284.
Your examination reveals the following additional information:
1) Check no. 3414 dated November 24, 2018, was entered in the Check Register as P300. Your
examination of the paid checks returned with the December bank statement reveals that the amount of
this check is P30.
2) 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.
3) The December bank statement includes an erroneous charge of P480.
4) On January 3, 2019, the bank informed your client that a December bank service charge of P42 was
omitted from the statement.
5) Your examination of the bank credit memo accompanying the December bank statement discloses that it
represents proceeds from the note receivable collection in December for P4, 000.
6) The outstanding checks at December 31, 2018, are as follows:
No. 3408 P440 No. 3418 P2, 814
No. 3417 800 No. 3419 5, 788

1. What is the total book disbursement for the month of December?

A. P377, 668 C. P377, 632
B. P377, 710 D. P377, 596
2. What is the book balance at December 31?
A. P9, 832 C. P9, 754
B. P9, 868 D. P9, 796
3. The outstanding checks at December 31 totaled
A. P8, 602 C. P9, 042
B. P9, 072 D. P9, 842
 4. What is the adjusted bank balance on November 30?
A. P16, 690 C. P16, 804
B. P16, 732 D. P16, 774
5. The adjusted book receipts for the month of December should be
A. P375, 724 C. P371, 238
B. P371, 766 D. P375, 766
6. The adjusted book disbursement for the month of December should be
A. P377, 590 C. P377, 674
B. P377, 662 D. P377, 632
7. What is the adjusted book balance on December 31?
A. P14, 824 C. P14, 908
B. P14, 866 D. P14, 782
8. A proof of cash used by an auditor
A. Provides that the client’s year-end balance of cash is fairly stated.
B. Confirms that the client has properly separated the custody function from the recording function with
respect to cash.
C. Validates that the client’s bank did not make an error during the period being examined.
D. Determines whether any unauthorized disbursements or unrecorded deposits were made for
the given time period.

SOLUTION 1-29
1. Company checks issued in December P377, 632
Add: November bank service charge 36
Total book disbursements in December P377, 668
Answer: A
2. Book balance, November 30 P15, 698
Add: December book receipts 371, 766
Total 387, 464
Less: December book disbursements 377, 668
Book balance, December 31 P9, 796
Answer: D
3. Outstanding checks, December 31:
Check no. 3408 P440
3418 2,814
3419 5,788
Total P9,042
Answer: C

Balance December Balance

Nov. 30 Receipts Disbursement Dec. 31
Book balances P15, 698 P371, 766 P377, 668 P9, 796
Bank service charges:
November 30 (36) (36)
December 31 42 (42)
Overstatement of Nov.
disbursement
(check #3413) 270 270
Mutilated check (#3417) 800 800
Note collected by bank 4, 000 4, 000
Adj. book balances P16, 732 P375, 766 P377, 674 P14, 824

Balance December Balance

 Nov. 30 Receipts Disbursement Dec. 31
Bank balances P24, 298 P373, 502 P380, 284 P17, 516
Deposits in transit:
November 30 3, 648 (3, 648)

December 31 5, 912
5, 912
Erroneous bank charge (480) 480
Bank service charge 42 (42)
Outstanding checks:
November 30 (11, 214) (11,214)
December 31 9, 042 (9, 042)
Adj. book balances P16, 732 P375, 766 P377, 674 P14, 824

4. Adjusted bank balance, November 30 P16, 732

Answer: B
5. Adjusted book receipts in December P375, 766
Answer: D
6. Adjusted book disbursements in December P377, 674
Answer: C
7. Adjusted book balance, December 31 P14, 824
Answer: A
8. A proof of cash usually consists of four columns, with reconciliations of beginning and end-of-period
cash balances and reconciliations of cash receipts and disbursements during the period. The amounts
appearing in the ledger and on the bank statement should reconcile both horizontally and vertically. This
reconciliation detects unauthorized disbursements and unrecorded deposits for the period. This is useful
when internal control over cash transactions is weak or inadequate.
Answer: D

