Audit of Cash - Roque 2018

CHAPTER 1
Audit of Cash & Cash Equivalents

AUDIT PROGRAM FOR CASH
Audit Objectives:
To determine that:
1. Cash balances at the end of the reporting period represent cash and cash items on
hand, in transit to, or in depository banks.
2. Cash transactions have been properly recorded.
3. Cash balances are properly described and classified, and adequate disclosures with
respect to amounts restricted as to withdrawal are made in the financial statements.
Audit Procedures:
1. Conduct a cash count of undeposited collections, petty cash, and other funds.
• Obtain custodian's signature to acknowledge return of items counted.
• Reconcile items counted with general ledger balances.
• Trace undeposited collections counted to bank reconciliation.
• Follow up dispositions of items in cash counted:
➢ Undeposited collections should be traced to bank deposits.
➢ Checks accommodated in petty cash should be deposited after the count to
establish their validity.
➢ IOUs in the petty cash should be confirmed and traced to collections in the next
payroll period.
➢ Expense vouchers should be traced to the succeeding replenishment voucher.
• Coordinate cash count with count of marketable securities and other negotiable
assets of the client.
• Obtain confirmation of year-end fund balances of cash not counted in branches
or other offices.
2. Confirm bank balance by direct correspondence with all banks in which the
client has had deposits and loans during the year.
3. Obtain bank reconciliation.
CHAPTER 1 AUDIT OF CASH AND CASH3

• Trace balance per book to the general ledger balance of cash account.
• Trace balance per bank to bank statement and compare with amount confirmed
by bank.
• Establish authenticity of reconciling items by reference to their respective
sources, like:
➢ Bank debit or credit advices.
➢ Duly approved journal vouchers.
• Investigate checks outstanding for a long period of time.
➢ Consider adjustment, especially if the check is already stale.
➢ Consider the possibility of an erroneous preparation of the check.
• Investigate any unusual reconciling items.
• Where internal control over cash is weak, consider preparing a proof of cash
reconciliation.
4. Obtain cutoff bank statement showing the client's transactions. with the bank at
least one week after the reporting date, and:
• Trace year-end reconciling items, like:
➢ Deposit of the year-end undeposited collections.
➢ Completeness of year-end outstanding checks.
➢ Corrections of bank errors.
• Examine supporting documents of year-encl outstanding checks that did not
clear in the cutoff bank statement,
5. Obtain a list of interbank transfers of funds a few days before and after the
reporting date.
• Vouch supporting documents.
• Ascertain that the related receipts and disbursements were booked by the client
within the same day or at least within the same month.
6. Test reasonableness of cutoff by:
• Comparing dates of checks returned with cutoff bank statement to dates of
recording in the cash disbursements register.
• Tracing receipts recorded a few days before the reporting date to bank deposits.
7. Inspect savings account passbook and certificates of deposits.
• Reconcile with book balances.
• Update interest earned posting on passbooks, if
• necessary.
• Compare balances with bank confirmation reply.
8. Determine any restrictions on availability of cash.
9. Determine propriety of financial statement presentation and adequacy of
disclosures.
Problem 1-1
Cash and Cash Equivalents
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,OOO
➢ Savings account P132,600
• Undeposited customer checks of P22,200 (including a custcmer check dated January 2, 2019, for
P3,000).
• Currency and coins on hand of P3,480.
Savings account at the Northern Philippines Bank with a balance of P2,400,000. This account is
being used to accumulate cash for future plant expansion (in 2019).
• Petty cash of P4,000 (currency of P1,200 and unreplenished vouchers for P2,800).
• P 120,000 in a current account at the Northern Philippines Bank. This represents a 20%
compensating balance P600,000 loan with the bank. Santiago Company is legally restricted to
withdraw the funds until the loan is due in 2021.
• Treasury bills:
Two -month maturity bills P90,OOO
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 C. P430,280
B. P427480 D. P327,480
SOLUTION 1-1
Savings and current accounts - Metropolitan Bank
("132,600 + P81,OOO) P213,600
Undeposited customer checks (P22,200 — P3,OOO) 19,200
Currency and coins on hand 3,480
Petty cash 1,200
Two-month treasury bills 90,000
Time deposit 100,000
Total cash and cash equivalents P427.480
Answer: B
Notes:
1. The P3,000 postdated customer check will not be accepted by the bank when presented either for
encashment or deposit. This should be reverted to accounts receivable.
2. The P2,400,000 cash balance at Northern Philippines Bank is being maintained for future plant
expansion. Thus, it is unavailable for use in current operations or payment of current liabilities. The
amount should be shown as part of investments in the noncurrent assets section of the statement of
financial position.
3. The P120,000 in ä current account at the Northern Philippines Bank which represents a compensating
balance is legally restricted and is being held against a long-term borrowing. Hence, this Should be
classified as investment or other asset in the noncurrent assets section of the statement of financial
position.
4. The 7-month treasury bills are not cash equivalents and should be shown as part of short-term
investments in the current assets section of the statement of financial position.
PAS 7 defines "cash equivalents" as short-term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value. These
normally include short-term investments with maturities of three months or less from the date of
acquisition.
PROBLEM 1-2
The following information has been extracted from the accounting records of the URSULA COMPANY at
December 31, 2018:
a. Cash on hand (see note below) P230,OOO
b. Impukan Bank savings account (the required
c. minimum Monthly Average Daily Balance is PIO,OOO) 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 note 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. customers note receivable 45,000
j. Postage stamps 2,400
The following are included in cash on hand:
• A customer check for returned by the bank December 28, 2018. It was redeposited and cleared the
batik on January 2, 2019.
• A customer check for P75,000 dated January 3, 2019, receiv December 27, 2018.
• PHLPost 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 ofyour loved one." 1.500
P20.ooo
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 current account depositors to maintain a
monthly average daily balance of P50,000.
What total amount should be recorded as cash and cash equivalents on December 31, 2018?
A. P383,000 C. P378,OOO
B. P373,500 D. P408,OOO
Solution 1-2
Cash on hand (230,000-P43,000-P75,000) P112,OOO
Impukan Bank savings account 9,500
Petty cash fund 13,500
Bank current account (P160,OOO + P13,OOO + PS,OOO) 178,000
Time deposits:
30 days 30,000
90 days 40,000
Total cash and cash equivalents P383,000
Answer: A
PROBLEM 1-3
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 companys 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 and 180day bills totaling P800,000.
on December 31, 2018, what amount should be reported as cash and cash equivalents?
A. P3,055,200 C. P2,955,200
B. P2,455,200 D. P2,355,200
Solution 1-3
Balance in Monte Bank checking account P540,000
Balance in Monte Bank savings account 884,000
Undeposited customer checks 208,000
Checking account in Naic bank 800,000
Treasury bills with 30-day maturity 600,000
Total cash and cash equivalents P3,055,200
Answer: A
PROBLEM 1-4
The following facts apply to OTO COMPANY during 2018:
1. Savings account of P900,000 and a checking account balance of PI,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 PI 1,550.
4. Travel advances of P270,000 for the first quarter of next year (employee
reimbursement will be through salary deduction).
5. Oto Company has purchased P3,150,000 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 P 1,500.
8. An IOU from an employee of Oto Company in the ampunt of P2,OOO.
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 P 187,500
dated January 15, 2019.
1l. 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. P13,736,050 C. P12,751,500
B. P12,575,550 D. P12,763,050
SOLUTION 1-4
Savings account — Manila Bank P 900,000
Checking account — Manila Bank 1,200,000
Money market placement 7,500,000
Petty cash 1,500
Commercial paper 3, 150,000
Total cash and cash equivalents P12,763,050
Answer: D
PROBLEM 1-5
Your audit of the December 31, 2018, financial statements of DIONISIO CORP.
reveals the following:
Current account at Prime Bank P(30,000)
Current account at Prudent 135,000
Treasury bills (acquired 3 months before maturity) 300,000
Treasury bills (maturity date is Dec. 31, 2019) 1,500,000
Payroll account 390,000
Foreign bank account — restricted (translated
using the December 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 C. P849,400
B. P873,900 D. P861,900
SOLUT10N 1-5
Current account at Prudent Bank P 135,000
Treasury bills (acquired 3 months before maturity) 300,000
Payroll account 390,000
Travelers Check 21,000
Money order 12,900
Answer: D
PROBLEM 1-6
Computation of Correct Cash Balance
The Cash account of the BEA CORPORATION as of December 31, 2018, was
composed of the following:
On deposit in current 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 P 10,000 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?
SOLUTION 1-6
Current account — Bank of PI P900,OOO
Undeposited collection 350,000
Supplier's check for goods returned by.the company 60,000
Bank of Manila (P410,OOO - P300,OOO) 110,000
Correct cash balance P1,430,000
PROBLEM 1-7
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 of P638,340.
Your audit of the companys 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 deposits 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 previously 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 P 1,950 was not
recorded. • Bank service charges totaling P 1,260 were not recorded.
• Deposit in transit and outstanding checks at December 31, 2018, totaled P 136,250 and P276,380,
respectively.
2. Various expenses from the companys imprest petty cash fund dated December 2018, totaled P
16,250, 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 of the petty cash fund was made on January 8, 2019
3. The companys trial balance on December 31, 2018, includes the following accounts:
Cash in bank - Tsunami Bank P 748,320
Cash in bank - Earthquake Bank (restricted
account for plant expansion, expected to
be disbursed in 2019) 700,000
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 C. P30,OOO
B.P1O,250 D. P24,097
2. The petty cash shortage on December C. P3ßOO31, 2018, is
A.P0 C. P3,500
B.P5,903 D. P4,347
3. What is the adjusted Cash in bank—Tsunami Bank balance on December 31, 2018?
A.P500,010 C. P432,710
B.P748,320 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. P 6,142,960 C. P4,442,960
B. P5,439,360 D. P5,442,960
SOLUTION 1-7
1. Petty cash fund per trial balance P30,OOO

Various expenses dated December 2018 (16,250)
Employee cash advance (3,500)
Adjusted petty cash fund balance P10,250
Answer: B
2. petty cash shortage cannot be determined because of insufficient information.

Answer: A
3. Book Bank
Unadjusted balances P748,320 P638,340
NSF check (22,500)
Bank error (P7,520 -- P5,720) 1,800
Unrecorded cash receipt 3,500
Postdated checks (67,300)
Deposits in transit (P136,250 — P67,300) 68,950
Bank debit memos (230,000)
Interest earned 1,950
Bank service charges (1,260)
Outstanding checks _______ (276,380)
Adjusted balances P432,710 P432,710
Answer: C
4.Accounts receivable (P22,500 + P67,300) 89,800

Accounts payable 230,000
Bank service charges 1,260
Cash in bank — Tsunami Bank 315,610
Advances to employees 3,500
Interest income 1,950
Answer: A
5. Cash in bank — Tsunami Bank P432,710

Time deposit 1,000,000
Money market placement 4,000,000
Cash and cash equivalents P5,442,960
Answer: D
PROBLEM 1-8
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 PI,650
Petty cash vouchers 420
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 bank, marked NSF 1,000
An envelope containing currency of P 1,890 for a gift for
a retiring employee 1,890
P16,000
The general ledger shows an imprest petty cash fund balance of P16,OOO.
1. How much is the petty cash shortage or overage?

