Cash Items Reviewer

CASH AND CASH EQUIVALENTS
TRUE OF FALSE- Conceptual

T 1. Savings accounts are usually classified as cash on the balance sheet.
F 2. Certificates of deposit are usually classified as cash on the balance sheet.
F 3. Companies include postdated checks and petty cash funds as cash.
F 4. Cash equivalents are investments with original maturities of six months or less.
F 5. Bank overdrafts are always offset against the cash account in the balance sheet.
T 6. Short-term, highly liquid investments may be included with cash on the balance sheet.
F 7. All claims held against customers and others for money, goods, or services are reported as current assets.
GAAP- T/F
T 1. iGAAP and U.S. GAAP are very similar in accounting for cash and receivables.
F 2. iGAAP does not permit the reversal of impairment losses, as does U.S. GAAP.
T 5. Both the FASB and IASB have indicated that they believe all financial instruments should be recorded and
reported at fair value.
IDENTIFICATION- MATCHING TYPE
Below is a list of items. Classify each into one of the following balance sheet categories:
a. Cash b. Receivables c. Short-term Investments d. Other
d 1. Compensating balances held in long-term borrowing arrangements
a 2. Savings account
d 3. Trust fund
a 4. Checking account
d 5. Postage stamps
c 6. Treasury bills maturing in six months
b 7. Post-dated checks from customers
d 8. Certificate of deposit maturing in five years
c 9. Common stock of another company (to be sold by December 31, this year)
a 10. Change fund
Match six of the terms (a-k) with the descriptions/definitions provided below (1-
6):
a. Bank reconciliation
b. Branch cash account
c. Cash equivalents
d. Cutoff bank statement
e. General cash account
f. Imprest payroll account
g. Imprest petty cash fund
h. Kiting
i. Proof of cash
j. Standard bank confirmation form
k. Lapping
g 1. A fund of cash maintained within the company for small cash

acquisitions , expenses, or to cash employees’ checks.
j 2. A form approved by the AICPA and American Bankers’
Association through which the bank responds to the auditor about
bank balance and loan information.
c 3. Excess cash invested in short-term, highly liquid investments such
as time deposits, certificates of deposit, and money market funds.
e 4. The primary bank account for most organizations.
h 5. The transfer of money from one bank account to another and
improperly recording the transfer so that the amount is recorded
as an asset in both accounts.
a 6. The document usually prepared by client personnel of the
differences between the cash balance recorded in the general
ledger and the amount in the bank account.
MULTIPLE CHOICE- Conceptual

21. Which of the following is not considered cash for financial reporting purposes?
a. Petty cash funds and change funds
b. Money orders, certified checks, and personal checks
c. Coin, currency, and available funds
d. Postdated checks and I.O.U.'s
22. Which of the following is considered cash?
a. Certificates of deposit (CDs)
b. Money market checking accounts
c. Money market savings certificates
d. Postdated checks
23. Travel advances should be reported as
a. supplies.
b. cash because they represent the equivalent of money.
c. investments.
d. none of these.
24. Which of the following items should not be included in the Cash caption on the balance sheet?
a. Coins and currency in the cash register
b. Checks from other parties presently in the cash register
c. Amounts on deposit in checking account at the bank
d. Postage stamps on hand
25. All of the following may be included under the heading of "cash" except
a. currency.
b. money market funds.
c. checking account balance.
d. savings account balance.
26. In which account are post-dated checks received classified?
a. Receivables.
b. Prepaid expenses.
c. Cash.
d. Payables.
27. In which account are postage stamps classified?
a. Cash.
b. Office supplies.
c. Receivables.
d. Inventory.
28. What is a compensating balance?
a. Savings account balances.
b. Margin accounts held with brokers.
c. Temporary investments serving as collateral for outstanding loans.
d. Minimum deposits required to be maintained in connection with a borrowing arrangement.