PROBLEM 1-30
Proof of Cash: Unadjusted to Adjusted Balances Format
The following data are assembled by the accountant of the HAROLD COMPANY:
Nov. 30, 2018 Dec. 31, 2018
Cash account balance P41, 175.00 P100, 712.50
Bank statement balance 267, 705.00 344, 542.50
Deposits in transit 20, 502.50 32, 200.00
Outstanding checks 69, 295.00 75, 280.00
Bank service charges 1,800.00 1, 500.00
NSF check* 20, 625.00
Company’s notes receivable collected by bank 179, 537.50 202, 250.00

*Redeposited in the same month. No entries made to take up the return and redeposit .
The bank statement and the company’s cash records show the following totals:
Canceled checks and debit memos per bank statement P545, 932.50
Cash receipts per cash book 411, 592.50
Checks written per cash book 529, 792.50
Deposits and credit memos per bank statement 622,770.00
1. What is the total books receipt in December?
A. P613, 842.50 C. P411, 592.50
B. P591, 130.00 D. P580, 330.00
2. What is the total book disbursement in December?
A. P531, 592.50 C. 533, 092.50
 B. P529, 792.50 D. 531, 292.50
3. What is the adjusted book balance on November 30?
A. P220, 712.50 C. P218, 912.50
B. P222, 512.50 D. P217,412.50
4. What adjusted bank receipts in December should be
A. P634, 168.50 C. P632, 667.50
B. P622, 770.00 D. P634, 467.50
5. The adjusted book disbursements in December should be
A. P545, 932.50 C. P548, 917.50
B. P552, 517.50 D. P551, 917.50
6. What is the adjusted book balance on December 31?
A. P301, 462.50 C. P332, 087.50
B. P302, 662.50 D. P280, 537.50

SOLUTION 1-30
1. Cash receipts per cash book P411, 592.50
Add: Notes collected by bank in November 179, 537.50
Total books receipts in December P591, 130.00
Answer: B
2. Checks written per cash book P529, 792.50
Add: Bank service charge in November 1, 800.00
Total book disbursement in December P531, 592.50
Answer: A
Balance December Balance
Nov. 30 Receipts Disbursement Dec. 31
Balance per bank P267, 705.00 P622, 770.00 P545, 932.50 P344, 542.50
statement
Deposits in transit:
November 30 20, 502.50 (20,502.50)
December 31 32, 200.00
32, 200.00
Outstanding checks:
November 30 (69, 295.00) (69, 295.00)
December 31 75, 280.00 (75,280.00)
Adj. balances P218, 912.50 P634, 467.50 P551, 917.50 P301, 462.50

Balance December Balance

Nov. 30 Receipts Disbursement Dec. 31
Balance per books P41, 175.00 P591, 130.00 P531, 592.50 P100, 712.50
Bank service charges:
November (1, 800.00) (1, 800.00)
December 1, 500.00 (1, 500.00)
NSF check 20, 625.00 20, 625.00
Collections of notes
receivables:
November 179, 537.50 (179, 537.50)
December 202,250.00 202, 250.00
Adj. book balances P218, 912.50 P634, 467.50 P551, 917.50 P301, 462.50
3. Adjusted book balance, November 30 P218, 912.50
Answer: C
4. Adjusted book receipts in December P634, 467.50
Answer: D
 5. Adjusted book disbursements in December P551,917.50
Answer: D
6. Adjusted book balance, December 31 P301, 462.50
Answer: A

31. The auditor of TSIKOY COMPANY gathered the following information:

1. The November 30 bank statement balance included bank service charges of P2, 000.
2. The November 30 cash balance in the general ledger was P244, 500.
3. Outstanding checks on November 30 were P63, 000 while undeposited receipts were P36, 000.
4. The bank service charges as shown on the bank statement totalled P3, 000.
5. The December 31 cash balance in the general ledger was P319, 750, which recognized P482, 750 for

December receipts and P405, 500 for checks written during December. In transit to the bank were receipts of
P28, 750. Checks of P15, 000 written prior to December and checks of P60, 500 written in December had not
yet cleared the bank.