A. P2,190 overage C. P 1,890 shortage
B. P2,190 shortage D. P 1,890 overage
2. What is the adjusted balance of the petty cash fund at July 3 1' 2018?
A. PIO,740 C. P7,200
B.P3,540 D. P8,850
Solution 1-8
1. Currency PI,650
Petty cash vouchers (P420 + P900 + P340 + P800 + PI,500) 3,960
Replenishment check 7,200
Employee's NSF check 1,000
Petty cash accounted 13,810
Petty cash fund per ledger (custodian's accountability) 16,000
Petty cash shortage P2,190
Answer: B
2 .Currency PI,650
Replenishment check 7,200
Adjusted petty cash balance P8,850
Answer: D
Problem 1-9
Petty Cash Fund
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 P 10,000. 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 amount of 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
Cash over and short 260
Petty cash 6,800
C. Office supplies expense 3,460
Cash 6,800
D .Office supplies expense 3,460

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
SOLUTION 1-9
1.One individual, the petty cash custodian, should be responsible for
the petty cash fund.
Answer: C
2. The petty cashier should not have custody of paid petty cash
vouchers to prevent their reuse.
Answer: A
3. Office supplies expense 3,460
Cash 6,800
Conmputation Of cash shortage:
Curreny and coins P3,200
Petty cash vouchers (P3,460 + p2,240 + P840) 6,540
Petty cash fund per ledger 10,000
Shortage P 260
Answer: C
4. Facilitate payment of small, miscellaneous items.
Answer: D
3. Cash will be overstated and expenses understated.
Answer: C
PROBLEM 1-10
Count of Petty Cash Fund and Undeposited Collections
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 8:20 a.m. on January 3, 2019. Your count disclosed the following:
Bills and coins
PIOO.OO 5 pieces
Bills Coins
P100.00 5 pieces 5.00 18 pieces
50.00 40 pieces 1.00 206 pieces
20.00 48 pieces 0.25 32 pieces
Postage stamps (unused)-P365
Checks
Date Payee Maker Amount
Dec. 30 Cash Custodian P 1,200
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 Description Amount
Dec. 23 Mario Lansang, Advance for trip to P20,OOO
sales manager Tagaytay City
28 Central Post Office Postage stamps 1,620
29 Messengers Transportation 150
29 Byte, Inc. Cömputer repair 800
Other itemsfound inside the cash box:
1. Unclaimed pay envelope of Juan MacDonut. Indicated on the pay slip is his net salary of P 7,500. 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,OOO
Less: Hotel accommodation, meals, etc. P 16,000
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 P 120

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 Decemb
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 C P120
B. PI,800 D. PO
2. What is the amount of undeposited collections on December 31,
A. P44,300 C. P57,300
B. P84,300 D. P41,OOO
December 31, 2018, should include a net
A. P17,320 C. P18,200
B. P18,320 D. P18,080
4. The cash count should include total checks of
A. P69,980 C P41,780
B. P42,980 D. P41,300
5. What is the total cash shortage?

A. P22,166 c. P22,406
B. P8,166 D. P20,486
SOLUTION 1-10
1. Cash advance P20,OOO
Less: Actual cash disbursed
Hotel, meals, etc. P16,OOO
Bus fare 1,200
Pablo (PI,OOO - P120) 880 18,080
Cash that should be returned 1,920
Cash actually returned 1,680
Shortage due from the sales manager p 240
Answer: A
2. Collections per OR nos. 4352 – 4355 P43,300
Unreceipted collections 14 000
Total undeposited collections P57.300
Answer: C
3. Travel expenses (P16,OOO + PI,200 + 880) P18,080
Answer: D
4. Total checks P42,980
Answer: B
5.Total cash shortage P22,166
Answer: A
Benjamin Corp.
CASH COUNT SHEET
January 3, 2019 — 8:20 a.m.
Bills and coins:
Denomination Quantity Amount Total
P100.00 5 P500
50.00 40 2,000
20.00 48 960
5.00 18 90
1.00 206 206
0.25 32 8 P3,764
Checks:
Date Maker Amount
Dec. 30 Custodian P1,200
Dec. 30 SLV, Inc. 14,000
Dec. 31 Mario Lansang 1,680
Dec. 31 MSU Corp. 17,800
Dec. 31 Ateneo, Inc 8,300 42,980
Unreimbursed vouchers:
Date Account Amount
Dec. 23 Advances P20,ooo
Dec. 28 Postage 1,620
Dec. 29 Transportation 150
Dec. 29 Repairs 800 22,570
Total cash accounted P69,314
Less: Accountabilities
Petty cash P25,OOO
Collections (per official receipts) 43,300
Unclaimed salary 7,500
Excess travel advance 1,680
Unreceipted collection from SLV, Inc 14,000 91,480
CASH SHORTAGE (P22,166)
Benjamin Corp.
ADJUSTING JOURNAL ENTRIES
December 31, 2018
1. Cash 14,000
Accounts receivable 14,000
2. Advances to officers and employees 20,000
Transportation expense 150
Repairs expense 800
3. Unused postage 365
Postage expense 365
4. Cash 27,000
5. Cash 7,500
Salaries payable 7,500
6. Receivable from custodian 22,166
Cash 22,166
7. Travel expenses (P16,OOO + PI,200 + P880) 18,080
Advances to officers and employees 19,760
PROBLEM 1-1 1
Petty Cash Fund; Bank Reconciliation
Anying Velasco is reviewing the cash accounting for ABX, Inc. vAnying'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 PI 0,000.
2. Expenditures from the fund by the custodian as of May 31, 2010, 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 PI,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

Balance, May 1, 2018 P 354,000
Deposits during May 2018 1,240,000
Checks written during May 2018 1,273,400
Deposits in transit are determined to be P 120,000, and checks outstanding at May 31 total P34,000.
Cash on hand (besides petty cash) at May 31, 2018, is P9,840.
I. What is the amount of petty cash shortage?
A. P2300 C. P300
B. P11,244 D. PO
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 ofP11,244
C. Petty cash fund of P 10,944
D. Petty cash fund of PI 1,244
3. What amount of cash should be reported in the May 31, 2018, statement of financial position?
A. P368,720 C. P368,420
B. P356,720 D.P358,880
SOLUTION 1-1 1
1. Coins and currency P 756
Fund disbursements (P3,920 + PI,200 + 2,298 + PI,526) 8,944
Custodian's accountability 10 000
Petty cash shortage P300
Answer: C
p 300
2. Petty cash fund 2,000
Office supplies 3,920
Accounts receivable-employees 1,200
Shipping expense 2,298
Miscellaneous expense 1,526
Cash short/over 300
Cash 11,244
Answer: B
3. Book Bank
Deposit in transit 120,000
Cash on hand 9,840
Outstanding checks (34,000)
Note collected by bank 37,200
Adjusted balances p-356.72Q usa.2Q
Adjusted cash balance (P356,720 + P12,OOO) P368,720
Answer: A
PROBLEM 1-1 2
Bank Reconciliation; Computation of Cash Balance
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
Deposits in transit 49,000
Outstanding checks 17,650
Note collected by bank including
P 11,200 interest (Narcisa Co. not yet informed) 136,000
Check
drawn by XYZ Co. erroneously
charged by bank to Narcisa'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 P16,358
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,OOO
Bank service charge for March 1,200
In comparing the bank statement to the companys cash records, you found:
Outstanding checks on March 31 P184,OOO
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 companys books. You
also found a customer's check for PI7,400 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,OO0
Interest earned for the second quarter 500
Customers' checks returned for insufficient funds 5,000
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 of bank charges not yet recorded, P7,500 of outstanding
checks, PI 2,500 of deposits in transit, and P 15,000 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 P 175,000 on its bank statement dated June 30. As of June
30, there are P55,COO 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 P 225,000 before reconciliation. The bank statement does
not include a deposit of P 11,500 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 P 1,600 was returned because it was
NSF. A customer*s check for P2,250 was recorded on the books as P 2,700, 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 P 209,500 balance while the cash account balance on June 30 was P35,000. In
reconciling the balances, the auditor discovered that:
1. The June 30 collections of P 176,000 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 P24,30() was entered incorrectly in the cash payments journal as P34,200.
What is the total outstanding checks at June 30, 2018?
SOLUTION 1-12
Book Bank
1. Unadjusted balances P 85,000
Bank service charge (2,000)
Collection of note 136,000
Erroneous bank debit 54,600
Transposition error (P16,358 - P13,658) (2,700) _______
2. Balance per books P 36,420

Unrecorded and undeposited customer's check 17,400
NSF check (13,000)
Adjusted cash balance P 39,620
3. Balance per bank statement 200,000

Interest earned (500)
NSF checks 5,000
Balance per books at June 30, 2018 P214,500
4. Balance per books P45,000

Bank charges (5,000)
Deposits in transit (12,500)
Bank credits and collections 15,000
Balance per bank P50,000
5. Balance per bank statement P175,OOO

Adjusted cash balance P157,500
6. Balance per books P225,OOO
Bank collection 4,700
Customer's NSF check (1,600)
Overstatement of cash receipt (P2,700 — P2,250) (450)
Overstatement of cash disbursement (P485 — P395) 90
7. Balance per books, June 30, 2018 35,000

Overstatement of disbursement (P34,200 — P24,300) 9,900
Balance per bank, June 30, 2018 209,500

Add: Undeposited collections 176,000
Total 385,500
Less: Adjusted cash balance 41,900
Outstanding checks, June 30, 2018 P343,600
Problem 1-13
Bank Reconciliation
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) recorded One check by written the bank in but payment was recorded of rent by P8,940 Ian Co. was
as a correctlyP9,840 disbursement.
d) In accordance with prior authorization, the bank withdrew P18,OOO directly from the current
account as payment on a mortgage note payable. The interest portion of that payment was p14,OOO.
Ian Co. has made no entry to record the automatic payment.
e) Bank service charges of P 740 were listed on the bank statement.
f) A deposit of P35,000 was recorded by the bank on December 12, but it did not belong to Ian Co.
g) The bank statement included a charge of P 3,400 for a notsufficient-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 301 the bank withdrew P40,000 from the account
and purchased treasury bills for Ian Co. The company recorded the transaction 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 C. P534,914
B. P543,514 D. P541,714
2. What is the adjusted cash in bank balance on December 31, 2018?
A. P520,474 C. P518,674
B. P527,274 D. P520,154
3. What amount of cash and cash equivalents should be shown under current assets on December 31,
2018?
A. P928,474 C. P720,474
B. P728,474 D. P735,274
SOLUTION 1-1 3
1. Balance per bank statement P585,284
Undeposited collections 23,000
Error in recording rent check (P9,840 -- P8,940) (900)
Automatic mortgage payment 18,000
Bank service charges 740
Bank error — deposit incorrectly credited to Ian Co. (35,000)
NSF check 3,400
Balance per books P541,714
Answer: D
2. Book Bank
Undeposited collections 23,000
Error in recording rent check 900
Automatic mortgage payment (18,000)
Bank service charges (740)
Bank error — deposit incorrectly credited
to Ian Co. account (35,000)
NSF check (3,400)
Answer: A
3.
Current account balance P520,474
Petty cash 8,000
Treasury bills (P400,OOO x 1/2) 200,000
Answer: B
PROBLEM 1-14
Bank Reconciliation:
Unadjusted to Adjusted Balances Format
The following data were taken from GARAY's check register for the month of April. Garays bank
reconciliation for March showed one outstanding check, check No. 178 for P2,150 (written on March
20), and one deposit in transit for P4,350 (made on March 31).
Date Item Checks Deposits Balance