29. Under which section of the balance sheet is "cash restricted for plant expansion" reported?
a. Current assets.
b. Non-current assets.
c. Current liabilities.
d. Stockholders' equity.
30. A cash equivalent is a short-term, highly liquid investment that is readily convertible into known amounts of
cash and
a. is acceptable as a means to pay current liabilities.
b. has a current market value that is greater than its original cost
c. bears an interest rate that is at least equal to the prime rate of interest at the date of liquidation.
d. is so near its maturity that it presents insignificant risk of changes in interest rates.
31. Bank overdrafts, if material, should be
a. reported as a deduction from the current asset section.
b. reported as a deduction from cash.
c. netted against cash and a net cash amount reported.
d. reported as a current liability.
32. Deposits held as compensating balances
a. usually do not earn interest.
b. if legally restricted and held against short-term credit may be included as cash.
c. if legally restricted and held against long-term credit may be included among current assets.
d. none of these.
67. Which of the following is an appropriate reconciling item to the balance per bank in a bank reconciliation?
a. Bank service charge.
b. Deposit in transit.
c. Bank interest.
d. Chargeback for NSF check.
68. Which of the following is not true?
a. The imprest petty cash system in effect adheres to the rule of disbursement by check.
b. Entries are made to the Petty Cash account only to increase or decrease the size of the fund or to adjust the
balance if not replenished at year-end.
c. The Petty Cash account is debited when the fund is replenished.
d. All of these are not true.
69. A Cash Over and Short account
a. is not generally accepted.
b. is debited when the petty cash fund proves out over.
c. is debited when the petty cash fund proves out short.
d. is a contra account to Cash.
70. The journal entries for a bank reconciliation
a. are taken from the "balance per bank" section only.
b. may include a debit to Office Expense for bank service charges.
c. may include a credit to Accounts Receivable for an NSF check.
d. may include a debit to Accounts Payable for an NSF check.
71. When preparing a bank reconciliation, bank credits are
a. added to the bank statement balance.
b. deducted from the bank statement balance.
c. added to the balance per books.
d. deducted from the balance per books.
1. Which of the following misstatements is most likely to be uncovered during an audit of a
client’s bank reconciliation?
a. Duplicate payment of a vendor’s invoice.
b. Billing a customer at a lower price than indicated by company policy.
c. Failure to record a collection of a note receivable by the bank on the client’s behalf.
d. Payment to an employee for more than the hours actually worked.
2. Which of the following is the focus of an audit of cash for most companies?
a. General cash account.
b. Payroll cash account.
c. Petty cash account.
d. Money market account.
3. The test of details of balances procedure that requires the auditor to foot the outstanding
check list and deposits in transit is an attempt to satisfy which audit objective?
a. Cutoff.
b. Presentation and disclosure.
c. Detail tie-in.
d. Completeness.
4. Which of the following cycles does not affect cash in bank?
a. Capital acquisitions cycle.
b. Inventory and warehousing.
c. Payroll and personnel cycle.
d. Acquisitions and disbursements.
5. The audit objective of determining that cash in bank, as stated on the reconciliation,
foots correctly and agrees with the general ledger can be tested by which of the
following procedures?
a. Performing tests for kiting.
b. Receiving and testing a cutoff bank statement.
c. Footing the outstanding checks list and the list of deposits in transit.
d. Examining the minutes of the board of directors for restrictions on the use of
cash.
6. The test details of balances procedure that requires the auditor to trace the book
balance on the reconciliation to the general ledger is an attempt to satisfy the audit
objective of:
a. detail tie-in.
b. existence.
c. completeness.
d. accuracy.
7. Which of the following statements is correct?
a. Auditors must obtain bank confirmations on every audit.
b. Auditors obtain bank confirmations at their discretion.
c. Auditing standards do not address specific requirements regarding bank
confirmations.
d. Auditing standards do not require bank confirmations except when there is an
unusually large number of inactive bank accounts.
8. Cash is important to auditors primarily because of the potential for:
a. errors.
b. fraud.
c. liquidity.
d. expenditures.