1. What is the total book disbursements for December?

A. P403, 500 C. P407, 500
B. P404, 500 D. P405, 500
2. What is the November 30 bank balance?
A. P271, 500 C. P268, 500
B. P269, 500 D. P266, 500
3. What is the total bank receipts in December?
A. P490, 000 C. P497, 250
B. P482, 750 D. P488, 000
4. What is the total bank disbursements in December?
A. P419, 000 C. P408, 500
B. P405, 500 D. P396, 000
5. What is the bank balance on December 31?
A. P316, 750 C. P322, 750
B. P363, 500 D. P366, 500

SOLUTION 1-31
1. Checks written during December P405, 500
Add: November bank service charges recorded
on company books in December 2,000
Total book disbursements in December P407, 500
Answer: C

Balance December Balance

Nov. 30 Receipts Disbursement Dec.31
Balance per books P244, 500 P482, 750 P407, 500 P482, 750
Undeposited receipts:
Nov. 30 (36,000) 36,000
Dec. 31 (28,750) (28,750)
Outstanding checks:
Nov. 30 63,000 63,000
Dec. 31 (75,500) 75,500
Bank service charges
Nov. 30 (2,000) (2,000)
Dec. 31 3,000 (3,000)
Balance per bank P269, 500 P490, 000 P396, 000 P363, 500

2. Bank balance, November 30 P259, 500

Answer: B
3. Total bank receipts in December P490, 000
Answer: A
4. Total bank disbursements in December P396, 000
Answer: D
5. Bank balance, December 31 P363, 500
Answer: B

32. RODELIO CO. has a current account in Pinoy Bank. Your audit of the company's cash account reveals the
following:
1. Balances taken from the company's general ledger:
Cash balance, Nov. 30, 2018 P637, 860
Cash balance, Dec. 31, 2018 576, 420
Receipts, Dec. 1-31, 2018 306, 220
2. Balances taken from the December bank statement:
Bank balance, Nov. 30, 2018 P685, 180
Bank balance, Dec. 31, 2018 637, 220
Disbursements (debits) 356, 080
3. Outstanding checks, Nov. 30, 2018 (P26,140 was
paid by bank in December) 64, 140
4. Checks written and recorded in December; not included in the
checks returned with the December bank statement 36, 080
5. Deposit in transit, Nov. 30, 2018 15, 260
6. Deposit in transit, Dec. 31, 2018 16, 140
7. A bank credit memo was issued in December to correct an
erroneous charge made in November 1, 500
8. Note collected by bank in December (company was
not informed of the collection) 2, 060
9. A check for P2, 020 (payable to a supplier) was recorded
in the Check Register in December as P3,000 980
10. A check for P2,240 was charged by the bank
as P2,420 in December 180

11. Rodelio Co. issued a stop payment order to the bank in

December. This pertains to a check written in December
which was not 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. 780
12. Bank service charge, Nov. 30, 2018 60

1. What is the total book disbursements in December?

A. P367, 660
B. P244, 780
C. P369, 720
D. P368, 540

2. What is the total bank receipts in December?

A. P260, 160
B. P308, 120
C. P306, 060
D. P309, 020

3. What is the total outstanding checks on December 31?

A. P100, 220
B. P38, 000
C. P62, 220
D. P74, 080

4. What is the adjusted bank balance on November 30?

A. P636, 300
B. P685, 180
C. P637, 800
D. P634, 800

5. What is the adjusted book receipts in December?

A. P307, 500
B. P306, 220
C. P303, 380
D. P305, 440

6. What is the adjusted bank disbursements in December?

A. P353, 980
B. P365, 840
C. P345, 960
D. P366, 020

7. What is the adjusted book balance on December 31?

A. P577, 500
B. P577, 400
C. P576, 420
D. P579, 460

SOLUTION 1-32
1. Book balance, November 30 P637, 860
Add: Book receipts in December 306, 220
Total P944, 080
Less: Book disbursements in December (SQUEEZE) 367,660
Book balance, December 31 P576, 420
Answer: A
2. Bank balance, November 30 P685, 180
Add: Bank receipts in December (SQUEEZE) 308, 120
Total P993, 300
Less: Bank disbursements in December 356, 080
Bank balance, December 31 P637, 220
 Answer: B
3. Checks issued prior to December (P64,140 - P26,140) P38, 000
Checks issued in December 36, 080
Total outstanding checks, December 31 P74, 080
Answer: D