2018
April 1 Beginning Balance 6,150
1 Deposit 250 26,167 32,317
1 Check No. 179 250 32,567
4 Check No. 180 10,673 21,898
27 Deposit 11,774 33,672
29 Check No. 181 13,217 20,490
The following is from Garay's bank statement for April:

Date Item Checks Deposits Balance
2018
April 1 Beginning Balance 3.950
3 Check No. 179 250 3,700
3 Deposit 4,350 8,050
5 Check No. 180 10,673 (2,623)
5 Automatic loan 8,150 5,527
5 Deposit 26,417 31,944
20 NSF check 1,000 30,944
20 Service charge 600 30,344
30 Interest 82 30,426
Assume that any errors or discrepancies you find are Garay's, not the bank's.
What is the adjusted cash balance as of April 30?
A. P26,833 C. P30,426
B. P26,838 D. P26,872
SOLUTION 1-14
Book Bank
Outstanding checks:
Check no. 178 P2,150
Check no. 181 13,217 (15,367)
Error in recording deposit (P26,417 - P26,167) 250
Automatic loan 8,150
Interest 82
NSF check (1,000)
Bank service charge 600)
Arithmetic error for:
Check no. 179 (500)
Check no. 180 (P21,898- P21,894) (4)
Check no. 181 (35) ________
Adjusted balance P26,833 P26,833
Answer: A
PROBLEM 1-15
Reconciliation: Unadjusted to Adjusted Balances Format
The following information pertains to FLINT CORP.:
Flint Corp.
BANK RECONCILIATION
November 30, 2018
Balance per bank statement P435,OOO
Less: Outstanding checks
No. 4321 P 6,000
4329 15,000
4340 1,700
4341 4,675 27,375
P407,625
Add: Deposit in transit 16,200
CHECK REGISTER
December 2018
Vouchers
Date Payee No. Payable Discount Cash

Dec. 1 San Beda, Inc. 4342 P 10,000 P500 P 9,500
3 Miriam Corp. 4343 4,200 - 4,200
7 UE Enterprises 4344 3,755 - 3,755
12 PSBA corp. 4345 12,000 120 11,880
15 Payroll 4346 96,000 - 96,000
16 BU, Inc. 4347 6,300 - 6,300
18 New Era Co. 4348 14,200 142 14,058
21 UST, Inc. 4349 7,000 - 7,000
22 Petty cash fund 4350 10,000 - 10,000
28 Payroll 4351 98.000 _ -__ 98.000
P261.455 P762 P260.693
BANK STATEMENT
BANKABLE BANK
PERIOD: NOVEMBER 30, 2018 - DECEMBER 31, 2018
No.: 001-43-44
Check
Date Description Number Debit Credit Balance
Balance last statement P435,OOO
Dec. 1 Cash deposit P16,200 451,200
1 Check issued 4329 P15,OOO 436,200
4 Check issued 4342 9,500 426,700
4 Check issued 4341 4.675 422,025
5 Check deposit 49,000 471,025
6 Check issued 4343 4,200 466,825
8 Check deposit 14,000 480,825
10 Check issued 4344 3,755 477,070
15 Encashment 4346 96,000 381,070
22 Encashment 4350 10,000 371,070
28 Encashment 4351 98,000 273,070
29 Debit memo
service charge 1,000 272,070
29 Credit memo – interest 1,550 273,620
Deposits in transit at December 31 totaled P49,OOO.
1. What is the total book receipts for December?
A. P113,550 C. P63,OOO
B. P80,750 D. 112,OOO
2. What is the cash balance per books on December 31, 2018?
A. P275,132 C. P291,332
B. P226,132 D. P274,370
3. What is the total outstanding checks on December 31, 2018?
A. P68,313 C. P46,938
B. P39,238 D. P40,938
4. What is the adjusted cash balance on November 30, 2018?
A. P446,375 C. P423,825
B. P417,825 D. P435,OOO
5. What is the adjusted cash balance on December 31, 2018?
A. P281,682 C. P226,682
B. P275,682 D. P274,920
SOLUTION 1-15
1. Dec. 5 deposit P49,OOO
Dec. 8 deposit 14,000
Dec. 31 deposit in transit 49,000
Total collections/book receipts P 112,000
Answer: D
2. Cash balance, November 30 P423,825
Add: December receipts (see no. 1) 112,000
Total 535,825
Less: Disbursements per check register 260,693
Cash balance, December 31 P275,132
Answer: A
3. Outstanding checks, December 31:
Check no. 4321 P 6,000
4340 1,700
4345 11,880
4347 6,300
4348 14,058
4349 7,000
Total P46,938
Answer: C
4. Adjusted cash balance, Nov. 30, 2018 P423,825
The balance per books as determined •and as shown on the November 30
reconciliation is also the adjusted cash balance on that date. Notice that there are no
book reconciling items in November.
Answer: C
6. Book Bank
Unadjusted balances Bank P275,132 P273,620
Service charge (1,000)
Interest 1,550 _______
Problem 1-16
Bank Reconciliation: Unadjusted to Adjusted Balances Format
EDGARDO CO. was organized on January 2, 2018. The following items are from the companys trial
balance on December'31, 2018.
Ordinary share capital 1,500,000
Share premium 150,000
Merchandise inventory 69,000
Land 1,000,000
Building 1,400,000
Furniture and fixtures 367,000
Notes payable-bank 500,000
Sales 6,235,200
Operating expenses (including depreciation of
P400,OOO) 1,005,150
Additional information is as follows:
1. Deposits in transit, December 31 P384,660
2. Service charge 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 C. P6,235,200
B.P4,119,240 D. P6,069,800
2. What is the total payments for merchandise purchases?
A. P3,905,990 C. P4,043,990
B. P4,649,140 D. P5,914,550
3. What is the total cash receipts per books?
A. P7,819,800 C. P8,219,800
B. P8,169,800 D. P8,069,800
4. What is the total cash disbursements per books?
A. P7,816,140 C. P8,021,290
B. P7,416,140 D. P7,278,140
5. What is the cash balance per books on December 31?
A.P653,660 C. P1,203,660
B. P803,660 D.P707,060
6. What is the adjusted cash balance on December 31?
A. P801,660 C. P1,201,660
B. P651,660 D. P803,660
Solution 1-16
1.Sales P6,235,200
Less: Accounts Receivable 165,400
Collections from customers P6,069,800
Answer: D
2.Cost of sales (P6,235,200 x 70%) P4,364,640
Add: Merchandise inventory, December 31 69,000
Goods available for sale/Purchases (there is no
beginning inventory) 4,433,640
Less: Accounts payable, December 31 389,650
Payments for purchases P4,043,990
Answer: C
3. Issue price of ordinary shares
(1,500,000 + P150,OOO) P1,650,000
Notes payable — bank 500,000
Collections 6,069,800
Total cash receipts per books P8,219,800
Answer: C
4. Land P1,000,000
Building 1,400,000
Furniture and fixtures 367,000
Operating expenses paid (PI,005,150 p400,000) 605,150
Payments for purchases 4,043,990
Total cash disbursements per books P7,416,140
Answer: C
5. Cash receipts per books (see no. 3) P8,219,800

Cash disbursements per books (see no. 4) (7,416,140)
Cash balance per books, December 31 P 803,660
Answer: B
6. Book Bank
Unadjusted balances P803,660 P892,OOO
Outstanding checks ________ (475,000)
Answer: A
PROBLEM 1-1 7
Computation of Cash Receipts and Disbursements
In connection with your audit of the cash account ofANNIE CORP., you gathered the following
information.
a. Balance per bank, December 1, 2018 P145,OOO

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
PI 2,000 paid by bank in December) 67,000
e. Outstanding checks, December 31, 2018 (including
checks issued in November) 94,162
f. Deposit in transit, November 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
SOLUTION 1-1 7
1. Bank receipts (credits) in December P346,OOO
Less: Deposit in transit, November 30 P39,458
NSF check redeposited in December 11,143 50,601
Book receipts (debits) in December P295,399
Answer: A
2. Bank balance, December 1, 2018 P145,OOO
Add: Bank receipts in December 346 000
Total 491,000
Less: Bank balance, December 31, 2018 114,500
Bank disbursements in December P376,500
Answer: B
3. Bank disbursements in December P376,500
Add: Bookdisbursements in December
but not in December bank disbursements:
Checks issued in December, outstanding
at December 31
Outstanding checks, Dec. 31 P94, 162
Less: Checks issued in Nov., still outstanding at Dec. 31
(P67,OOO - P12,OOO) 55 000 39,162
Total 415,662
Less: Bankdisbursements in December
but not in book disbursements
in December;
November outstanding checks

paid by bank in December P12,OOO
NSF check 11,143 23,143
Book disbursements (credits) in December P392,519
Alternative computation:
Bank disbursements in December P376,500
Add: Outstanding checks, December 31 94,162
Total P470,662
Less: Outstanding checks, Nov. 30 P67,000
NSF check 11,143 78,143
Book disbursements in December P392,519
Answer: D
PROBLEM 1-1 8
Petty Cash Fund; Bank Reconciliation
Your audit of the cash accöunt of JUNIE CORP. disclosed the following information:
1. Cash in bank balance per books, Dec. 31, 2018 P35,OOO
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 P 200) 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,OOO
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 P 10,000. Your count on December 31,
2018, revealed the following fund items:
Currency and coins P3,OOO
Supplies 2,400
Transportation 100
IOUs 4 000 9,500
9. Erroneous bank credit 11,000
10. Outstanding checks (including a certified
check of PIO,OOO) 39,400
1. What is the principal amount of the note collected by bank in December?
A. P27,600 C. P28,200
B. P26,800 D P27,000
2. What is the adjusted cash in bank balance at December 31, 2018?
A. P52,500 C. P53,OOO
B. P52,700 D. P51,900
3. The cost of checkbook is
A. P600 C. PO
B. P300 D. PIOO
4. What is the amount of petty cash shortage at December 31, 2018?
A. P400 C. PIOO
B. P500 D. P O
5. What is the adjusted petty cash balance?
A. P9,500 C, P3,OOO
B. P3,500 D. PIO,OOO
Solution 1-18
1.Principal (SQUEEZE) P27,OOO
Interest 800
Collection fee (200)
Proceeds credited by bank 27,600
Answer: A
3. B Book Bank
Unadjusted balances P35,OOO P60,OOO
Note collected by bank 27,600
Debit memo for a checkbook (SQUEEZE) (100)
Transposition error in recording deposit
P54,OOO - P45,OOO) (9,000)
Erroneous bank debit 26,700
Petty cash fund (10,000)
Erroneous bank credit (11,000)
Outstanding checks, net of certified check
(P39,400 - PIO,OOO) ______ (29,400)
Answer: A
3.Cost of checkbook (see no. 2) 100

Answer: D
4. petty cash fund per ledger P1O,OOO
Petty cash accounted 9500
Petty cash shortage 500
Answer: B
5.Adjusted petty cash balance currency & coins P3,000
Answer: C
PROBLEM 1-1 9
Bank Reconciliation
The cash receipts and the cash payments of LIEZEL COMPANY for April 2018 follow:
Cash Receipts (CR) Cash Payment (CP)
Date Cash Debit Check No. Cash Credit

April 2 P208,700 4113 P44,550
8 20,350 4114 7,350
10 27,950 4115 96,500
16 109,350 4116 33,200
22 92,700 4117 73,600
29 53,000 4118 50,000
30 16,850 4119 31.600
Total P528,900 4120 93,750
4121 5,000
4122 120,650
Total P546,200
The cash account of Liezel Company shows the following information at April 30,
2018:
_______________________________CASH______________________________
Date Item Ref Debit Credit Balance
April 1 Balance 95,550
30 CR 6 528,900 624,450
30 CP 11 546,200 73,250
Liezel Company received the following bank statement on April 30, 2018:
Bank Statement for April 2018
Beginning balance P 95,550

Deposits and other Credits:
April 1 P 16,300 EFT
4 208,700
9 20,350
12 27,950
17 109,350
22 68,400 BC
23 92 700 543,750
Checks and other Debits:
April 7 P 44,550
13 69,500
14 45,150 US
15 7,350
18 33,200
21 10,950 EFT
26 73,600
30 50,000
30 1,000 sc (335,300)
Ending balance P 304,000
______________
Explanation: EFT--- electronic funds transfer
US---- unauthorized signature
BC---- bank collection
SC---- service charge
Additional datafor the bank reconciliation include the following:

a. The EFT deposit was a receipt of monthly rent. The EFT debit was a monthly insurance payment.
b. The unauthorized signature check was received from Lester Soon.
c. The P68,400 bank collection of a note receivable on April 22 included P9,250 interest revenue.
d. The correct amount of check number 4115, a payment on account, is P69,500. (Liezel's accountant
mistakenly recorded the check for P96,500.)
1. What is the amount of deposits in transit on April 30?

A, P53,OOO C. P45,150
B. P69,850 D. P115,OOO
2. What is the amount of outstanding checks on April 30?
A. P241,OOO C. P286,150
B. P337,500 D D. P310,500
3. What is the amount of bank receipts in April?
A. P543,750 C. P459,050
B. P527,450 D. P528,900
4. What is the amount of bank disbursements in April?
A. P290,150 C. P289,150
B. P335,300 D. P316,150
5. What is the correct cash balance as of April 30?
A. P132,850 C. P122,150
B. P87,700 D. P223,150
SOLUTION 1-19
1. Deposits in transit, April 30:
April 29 collection per CR P53,OOO
April 30 collection per CR 16,850
Total P69,850
Answer: B
2. Oustanding checks, April 30:

Check no, 4119 P 31,600
Check no. 4120 83,750
Check no. 4121 5,000
Check no. 4122 120,650
Total 241,000
Answer: A
3. Bank receipts in April
(Total deposits and other credits) P543,750
Answer: A
4. Bank disbursements in April P335,300
(Total checks and other debits
Answer: B
5.B ` Book Bank
Unadjusted balances, April 30 P78,250 P304,OOO
Error in check no. 4115
(P96,500 - P69,500) 27,000
EFT -rent 16,300
Bank collection 68,400
Unauthorized signature check (45,150)
EFT – insurance (10,950)
Service charge (1,000) _________
Adjusted balances, April 30 P132,850 P132,850
Answer: A
PROBLEM 1-20
FERMIN COMPANY's check register shows the following entries for the month of December:
Date Checks Deposits Balance
2018
Dec. 1 Beginning Balance P 89,300
5 Deposit P 65,000 154,300
7 Check #14344 P 32,500 120,800
11 Check # 14345 14,000 106,800
26 Deposit 49,000 155,800
29 Check #14346 8,600 147,200
Fermin's bank reconciliation for November revealed one outstanding check (No. 14343) for P 12,000
(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
2018
Dec. 1 Beginning Balance P950,750
1 Deposit P 5,550 101,300
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 Fermin 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. P119,550 D.P 61,550
5. Adjusted cash balance on December 31
A. P663,800 C. P748,200
B. P634,200 D. P597,200
Solution 1-20
1. Balance per bank, Nov. 30 P95,750
Outstanding in check (no. 14343) (12,000)
Deposit transit 5,550
Adjusted bank balance, Nov. 30 P89,300
Answer: A
Since there are no book reconciling items in November, the adjusted bank balance agrees with the cash
in bank balance per ledger on November 30.
2. Outstanding checks on December 31:

Check no. 14343 P12,OOO
Check no. 14646 8,600
Total P20,600
Answer: D
3. Deposit in transit on December 31:
Dec. 26 collection P49,000
Answer: B
4. Total bank receipts in December P565,150
Answer: C
The total bank receipts is the tota/ amount credited by the bank during the period.
5. Book Bank
Outstanding checks (see no. 2) (20,600)
Error in recording deposit
(P65,OOO - P56,OOO) (9,000)
Error in arithmetic for Check No. 14344 1,000
Loan proceeds 500,000
NSF check (7,600)
Interest 3,600
Answer: B
PROBLEM 1-2 1
In connection with an audit, you are given the following bank reconciliation
BANK RECONCILIATION
December 31, 2018
Balance per ledger, December 31, 2018 P 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 Inade on the books) 4,000
Debit memo for bank service charge for December 1,000
P46,675
Deduct:
Outstanding checks
(see detailed list below) P18,625
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 P12,625
but drawn and paid by bank
as P16,225 3,600 32,225
Computed balance P14,450
Unlocated difference 36,600
Balance per bank (checked to confirmation) P51,050
LIST OF OUTSTANDING CHECKS, Dec. 31, 2018
Check No. Amount
14344 P 5,820
14358 1,295
14367 3,543
14399 2,001
14401 4,892
14407 5,074
PI 8,625
1. What is the correct amount of outstanding checks on December 31?

A. P18,625 C. P17,625
B. P22,625 D. P21,625
2. The journal entry to correct the outstanding checks should include a
A. Debit to Cash in bank of P4,000
B. Credit to Cash in bank ofP4,000
C. Debit to accounts payable of P4,000
D. No journal entry is necessary
3. The correct amount of "unlocated difference" is
A. P32,600 C. P36,600
B. P35,600 D. P O
4. The Cash in bank to be shown on the company's December 31, 2018, statement of
financial position is
A. P34,750 C. P33,750
B. P37,350 D. P37,750
5. The journal entry to adjust the Cash in bank account as of December 31 should
include a
A. Debit to Cash in bank ofP8,000
B. Credit to Cash in bank ofP8,600
C. Net credit to Cash in bank of P600
D. Net debit to Cash in bank ofP600
SOLUTION 1-21
1. Outstanding checks, Dec. 31 (correct total of the list) pp.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
Customer's check returned (4,000)
Credit memo for note collected 8,000
Understatement of book disbursement (3,600) _______
Answer: C
5. ADJUSTING JOURNAL ENTRIES
December 31, 2018
a. Accounts 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 P8,OOO
Credit to cash in bank (P4,000 + PI,OOO + P3,600) (8,600)
Net credit to cash in bank (P600)
Problem 1-22
Computation of Book Disbursements
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:
Deposits in transit 37, 856
P68,390
Outstanding checks 42 ,756
As part of your verification, you obtained the bank statement and canceled checks from the bank on
January 15, 2019. According to the records of the company, checksissued from January 1 to January 15,
2019;amounted to P22,482. Checks returned by the bank on January 15, 2019, totaled P58,438. Of the
checks outstanding on December 31, 2018, P9,600 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,
P7,200 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. P61,912 C. PIO,OOO
B. P2,800 D. P29,874
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:
From December or before P9,600
From January 7 200 P16,800
Add: Disbursements per bank statement 58 438
Total 75,238
Less: Outstanding checks, December 31 42,756
Disbursements per books as computed P32,482
Disbursements per books as computed P32,482

Disbursements per books as reported 22,482
Difference in disbursements P10,000
Answer: C
2. Three possible explanations for the above difference:

correct.
a. The bank disbursements (P58,438) may be overstated by PIO,OOO. Another company check
for PIO,OOO may have been charged erroneously by the bank against the client's account.
b. Tie December 31 outstanding checks may be understated by PIO,OOO. 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 (P22,482).
Problem 1-23
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 with that shown on the company's books, you observed the facts set forth below;
(1) Balance per bank statement, Dec. 31, 2018 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 for the return or redeposit 77,320
(9) Error on bank statement in entering deposit
of Dec. 18, 2018:
Correct amount PI,600
Entered in statement 160 1,440
(10) Check No. 021261 of Yek Company,
charged by bank in error to
company's account 13,600
(11) Proceeds of note of Harthur Co.,
collected by bank, Dec. 10, 2018, not
entered in cash book (principal amount of
P25,OOO plus interest of P 1,125
less collection fee) 25,625
(12) Erroneous debit memo of Dec. 28, 2018,
to charge companys 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 of Dec. 4, 2018:
Entered as P14,200.62
Correct amount 12,400.62 1,800
(14) Deposit of Bunso Co. of Dec. 2,
credited in error to this company 3,500
1. What is the principal amount of the loan obtained from bank in December?
A. P50,OOO C. P48,125
B. P47,750 D. P49,625
2. What amount of prepaid interest should on Hectors December 31, 2018, statement
A. P2,250 C. P375
B. P0 D. P1,875
3. The amount of collection fee
A. P625 C. P500
B. P1,625 D. P0
4. What is the adjusted Cash in bank balance as of December 31, 2018?
A. P14,344 C. PI 7,944
B. P11,464 D. P9,344
5. The Cash in bank per ledger 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 - (Px180/0 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 (2/250 x 2.5/3) PI ,875
Answer: D
3. Principal
Interest income
Maturity value
Proceeds
Answer: C
4. Book Bank
Receipts of 12/31/18, deposited 1/02/19 6,260
Service charge for November (1,000)
Proceeds ofbank loan 47,750
Deposit of 12/22/18, omitted from 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 12/04/18 (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 P 4,945