Balance December Balance

Nov. 30 Receipts Disbursements Dec. 31
Balance per books P637, 860 P306, 220 P367,660 P576, 420
Note collected by
bank in December 2, 060 2, 060
Overstatement of
December book
disbursement
(P3,000 - P2,020) (980) 980
Check stopped for payment (780) (780)
Bank service charge
in November (60) (60)
Adj. book balances P637, 800 P307, 500 P365, 840 P579, 460

Balance December Balance

Nov. 30 Receipts Disbursement Dec.31
Bank Balances P244, 500 P482, 750 P407, 500 P482, 750
Outstanding checks:
Nov. 30 (64, 140) (64, 140)
Dec. 31 74, 080 (74, 080)
Deposits in tansit:
Nov. 30 15, 260 (15, 260)
Dec. 31 16, 140 16, 140
Errorneous
bank charge in
November 1, 500 (1, 500)
Overstatement of
bank disbursement
in December Nov. 30 (180) 180
Adj. bank balances P637, 800 P307, 500 P365, 840 P579, 460

4. Adjusted bank balance, November 30 P637, 800

Answer: C
5. Adjusted book receipts in December P307, 500
Answer: A
6. Adjusted bank disbursements in December P365, 840
Answer: B
7. Adjusted book balance, December 31 P579, 460

Answer: D

33. Data for the ANNABELLE, INC. are shown below:

Nov 30 Dec 31
Cash account balance P 20,340 P 48,540
Bank statement balance 107,060 137,820
Deposits in transit 8,200 12,880
Outstanding checks 27,700 30,100
Bank service charges fur the month, not shown on company books 720 600
NSF checks returned by bank, not shown on company books 4,300 8,240
Bank collections from company customers, not shown on company books 72,240 80,900

Additional information:
1. Deposits and credit memos per bank statement P249,100
2. Canceled checks and debit memos per bank statement 218,340
3. Cash receipts per cash book 172,880
4. Checks written per cash book 211,900

1. What is the total book receipts in December?

A. P172,880
B. P245,120
C. P253,780
D. P181,540

2. What is the total book disbursements in December?

A. P211,900
B. P216,200
C. P211,180
D. P216,920

3. What is the adjusted cash balance on November 307

A. P89,000
B. P87,560
C. P71,160
D. P96,160

4. What is the adjusted cash balance on December 31?

A. P120,600
B. P94,840
C.P137,080
D. P155,040

5.What is the adjusted book recelpts in December?

A. P253,780
B. P236,460
C.P244,420
D. P270,180

6. What is the adjusted bank disbursements in December?

A. P215,940
B. P220,740
C P248,440
D. P204,260

SOLUTION 1-33

1. Cash receipts per cash book P172,880

Add: November bank collections 2,240
Total book receipts (debits) in December P245,120
Answer: B

2. Checks written per cash book P211,900

Add: Bank service charges in November P 720
NSF checks returned in November 4,300 5,020
Total book disbursements (credits) in December P216,920
Answer: D.

Balance December Balance

Nov. 30 Receipts Disbursements Dec. 31
Unadj. book balance P20,340 P245,120 P216,920 P48,540
Bank service charges
November 30 (720) (720)
December 31 600 (600)
NSF Checks
November 30 (4,300) (4,300)
December 31 8,240 (8,240)
Bank collections
November 30 72,240 (72,240)
December 31 __ 80,900 80,900
Adj. book balances P87 560 P253,780 P220,740 P120,500

Balance December Balance

Nov. 30 Receipts Disbursements Dec. 31
Unadj. bank balance P107,060 P249,100 P218,340 P137,820
Deposits in transit
November 30 8,200 (8,200)
December 31 12,880 12,880
Outstanding Checks
November 30 (27,700) (27,700)
December 31 30,100 (30,100)
Adj. book balances P87,560 P253,780 P220,740 P120,509