Answer: C
Problem 1-24
Bank Reconciliation
You are auditing general cash for the DION COMPANY for the fiscal year ended July 31, 2018. The client
has not prepared the July 31 bank reconciliation. After a brief discussion with the owner you agree to
prepare the reconciliationj with assistance from one of Dion Company's clerks. You obtain the following
information:
General Bank
Ledger Statement
Beginning balance P 46,110 P57,530

Deposits 250,560
Cash receipts journal 254,560
Checks cleared (236,150)
Cash disbursements 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 books 46,110
Additional information obtained is:
I. Checks clearing that were outstanding on June 30 totaled P 16,920.
2. Checks clearing that were recorded in the July disbursements journal totaled P204,670.
3. A check for P 10,600 cleared the bank, but had not been recorded in the cash disbursements journal.
It was for an acquisition of inventory. Dion uses the periodic inventory method.
4. A check for P3,960 was charged to Dion Company but had been written on a different company's bank
account.
5. Deposits included P6,000 from June and P 244,560 for July.
6. The bank charged Dion Company's account for a not-sufficientfund check totaling P3,110. The credit
manager concluded that the customer intentionally closed its account and the owner left the city The
check was turned over to a collection .
7. A note for plus interest, was paid directly to the bank under an agreement signed
four months ago. The note payable was recdrded at on Dion Company's books.ency.
Based onfactsgiven, answer the following:
1. The checks outstanding on June C. 30 P13,940 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,OOO
B. PIO,OOO D. P9,110
3. The adjusted cash bålance on July 31 is
A. P6,980 c. 3,870
B. PIO,940 D. P3,020
4. Which of the following audit procedures would be 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 duplicate deposit slip.
D. Obtain cutoff bank statement.
5. The auditor would perform the following procedures to verify
the unrecorded check of P10,600, except
A. Obtain cutoff bank statement.
B. Examine checks retürned with July bank statement.
C. Trace check number to absence in July cash disbursements journal and recording in August.
D. Examine supporting documentation.
SOLUTION 1-24
1. Outstanding checks, June 30 P 17,420
Add: Checks issued in July (P218,110 per
cash disbursements journal + PIO,600
unrecorded check) 228,710
Total 246,130
Less: Checks paid by bank in July
(236, 150 - 2,960 erroneous check
charged by bank) 232, 190
Outstanding checks, July 31 P13,940
Answer: C
Alternative computation: Checks outstanding on June 30 that did not
clear in July (P17,420 - P16,920) P 500
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 P 6,000
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 P 6,960

Outstanding checks (see no. 1) (13,940)
Deposits in 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 absence of note on July 31 bank confirmation.
Answer: B
5. The following audit procedures would be performed to verify the unrecorded check:
1. Examine check returned with July bank statement.
2. Trace number to absence in July cash disbursements journal and recording in August.
3. Examine supporting documentation.
4. Investigate why it was unrecorded.
The cutoffbank statement WI/ no longer show the unrecorded check because it was already paid by the
bank in July.
Answer: A
Problem 1-25
Proof of Cash: Unadjusted to Adjusted Balances Format
The cash account of VELASCO COMPANY shows the following activities:
Date Debit Credit Balance
Nov. 30 Balance P115,OOO
Dec. 2 November bank charges P 50 114,950
4 November bank credit for
notes receivable collected P10,000 124,950
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 P 11,000 801 8, 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 23 250 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 61 630 38, 000 824 29,000
29 - - 825 2,000
29 - _______- 826 11,000
Totals P707,300 P408,000
BANK STATEMENT
Date Check No. Charges Credits

Dec. 1 792 P 2, 500 P 8,500
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 CM 16 - 12,000
10 799 7,050 154,000
11 DM 57 1,300 77,000
12 808 30,000 21,000
15 803 1,000 -
16 809 61,000 85,000
17 DM 61 60 8,000
18 813 20,000 19,000
19 CM 20 - 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 DM 112 120 -
29 821 3,000 5,000
29 CM 36 - 12,000
29 820 4,000 ____-
Totals P353,030 P831,300
a. DMS 61 and 112 are for service charges.
b. EC is error corrected.
c. DM 57 is for an NSF check.
d. CM 20 is for loan proceeds, net of P 150 interest charges for 90 days.
e. CM 16 iS for the correction of an erroneous November bank charge.
f. CM 36 is for customers' notes collected by bank in December.
g. Bank balance on December 31 is P592,270.
1. The total outstanding checks at November 30 should be

A. P9,550 C. P13,050
B. P7,050 D. P15,550
2. The total outstanding checks at December 31 should be
A. P147,OOO C. P153,OOO
B. P162,550 D. P159,OOO
3. The deposit in transit at November 30 should be
A. P8,500 C. P48,500
B. P19,500 D. P O
4. The deposit in transit at December 31 should be
A. P44,OOO C. P46,500
B. PO D. P38,OOO
5. The adjusted book balance at November 30 should be
B. P124,950 D. P136,950
6. The adjusted bank receipts for the month of December should
A. P763,800 C. P765,800
B. P773,800 D. P767,800
7. The adjusted book disbursements for the month of December should be
A. P403,480 C. P415,480
B. P415,540. D. P409,480
8. The adjusted bank balance at December 31 should be
A. P592,270 C. P558,270
B. P477,270 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 no. 806 P 19,000
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. Deposits in transit, November 30 P8,500

Answer: A
4. Deposit in transit, November 30 (see no. 3) P 8,500
Add: Collections per cash receipts book 707,300
Total 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 P 38,000
Answer: D
PROOF OF CASH
December 1-31
Balance Balance
Nov. 30 Receipts Disbursements Dec. 31
Balances per bank P114,OOO 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)
Deposits 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. book balances P124,950 P767,800 P415,480 P477,270
Balance Balance
November 30 Receipts Disbursements Dec. 31
Balances per books P115,OOO 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 disburse
ment — Check no. 815 _______ _______ 6 000 (6,000)
Adj. bank balances P124,950 P767,800 P415,480 P477,270
5. Adjusted book balance, Nov. 30 P124,950
Answer: B
6. Adjusted bank receipts in December P767,800
Answer: D
7. Adjusted book disbursements in December P415,480
Answer: C
8. Adjusted bank balance, December 31 P477,270
Answer: B
PROBLEM 1-26
Proof of Cash: Bank to Book Balances Format
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
No, 640 P10,000
652 8,000
653 2,000 20,000
Adjusted bank balance P642,000
Book balance P570,800
Add: Proceeds of note receivable
collected in May P70,OOO
Deposit 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
June 30 3,000 DM
The June 2018 bank statement is shown below:

Pasig Bank
Period covered: May 31, 2018 - June 30, 2018
Account No.: 0021261
Date Checks Deposits
June 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
June 30 200 SV
June 30 3,000 DM
SV-Service Charges DM-Debit Memo

EC - Error Corrected CM Credit Memo
The paid checks accompanying this bank statement (all clearing in June) are the following:
No. 652 P8,OOO No. 654 P14,OOO No. 657 P12,OOO
No. 653 P2,OOO No. 655 P 4,000 No. 658 P18,OOO
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?

D. P78,OOO B. P88,OOO
2. What is the total bank disbursements in June?
A. P59,200 `C. P58,200
D. P63, B. P58,OOO
3. What is the balance per bank statement on June 30, 2018?
A. P676,800 C. P732,400
B. P627,200 D. P729,200
4. What is the total book receipts in June?
B. P220,OOO D. P218,OOO
5. What is the total book disbursements in June?

A. P53,OOO C. P56,400
B. P57,400 D. P63,200
6. What is the book balance on June 30, 2018?
A. P732,200 C. P732,400
B.P729,200 D. P676,800
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,OOO
Add: Bank receipts in June 88,000
Total 740,000
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,OOO P88,000 P63,200 P676,800
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)
May 31 800 800
June 30 200 200
Bank collection in May (70,000) 70,000
May deposit recorded
By the company in
June (2,000) 2,000
NSF checks:
Already redoposited (1,000) (1,000)
Not yet deposited (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 P56,4OO
Answer: C
6.Book balance on June 30, 2018 P732,400
Answer: C
PROBLEM 1-27
Proof of Cash: Bank to Book Balances Format
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,OOO

Add: Deposit in transit 11 000
Total P205,OOO
Less: Outstanding checks PI,400
No. 1434 P1,400
1562 7,500
1571 5,800
1584 8,000
1591 300 23,000
Balance per books PI 82,000
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 P
1,800 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 P 100 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 CPA'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 a deposit of P24,000 on January 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
Date Amount
Number of Check 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 overlooked
informing the
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 had been
labeled NSF and
returned to the payee
because the bank had
erroneously believed
that the 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
1. What is the correct amount of outstanding checks on December 31?
A. P41,400 C. P48,OOO
B. P33,250 D.P40,OOO
2. What is .the amount of cash receipts per book in December?
A.P1,496,900 C. P1,495,100
B. P1,504,900 D. P1,487,000
3. What is the amount of cash disbursements per book in December?
A. P1,254,850 C. P1,256,850
B. P1,252,850 D. P1,248,850
4. What is the cash in bank balance per book as of December 31?
A. P426,050 C. P430,050
B. P428,250 D.P343,050
5. What is the adjusted cash balance as of December 31?
B. P340,200 D. P344,200
Solution 1-27
1. Outstanding checks, December 31
(P49,400 - PI,400 - P8,OOO) P40,000
Answer: D
Balance December Balance
Nov. 30 Receipts Disbursements Dec 31
Per bank statement P194,OOO P1,487,000 P1,325,000 P356,000
Outstanding checks:
Nov. 30 (23,000) (23,000)
Dec. 31 40,000 (40,000)
Nov. 30 11,000 (11,000)
Dec. 31 24,000 24,000
Interest on note discounted
(P90,OOO x 60/360) 900 900
NSF checks (4,000) (4,000)
Cancellation of check no. 1434 1,400 (1,4000
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 diarged in
Error (3,000) 3,000
Postdated check presented for
payment _______ _______ (100,000) 100,000
Per book balances P182,000 P1,496,900 P1,248,850 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,OOO
Interest on note discounted (900)
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
PROBLEM 1-28
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 jn Decernber 2,500
Blank 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 companys 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,OOO C. P22,500
B. P20,OOO D. P17,500
2. The total unrecorded bank service charges as of December 31, 2018, is
A. P750 C. PI,750
B. P2,250 D. P4,250
3. What is the total book receipts in December?
B.P152,000 D. P147,500
4. What is the total amount of company checks issued in December?
A. P130,000 C. P133,750
B. P123,OOO D. P126,250
5. What is the total book disbursements in December?
A. P123,750 C. P126,250
B, P128,500 D. P128,750
6. What is the book balance on November 30, 2018?
A. P16,250 C. P37,500
B. P21,250 D. P35,OOO
7. What is the bank balance on November 30, 2018?
A. P23,OOO C. P43,500
.BP18,500 D. P16,250
8. What is the total bank receipts in December?
B.P140,OOO D. P150,OOO
9. What is the total bank disbursements in December?
A. P154,500 C. P129,500
B.P132,500 D. P137,OOO
10. What is the bank balance on December 31, 2018?
A. P21,500 C. P31,OOO
B. P26,500 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
(2,500 - PI,500) 1 000
Unrecorded December bank service charges P2,250
Answer: B
6. What is the book balance on November 30, 2018?

A.P16,250 C. P37,500
B. P21,250 D. P35,OOO
7. What is the bank balance on November 30, 2018

B.P23,OOO C. P43,500
B. P18,500 D. P16,250
8. hat is the total bank receipts in December?

C. P120,OOO C. P145,OOO
B. P140,OOO D. P150,OOO
9. What is the total bank disbursements in December?

A. P154,500 C. P129,500
B. P132,500 D. P137,OOO
10. What is the bank balance on December 31, 2018?

A. P21,500 C. P310,OOO
B. P26,500 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 3 20,000
Answer: B
2. Bank service charges per December bank statement P3, 250

Less: December bank service charges recorded
on company books in December (2500-1500) P1,000
Unrecorded December Bank Service Charge 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 150,000
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 126,250
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 128,750
Answer: D
6. Book balance, December 31 P 37,500

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

Book balances P16,250 P150,OOO P128,750 P37,500

Outstanding checks:
Nov. 30 16,250 16,250
Dec. 31 (12,500) 12,500
Nov. 30 (12,500) 12,500
Dec. 31 (20,000) (20,000)
Nov. 30 (1,500) (1,500)
Dec. 31 2,250 (2,250)
Underfooting 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 P 26,500
7. Bank balance, November 30, 2018 18,500

Answer: B
8, Total bank receipts in December 145,000

Answer: C
9. Total bank disbursements in December 137,000

Answer: D
10. Bank balance, December 31, 2018 26,500

Answer: B
Problem 1-29
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 3,643
Total P27,946
No. 3408 P440
No. 3413 300
No. 3414 6,820
No. 3416 3,924
No. 3417 800 12,248
Balance 15,662
Add: Bank Service Charge For November 36*
Balance per general ledger, November 30 15,698
*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 PI 7,516. This statement shows total receipts
of P373, 502 and checks paid of P380,284.
Your examination reveals the following additional information:
1) Check no. 3413 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 P'3ff
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 P 480.
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 disbursements 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 check issued in December 377,632

Add: November Bank service charge 36
Total book disbursement in December 377,668
Answer: A
Answer:
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 9,796
Answer: D
3. Outstanding checks, December 31:

Check no. 3408 P440
3418 2,814
3419 5,788
Total 9,042
Answer: C

Nov 30 Receipts Disbursements Dec. 31
Book balances P15, 698 P371,766 P377,668 P 9,796
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 balance 16,732 375,766 377,674 14,824

Bank balances P 24,298 P373, 502 P380, 284 P17, 516
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. bank balance P 16,732 P 375,766 P 377,674 P 14824
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 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
The following data are assembled by the accountant of the HAROLD COMPANY:
Nov. 30, 2018 Dec. 31. 2018
Cash account balance P 41,175.00 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 *
Company's notes receivable collected by bank 20,625.00
*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 total:
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
l. What is the total book receipt in December?
A. 613, 842.50 C. P411, 592.50
B. P591, 130.OO D. P580, 330.00
2. What is the total book disbursement in December?

A. P531, 592.50 C. P533, 092.50
B. P529, 792.50 D. P531, 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. The adjusted bank receipts in December should be

A. P634, 168.50 C. 632,667.50
B. P622, 770.00 D. 634, 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

A. P301, 462.50 C. P322, 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 book receipts in December P 591,130.00
Answer: B
2. Checks written per cash book P529, 792.50

Add: Bank service charge in November 1,800.00
Total book disbursements in December P 531, 592.50
Answer: A

Balance per bank statement P 267, 705.00 P622, 770.00 P545, 932.50 P344, 542.50
November 30 20, 502.50 (50, 502.50)
December 31 32, 200.00 32, 200
Outstanding checks:
November 30 (69, 295.00) (69, 295.00)
December 31 75, 280.00 (75, 280.00)
Adj. bank balance P 218, 912.50 P 634, 467.50 P 551,917.50 P 301, 462.50
Balance per books P41, 175.00 P591, 130.00 P531, 592.50 P 100, 712.50
November (1800) (1800)
December 1, 500.00 (1, 500.00)
NSF check 20, 625.00 20, 625.00
Collections of Notes Receivable
November 179, 537.50 (179, 537.50)
December 202, 250.00 202,250.00
Adj. balance 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 P351, 917.50

Answer: D
6. Adjusted book balance, December 31 P301, 462.50

Answer: A
PROBLEM 1-31
Proof of Cash: Book to Bank Balances Format
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 totaled P3, OOO.
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 P 15,000 written prior to December and checks of P60, 500 written in
December had not yet cleared the bank.
1. What is the total book disbursement 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 C. in December?
A. P490, 000 C. 497, 250

B. P482, 750 D. 488, 00
4. What is the total bank disbursement 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
1.. Checks written during December 405,5000

Add: November bank service charges recorded
on company books in December 2 000
Total book disbursements in December P407, 500
Answer: C

Balance per books P244, 500 P482, 750 P407, 500 P319, 750
Undeposited receipts
Nov. 30 (36, 000) 36, 000
Dec. 31
Outstanding checks:
Nov. 30 63, 000 63, 000
Dec. 31 (12,500) 12,500
Nov. 30 (2, 000) (2, 000)
Dec. 31 3,000 3,000
Bank balances P269, 500 P490, 000 P369, 000 P 363,500
2. Bank balance, November 30 P 269, 500
Answer: B
3. Total bank receipts in December P 490, 000

Answer: A
4. Total bank disbursements in December P 369, 000

Answer: D
5. Bank balance, December 31 P363, 500

Answer: B
PROBLEM 1-32
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,OOO 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

A. P367, 660 C. P369, 720
B. P244, 780 D. P368, 540
2. What is the total bank receipt in December?

A. P260, 160 C. P306, 060
B. P308, 120 D. P309, 020
3. What is the total outstanding check on December 31?
A. P100, 000 C. P62, 220
B. P38, 000 D. P74, 080
4. What is the adjusted bank balance on November 30?

A. P636, 300 C. P637, 800
B. P685, 180 D. P634, 800
5. What is the adjusted book receipt in December?

A. P307, 500 C. P303, 380
B. P306, 220 D. P305, 440
6. What is the adjusted bank disbursement in December?

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

A. P577, 500 C. P576, 420
B. P577, 400 D. P579, 460
SOLUTION 1-32
1. Book balance, November 30 P637, 860

Add: Book receipts in December 306, 220
Total 944,080
Less: Book disbursements in December (SQUEEZE) 367,660
Book balance, December 31 576,420
Answer: A
2. Bank balance, November 30 P685, 180

Add: Bank receipts in December (SQUEEZE) 308, 120
Total 993,300
Less: Bank disbursements in December 356, 080
Bank Balance, December 31 637, 220
Answer: B
3. Checks issued prior to December (P64,140 - P26,140) 38,000

Checks issued in December 36,080
Total outstanding checks, December 31 74, 080
Answer: D

Balance per books P637, 860 P306, 220 P367, 660 P576, 420
Note collected by bank
in December 2,060 2060
Overstatement of Dec.
book disbursement (3, 000-2, 020) (980) 980
Check Stopped for payment (780) (780)
Bank service charges in Nov. ( 60) (60) .
Adj. book balance P637. 800 P307, 500 365, 840 P579, 460

Bank balance P685, 000 P308, 120 P356, 080 P637,220
Outstanding checks:
Nov. 30 (64,140) (64, 140)
Dec. 31 74, 080 (74, 080)
Nov. 30 15, 260 (15, 260)
Dec. 31 16, 140 16, 140
Erroneous bank charge
In November 1, 500 (1, 500)
Overstatement of bank
disbursement in Dec. (180) 180 .
Adj. bank balance P637, 800 P307, 500 P 365, 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
PROBLEM 1-33
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 charge for the month,
not shown on company books 720 600
NSF checks returned by banks, not shown
on company books 4, 300 8, 240
Bank collections from company
customer, not shown on company books 72, 240 80, 900
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 receipt in December?

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

A. 211, 900 C. 211, 180
B. P216, 200 D. 216, 920
3. What is the adjusted cash balance on November 30?

A. P89, 000 C. P71, 160
B. P87, 560 D. P96, 160
4. What is the adjusted cash balance on December 31?

A. P120, 600 C. P137, 080
B. P94, 840 D. P155, 040
5. What is the adjusted book receipt in December?

A. P253, 780 C. P244, 420
B. P236, 460 D. P270, 180
6. What is the adjusted bank disbursement in December?

A. P215, 940 C. P248, 440
B. P220, 740 D. P204, 260
SOLUTION 1-33
1. Cash receipts per cash book P172, 880

Add: November bank collections 72,240
Total book receipts (debits) in December 245, 120
Answer: B
2. Checks written per cash book P211, 900

Add: Bank service charges in November P720
NSF checks returned in November 4, 300 5,020 .
Total book disbursements (credits) in December 216, 920
Answer: D
Unadj. book balances 20,340 P245,120 216,920 P48,540

November 30 (720) (720)
December 31 600
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 P120,600
Balance December

Unadj. bank balances P107,060 P249AOO P218,340 P137,820
November 30 8,200 (8,200)
December 31
Outstanding checks:
12,880 12,880
November 30 (27,700) (27,700)
December 31 _______ _________ 30,100 (30,100)
Adj. bank balances P87,560 P253,780 P220,740 P120,600
P87.560
Answer: B
4.Adjusted cash balance, December 31 P120,600

Answer: A
5. Adjusted cash balance, December 31 P253,780
Answer: A
6. Adjusted book receipts in December P220,740
Answer: B
Problem 1-34
On January 10, 2019, you started the audit of the financial records of the 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 following 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
pettY8sh, was as follows:
Currency and coins PI,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 ofyour 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
5. On July 5, 2018, cash of P 1,200 was received on account from a customer; the Allowance for Doubtful
Accounts was charged and Accounts Receivable was credited.
6. On December 5, 2018, cash of P900 was received on account from a customer; Inventory was charged
and Accounts Receivable was credited.
7. Cash of P 2,190 received during 2018 was not recorded.
8. Checks received from customers from January 2, 2019 to
January 10, 2019, totaling P 1,260, were not recorded but were deposited in the bank.
9. On July 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 PZ,550; these were unrecorded and undeposited.
11. In the outstanding checks, there is one for P 150 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 P 150 was
made in error as to amount.
Required:
1. Compute the correct bank balance as of December 31, 2018.
2. Compute the ca h shortage as of December 31, 2018.
3. Compute the c sh shortage for the period January 1, 2019 to
January 10, 2019.
Book Bank