3. Adjusted cash balance, November 30 P87,560

Answer: B

4. Adjusted cash balance, December 31 P120,600

Answer: A

5. Adjusted book recelpts in December 31 P253,780

Answer: A

6. Adjusted bank disbursements in December P220,740

Answer: B

34. On January 10, 2019, you started the audit on the financial records ofthe KEMIRARA COMPANY for the
year ended December 31, 2018. From your investigation, you discovered the following

1. The bookkeeper acts also as the cashier. Her December 31, 2018, year-end cash reconciliation contained the
follow items:
Cash per ledger, Dec. 31, 2018 P184,200
 Cash per bank, Dec. 31, 2018 194,550
Checks outstanding 15,660
Amnesia Co. check charged by the bank in error Dec. 20, 2018;
corrected by the bank on Jan. 5, 2019 450
Cash in transit, credited by the bank on Jan. 2, 2019 2,160

2. The cash account balances per ledger as of December 21, 2018 were
Cash P184,200
Petty cash 450

3. The count of the cash on hand at the close of the business on

January 10,2019, including the petty cash, was as follows:
Currency and coins P1,155
Expense vouchers 60
Employees' IOU's dated Jan. 5, 2019 165
Customers checks in payment of account 870

4. From January 2, 2019 to January 10, 2019, the date of your cash count, total cash receipts appearing in the
cash records were P25,800. According to the bank statement for the period from January 2, 2019 to January 10,
2019, total deposits were P22,800.
5. On July 5, 2018, cash of P1,200 was received on account from a customer; the Allowance tor Doubtful
Accounts was charged and Accounts Receivable was credited.
6. On December 5, 2018, cash of 900 was received on account from a customer, Inventory was charged and
Accounts Receivable was credited.
7. Cash of P2,190 received during 2018 was not recorded.
8. Checks received from customers from January 2, 2019 to January 10, 2019, totaling P1,260, were not
recorded but were deposited in the bank.
9. On luly 1, 2018, the bank refunded interest of P60 because a note of the Kemirara Company was paid before
maturity. No entry was made for the refund.
10. In the cashier's petty cash, there were receipts for collection from the customers on January 9, 2019, totaling
P2,550; these were unrecorded and undeposited.
11. In the outstanding checks, there is one for P150 made payable to a trade creditor, investigation shows that
this check had been returned by the creditor on November 14, 2018 and a new check for P300 was issued in its
place; the original check for P150 was made in error as to amount.

Requlred:
1. Compute the correct bank balance as of December 31, 2018.
2. Compute the cash shortage as of December 31, 2018.
3. Compute the cash shortage for the period January 1, 2019 to January 10, 2019.
(PhilCPA adapted)

SOLUTION 1-34

Book Bank
Unadjusted Balances P184,200 P194, 550
Outstanding checks (P15,660-P150) (15,510)
Ammesia Co check charged by the bank in error 450
Deposit in transit 2,160
Collection from a customer charged to Allowance for Doubtful Accounts 1,200
Colection from a customer charged to Inventory account 900
Unrecorded collection 2,190
Bank credit for refund of interest 60
Check returmed and replace 150
Comected balances P188,700 P181,650
SHORTAGE AS OF DEC 31, 2018 (Req. 2) (7,050) -----
Adjusted balances (Req. 1) P181,650 P181,650

Requirement 3
Cashier's accountability :
Carsh receipts per cash records, Jan. 2-10, 2019 P25,800
Unrecorded deposited collections, Jan. 2-10, 2019 1,260
Unrecorded undeposited collections, Jan. 9, 2019 2,550
Petty cash fund 450
Total P30,060

Accounted for as follows:

Count of cash on hand and petty cash fund
Currency and coins P1,155
Expense vochers 50
Employees I0Us 165
Customer checks 820 P2,250
Total deposits per bank statement P22,800
Correction of bank error (450)
Deposit in transit, Dec. 31 (2,160) 20,190 22,440
CASH SHORTAGE, Jan. 2-10, 2019 P7,620