Outstanding checks (P15,660 - P150) (15,510)
Amnesia Co. check charged by bank in error 450
Collection from a customer charged to
Allowance for Doubtful Accounts 1,200
Collection from a customer charged to
Inventory account 900
Unrecorded collection 2,190
Bank credit for refund of interest 60
Check returned and replaced ___ 150 _____
Corrected 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:
Cash 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
Count of cash on hand and petty cash fund:
Currency and coins PI,155
Expense vouchers 60
Employees' IOUs 165
Customers' checks 870 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
Problem 1-35
The bookkeeper-cashier of the TANYING COMPANY absconded on the evening of April 16, 2019,
apparently with a large portion of the company's cash. He had taken with him certain accounting
records, including the cash journals and the general ledger. You are called upon to ascertain, if possible,
the shortage with which the missing employee may be charged.
you obtained the following information from the available subsidiary journals, ledgers, and other data.
Balances at close of business. April 16, 2019:

Accounts receivable P442,550
Cash in bank, less checks outstanding 98,830
Transactions, January 1 - April 16, 2019:

Sales, per receivable clerk P5,876,170
Cash sales none
Sales allowances in customers' accounts 3,615,260
Cash purchase of furniture, per dealer's invoice 3,000
Total merchandise purchases 3,615,260
Expenses paid, supported by paid invoices and payrolls 1,865,830
Cash dividend declared, P50,OOO (of which, P 10,000 remains
unpaid) 40,000
A check for P 100,000 had been cashed by the bookkeeper shortly before his departure. Although the
signature on the check had been obviously forged, it was paid by the bank and returned with other
canceled checks.
A statement of financial position prepared from the books and other files follows:
Tanying Company
Statement of Financial Position
December 31, 2018
ASSETS
Cash P 32,670
Inventory (at cost) 440,350
Furniture P74,560
Less: Accumulated depreciation 31 800 42,760
Total assets P742,010
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable P114,720
Share capital 500,000
Retained earnings 127 290
Total liabilities and shareholders' equity P742,010
1. What is the total amount paid for merchandise purchases?

A.P3,615,260 C.P 3,522,680
B.P3,293,240 D. P3,707,840
2. What is the total amount of collections from sales?
A. P5,641,520 C.P6,074,160
B. P5,659,850 D. P6,092,490
3. What is the total amount of cash disbursements from January 1 April 16, 2019?
A. P5,524,090 C. P5,431,510
B. P5,202,070 DP5,432,510
4. What is the cashier's accountability (correct cash balance beforeshortage) on April 16, 2019?
A. P242,680 C. P143,850
B. P98,830 D.P 43,850
5. What is the amount of cash shortage chargeable against the cashier?
A. PIOO,OOO C. P143,850
B. P43,850 D. P242,680
SOLUTION 1-35
1. Accounts payable, Dec, 31, 2018 P 114,720
Purchases 3,615,260
Total
Accounts payable, April 16, 2019 (207,300)
Payments for merchandise purchases
Answer: C
2. Accounts receivable, Dec. 31, 2018 P 226,230
Net sales (P5,876,170–P18,330) 5,857,840
Total 6,084,070
Accounts receivable, April 16, 2019 (442,550)
Collections from sales P5 641 520
Answer: A
3. Payments for purchases P3,522,680
Furniture 3,000
Expenses 1,865,830
Dividends 40,000
Total cash disbursements P5,431,510
Answer: C
4. Cash balance, Dec. 31, 2018 P 32,670
Collections 5,641,520
Disbursements (5,431,510)
Cash balance, April 16, 2019 (accountability) P242,680
Answer: AAUDHINC, PROBLFNs
5. Cash accountability 242,680

Cash accounted (98,830)
Total shortage 143,850
Shortage chargeable against bank (100,000)
Shortage chargeable against the cashier P 43,850
Answer: B
PROBLEM 1-36
The JUNNEL COMPANY had weak internal controls over its cash transactions. Facts about its cash
position at November 30, 2018, were as follows:
The cash books showed a balance of P94,508, which included undeposited receipts. A credit of P500 on
the banks records did not appear on the books of the company. The balance per bank statement was
P77,750. Outstanding checks were no. 8420 for P581, no. 8422 for P750, no. 8430 for PI,266, no. 8621
for P954,no. 8623 for PI,034, and no. 8632 for P726.
The cashier stole all undeposited receipts in excess of P 18,972 and prepared the following
reconciliation:
Balance per books, Nov. 30, 2018 P94,508

Add: Outstanding checks
8621 p 954
8623 1,034
8632 726 2,214
96,722
Less: Undeposited receipts 18,972
Balance per bank, Nov. 30, 2018 77,750
Less: Unrecorded credit 500
True cash, Nov. 30, 2018 P77,250
1. What is the correct amount of cash that should be on hand for deposit on November 30, 2018?
A. P23,069 C. P22,569
B. P18,972 D.P22,069
2. How much was stolen by the cashier?
A. P3,597 C. P4,097
B. P3,097 D. P O
3. The cashier attempted to conceal his theft by
I. Not listing all outstanding checks.
Il. Underfooting outstanding checks shown
on the reconciliation.
Ill. Adding an item
to the bank balance that should be deducted
from the book balance.
A. I and Il only C. I and Ill only
B. Il and Ill only D. l, Il, and Ill
4. Taking only the information giveny which of the following internal control deficiencies
allowed the cashier to steal cash and conceal his theft?
A. The cashier is also responsible for
preparing the reconciliation.
B. No one other than the cashier is
responsible for tracing cash receipts to
the deposits in the bank. C. Both A and B.
D, Neither A nor B.
5. What is the adjusted cash balance as of
November 30, 2018?
A. P95,008 C. P94,008
B. P91, D. P87,814
SOLUTION 1-36
1.Cash balance per books, Nov. 30 P94,508
Add:Bank credit 500
Adjusted cash balance (on hand and in bank) 95,008

Less: Adjusted bank balance:
Bank balance, Nov. 30 P77,750
No. 8420 P 581
8422 750
8430 1,266
8621 954
8623 1,034
8632 726 5,311 72,439
Cash that should be on P22,569
Answer: C
2. Cash that should be on hand for deposit (see no. 1) P22,569
Cash reported 18 972
Amount of theft P3,597
Answer: A
3. The cashier attempted to conceal his theft by:
1. Not listing all outstanding checks.
2. Underfooting outstanding checks shown on the reconciliation.
3. Subtracting an item from the bank balance that should be added to book balance.
Answer: A
4. The following internal control deficiencies are noticeable:
1. The cashier is also responsible for preparing the cash reconciliation.
2. No one other than the cashier is responsible for tracing cashreceipts to the deposits in the
bank.
Answer: C
5. Book Bank
Unrecorded credit 500
Undeposited receipts _______ 18,972
Corrected balances 95,008 9 91,411
Cash shortage (amount of theft) (3,597) ____ ---
Adjusted cash balances P91,411 P91,411
Answer: B
PROBLEM 1-37
Presented below is the cash receipts book of APPLE, INC.:
CASH RECEIPTS BOOK
June 1-30, 2018
Accounts Cash Sales Net
Date Receivable Sales Discount Cash
June 1 Cash Sales P 800 P 800
10 BA P 3,200 P 64 3,136
15 BO 6,000 120 5,880
2 BE 4,800 96 4,664
20 Cash Sales 2,400 2,400
25 BU 10,800 216 10,504
26 BO 4,000 4,000
26 BE 12,000 240 11,680
30 BO 3,600 3,600
30 BA 800 _____ _____ 800
P45,200 P3,200 P936 P47,464
The following are the company's accounts receivable subsidiaryledgers. All the debits represent
sales. The credit terms are 2%-10 days, net 30 days.
BA BO
June 3 3,200 June 10 3,200 june 2 6,000 June 15 6,000
4 4,800 30 800 9 4,000 26 4,000
15 3,600 30 3,600
BU BE
June 2 6,00 | June 2 June 15 4,800| June 20 4,800
10 4,800 | 16 12,00 | 26 12,000
1. What is the correct amount of cash receipts in June?
A. P47,800 C. P48,OOO
B. P47,600 D. P47,664
2. What is the cash shortage on June 30?

A. P336 C. P200
B. PO D. P536
SOLUTION 1-37
1. Cash receipts per book P47,464
Understatement of cash receipts by:
Recording sales discounts for collections made
beyond the discount period:
June 15 P120
Jun 25 216 336
Overfooting the sales discounts column
(P936 - P736 200 *
Cash receipts as corrected 48,000
To balance, the following extensions to the "Cash" column are understated:
Correct Amount
Amount Extended Understatement
June 20 (4,800-96) P4,704 P4,664 P40
June 25 (10,800-P216) 10,584 10,504 80
June 26 (P12,000-P240) 11,760 11,680 80
Total P200
Answer: C
2. Cash receipts as corrected P48,OOO
Cash receipts per book 47,464
Cash shortage, June 30 P536
Answer: D
PROBLEM 1-38
You started the audit of the financial statements of ARCHIE, INC. on January 15, 2019, for the year
ended December 31, 2018. The general ledger shows cash account balance of P247j200 as at December
31, 2018.
The following items are included in the December 31, 2018, reconciliation prepared by the cashier:
Cash per records, December 31, 2018 P247,200

Cash per bank statement, December 31, 2018 264,095
Check of Tsikoy Co., charged by bank in
error on December 28, 2018; corrected by
bank on January 2, 2019 750
From January 2, 2019, to January 15, 2019, the date of your cash count, total cash receipts appearing in
the cash records amounted to P53,500. During the same period, the bank had credited total deposits of
P47,965.
The following cash and cash items were on hand at the close of business on January 15, 2019:
Currency PI,425
Customers' checks 1,950
Expense vouchers 375
P3,750
Your further investigation revealed the following:
a. Cash received on account from customers:
DATE AMOUNT ENTRY MADE
07/05/18 P4,OOO Allowance for bad debts 4,000
12/10/18 P3,OOO Inventory 3,000
12/15/18 P3,500 Not recorded
b. Unrecorded but deposited checks received from customers from January 2, 2019, to January 15,
2019, totaled P2,OOO.
c. The cashier presented receipts for collections from customers on January 10, 2019, totaling P4,500;
these were unrecorded and undeposited.
1. What adjusting entries would you provide for items (a) through (c)?
2. What is the total cash shortage as of December 31, 2018?
A. P21,180 C. P14,680
B.P16,180 D. P4,180
3. What is the total cash shortage as of January 15, 2019?
A. P26,465 C. P27,965
B. P18,430 D. P24,930
SOLUTION 1-38
1. ADJUSTING JOURNAL ENTRIES:
a. 1. Cash 4,000
Allowance for bad debts 4,000
2. Cash 3,000
Inventory 3,000
3. Cash 3,500
b.4. Cash 2,000
c. 5. Cash 4,500
2. Book Bank
Unadjusted balances 247,200 264,095
Bank error 750
AJE 1 4,000
2 3,000
3 3 500 ______
SHORTAGE as of Dec. 31, 2018 (14,680) ________-
Answer: C
3.Deposit in transit, Dec. 31, 2018 P3,500
Add: Company collections, Jan. 2-15, 2019

Per records P53,500
AJE 4 P2,OOO
5 4, 500 6 500 60 000
Total 63,500
Less: Deposits credited by bank, Jan. 2-15, 2019 47 965
Deposit in transit, Jan. 15, 2019 15,535
Cash and cash items per count on Jan. 15, 2019 (3,750)
Cash shortage, Jan. 2-15, 2019 P11,785
Add: Cash shortage as of Dec. 31, 2018 (see no. 2) 14,680
Total shortage as of January 15, 2019 P26,465
Answer: A
PROBLEM 1-39
Computation of Cash Shortage
The LEINOR COMPANY does not have adequate controls over its cash transactions. During an audit, you
found the following data concerning its cash position at December 3.1, 2018.
1. On the companys records the cash balance is PI 73,500.
2. A credit ofP2,500 fora note collected by the bank does not appear on the company's records.
3. The bank statement balance is P 135,000.
4. Outstanding checks are as follows:
Number Amount
1428 P5,200
1431 3,600
1445 4,080
1446 3,460
The cashier made the following reconciliation:
Balance per bank statement P135,000
Deduct: Outstanding checks:
No.
1431 P3,600
1445 4,080
1446 3 460 10,140
P 124,860
Add: Undeposited collections (per count) P46,140
Collected note 2,500 48,640
Cash per books, December 31, 2018 P 173.500
1. What is the total shortage?
A. P1l,200 c. P5,OOO
B. P8,700 D. P6,OOO
2. How did the cashier attempt to conceal the shortage?
SOLUTION 1-39
1. Book Bank
Note collected by the bank 2,500
Undeposited collections ______ 46 140
Corrected balances PI 76,000 P164,800
SHORTAGE (11,200) _______-
Adjusted balances P164 800 P164 800
Answer: A
2. Concealment of shortage:
Omission of outstanding check no. 1428 P 5,200
Underfooting of outstanding checks in
reconciliation (PI 1,140 - PIO,140) 1,000
Adding (instead of deducting) the unrecorded
note collected by the bank 5 000
Total shortage P1l,200
PROBLEM 1-40

The following table summarizes the cash receipts and disbursements of LOI COMPANY for the last six
months of 2018:
Month Receipts Disbursements
July P102,OOO P 60,000
August 70,000 110,000
September 120,000 68,000
October 172,000 92,000
November 260,000 122,000
December 280,000 180,000
1. Bank balance, July 1, 2018 P200,OOO
2. Bank balance, December 31, 2018 524,000
3. Outstanding checks, December 31, 2018 42,000
(No checks were outstanding on July 1)
4. Undeposited receipts, December 31, 2018
(included in the December receipts) 24,000
5. Bank deposits, July 1 through December 31 914,000
What is the total shortage?
A. P0 B. P30,OO0
C. P76,OOO D. P66,OOO
SOLUTION 1-40
Book balance, July 1 (see note 1) P 200,000
Add: Total book receipts as corrected (see note 2) 1 004 000
Total 1,204,000
Less: Total book disbursements as corrected (see note 2) 632 000
Corrected book balance, December 31 P 572,000
Bank balance, December 31 P 524,000
Add: Undeposited receipts 24 000
Total 548,000
Less: Outstanding checks 42,000
Adjusted bank balance 506,000
Corrected book balance (accountability) (572000)
Cash shortage P(66,000)
Answer: D
NOTES:
1. Because there were no book and bank reconciling items on July 1, the bank balance on that date was
also the cash balance per books.
2. The receipts column of the table of cash receipts and disbursements is under-footed by P40,OOO
correct total - P964,OOO) while the is bursements column is overfooted by P36,000 (P668,000 —
P632,000 correct total).
PROBLEM 1-41
In connection with the audit of the financial statements of JEMCOMPANY for the year ended October
31, 2018, you conducted asurprise count of undeposited receipts on October 31, 2018. It was
witnessed by the company's cashier whose accountability on October 31 was determined to be P80,000.
Your count revealed the following:
Currency and coins P48,840
Unused postage stamps 440
Checks:
Date Payee Maker
1-22 Cash Cashier 4,000
10-19 Jem Company DWU, Inc. 9,400
10-28 Jem Company PSU co. 7,840
10-31 CCP co. Jem Company 3,600
Office supplies paid out of receipts 6,400
Total per count P8O,520
1. What is the cash shortage on October 31, 2018?
A. P7,080 C. P3,080
B. P3,480 D. P7,600
2. A cash shortage may be concealed by transporting funds from one location to another or by
converting negotiable assets to cash. Because of this, which of the following is vital?
A. Simultaneous confirmations
B. Simultaneous bank reconciliations
C. Simultaneous verification
D. Simultaneous surprise cash count
SOLUTION 1-41
1. Cashier's accountability P80,OOO
Total per count P80,520
Less: Cashier's stale check P4,000
Unreleased
disbursement check 3,600 7 600 72,920
Cash shortage P 7,080
Answer: A
2. Simultaneous verification
Answer: C
PROBLEM 1-42
Computation of Working Capital and Current Ratio
JAM COMPANY's unadjusted trial balance at December 31, 2018, included the following accounts:
Debit Credit
Cash P 69,200
Accrued expenses 13,214
Jam Co.'s year-end is December 31. At the end of 2018, it held its cash book open so that its statement
of financial position would show a more favorable financial condition. Your audit revealed the
following items:
1. The December cash book included January cash receipts of p65,460, of which P36,010 represents cash
salespnd P29,450 represents collections from customers, net of 5% cash
discounts.
2. The December check register included payments of accounts to suppliers of P37,240 on which
discounts of P 1,240 were taken.
3. The merchandise inventory account balance was
determined by physical count on December 31, 2018.
1. What are Jam's working capital and current ratio at December 31, 2018, based on balances per
company books?
Working Current
Capital Ratio
A.P316,081 1.42
B. 316,081 1.39
c. 329,295 1.42
D. 329,295 1.39
2. What are Jam's correct working capital and current ratio at December 31, 2018?
Working Current Capital Ratio
AP244,381 1.29
B.278,831 0.33
c. 330,835 1.40
D. 280,381 1.33
2. A cash shortage may be concealed by transporting funds from one location to another or by
converting negotiable assets to cash. Because of this, which of the following is vital?
A. Simultaneous confirmations
B. Simultaneous bank reconciliations
C. Simultaneous verification
D. Simultaneous surprise cash count
SOLUTION 1-41
1. Cashier's accountability P80,OOO

Total per count P80,520
Less: Cashier's stale check P4,000
Unreleased
disbursement check 3,600 7 600 72,920
Cash shortage P 7,080
Answer: A
2. Simultaneous verification
Answer: C
PROBLEM 1-42
Computation of Working Capital and Current Ratio
JAM COMPANY's unadjusted trial balance at December 31, 2018, included the following accounts:
Debit Credit
Cash P 69,200
Accrued expenses 13,214
The bank statement for the month ended March 31, 2018, shows a cash balance of P590,000. The
following checks are outstanding on March 31:
No. 7163 P 8,623
No. 7284 7,320
No. 7285 10,612
No. 8722 6,322
No. 8724 12,280
No. 8733 6,200
The company's general ledger shows a cash balance of P696,499 on March 31, 2018.
Realizing that being the cashier-accountant of the company he can easily misappropriate collections and
conceal it, Alex removed all the cash on hand in excess of P 127,301, and then prepared the following
reconciliation in an effort to conceal this theft.
BANK RECONCILIATION
Balance per accounting records P696,499
Add: Outstanding checks
No. 8722 P 6,322
No. 8724 12,280
No. 8733 6,200 20 802
Total 717,301
Deduct: Cash on hand 127,301
Balance per bank statement, March 31 P590,000
1. How much was taken by the cashier-accountant?
A. P30,555 C. P4,OOO
B. P157,856 D. P26,555
2. What is the amount of cash that should be on hand at November 15,2018?
A. P127,301 C. P157,856
B. P131,301 D. P30,555
SOLUTION 1-44
1. Book Bank
Outstanding checks:
No. 7163 P8,623
No. 7284 7,320
No. 7285 10,612
No. 8722 6,322
No. 8724 12,280
No. 8733 6,200 (51,357)
Undeposited collections _______ 127,301
CASH SHORTAGE (30,555) ______-
Answer: A
2. Cash on hand P127,301
Add: Cash shortage (see no. 1) 30 555
Cash that should be on hand, Nov. 15 P157,856
Answer: C

Audit of Cash - Roque 2018

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Audit of Cash - Roque 2018

Încărcat de

Drepturi de autor:

Formate disponibile

CHAPTER 1

Audit of Cash & Cash Equivalents

CHAPTER 1 AUDIT OF CASH AND CASH3

Time deposit (placement term is 2 months) P100,000

Money market placement - Prudential Bank 4,000,000

1. Petty cash fund per trial balance P30,OOO

2. petty cash shortage cannot be determined because of insufficient information.

4.Accounts receivable (P22,500 + P67,300) 89,800

5. Cash in bank — Tsunami Bank P432,710

Postage stamps 300

1. How much is the petty cash shortage or overage?

D .Office supplies expense 3,460

Accounted for as follows:

Cash returned by Pablo to the sales manager P 120

5. What is the total cash shortage?

ABX, Inc.'s Cash Account

A customer's check has been marked "NSF"

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

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

What is the cash balance per bank?

What is the adjusted cash balance on June 30?

What should be the correct cash balance?

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

2. Balance per books P 36,420

3. Balance per bank statement 200,000

Outstanding checks (15,000)

4. Balance per books P45,000

5. Balance per bank statement P175,OOO

7. Balance per books, June 30, 2018 35,000

Balance per bank, June 30, 2018 209,500

Date Item Checks Deposits Balance

The following is from Garay's bank statement for April:

Date Payee No. Payable Discount Cash

1. What is the total collections from sales?

5. Cash receipts per books (see no. 3) P8,219,800

a. Balance per bank, December 1, 2018 P145,OOO

November outstanding checks

7. Erroneous bank debit 26,700

3.Cost of checkbook (see no. 2) 100

Date Cash Debit Check No. Cash Credit

Beginning balance P 95,550

Additional datafor the bank reconciliation include the following:

1. What is the amount of deposits in transit on April 30?

2. Oustanding checks, April 30:

2. Outstanding checks on December 31:

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

Disbursements per books as computed P32,482

2. Three possible explanations for the above difference:

(1) Balance per bank statement, Dec. 31, 2018 P47,174

Error in entering deposit of 12/04/18 (1,800)

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

Net credit adjustment— decrease P 4,945

Beginning balance P 46,110 P57,530

Unadjusted balances P82,560 P 6,960

Date OR No. Amount Check NO. Amount

Date Check No. Charges Credits

2 802 3,000 11,000

1. The total outstanding checks at November 30 should be

3. Deposits in transit, November 30 P8,500

The June 2018 bank statement is shown below:

SV-Service Charges DM-Debit Memo

1. What is the total bank receipts in June?

5. What is the total book disbursements in June?