9. A partial-period bank statement and the related canceled checks, duplicate deposit slips,
and other documents included in bank statements, mailed by the bank directly to the
CPA firm’s office, is called:
a. a four-column proof of cash.
b. a year-end bank statement.
c. a cutoff bank statement.
d. a short-period bank statement.
10. When the auditor believes the year-end bank reconciliation may be intentionally
misstated, it is appropriate to perform extended tests of the year-end bank reconciliation.
Assuming the client has a October 31 year-end, these extended tests would not include:
a. comparing all September 30 reconciling items with canceled checks and other
documents in the October bank statement.
b. comparing all canceled checks and deposit slips in the October bank statement
with the October cash disbursements and receipts records.
c. carrying out all proper procedures subsequent to the end of the year with the use
of the bank cutoff statement.
d. determining that all outstanding checks had cleared by the date of the bank cutoff
statement.
11. Which of the following statements is correct?
a. Bank personnel are responsible for providing reasonable assurance that a
response to a bank confirmation is accurate.
b. Bank personnel are responsible for providing complete assurance that a bank
confirmation is complete.
c. Bank personnel are not responsible for searching their records for bank balances
or loans beyond those included on the bank confirmation.
d. Bank personnel are not responsible for providing information related to interest on
the bank confirmation.
12. The auditor uses a proof of cash to determine whether:
All recorded cash disbursements All amounts that were paid by the
were paid by the bank. bank were recorded.
a. Yes Yes
b. No No
c. Yes No
d. No Yes
13. Which of the following would normally not be discovered as part of the audit of the bank
reconciliation?
a. Failure to bill a customer.
b. Failure to include a deposit in transit on the bank reconciliation.
c. Duplicate payment of a vendor’s invoice.
d. Payment to an employee for more hours than she worked.
14. A proof of cash represents:
a. a test of controls and substantive test of transactions.
b. a substantive test of transactions.
c. a substantive test of transactions and test of details of balances.
d. a test of details of balances.
15. To gather evidence regarding the balance per bank in a bank reconciliation, an auditor
would examine all of the following except the:
a. general ledger.
b. bank confirmation.
c. cutoff bank statement.
d. year-end bank statement.
16. Which of the following balance-related audit objectives typically is assessed as having
high inherent risk for cash?
a. Existence.
b. Cutoff.
c. Detail tie-in.
d. Presentation and disclosure.
17. Which of the following is not a “cash equivalent”?
a. Time deposits.
b. Certificates of deposit.
c. Money market funds.
d. Marketable securities.
18. The general cash account is considered significant in almost all audits:
a. where the ending balance is material.
b. even when the ending balance is immaterial.
c. except those of not-for-profit organizations.
d. where either the beginning or ending balance is material.
19. Which of the following errors would be least likely to be discovered during the audit of
the acquisitions and payments cycle?
a. Duplicate payment of a vendor’s invoice.
b. Improper payments of officers’ personal expenditures.
c. Payment of interest to a related party for an amount in excess of the going rate.
d. Payment for raw materials that were not received.
20. Because cash is the most desirable asset for people to steal, it has a higher:
a. control risk.
b. inherent risk.
c. detection risk.
d. liquidity risk.
21. Testing the reasonableness of the cash balance at year-end is less important when the
year-end bank reconciliation is verified:
a. on a 100% basis.
b. by someone in client’s organization who is independent of the treasurer’s
function.
c. by someone in client’s organization who is independent of the controller’s
function.
d. by the owner/manager.
22. A major consideration in the audit of the general cash balance is the possibility of fraud.
The auditor must extend his or her procedures in the audit of year-end cash to
determine the possibility of a material fraud when there are:
a. large cash balances at the end of the year.
b. large cash receipts and disbursements during the year.
c. no imprest accounts used for payroll.
d. inadequate internal controls.
23. The starting point for the verification of the balance in the general bank account is to
obtain:
a. a bank reconciliation from the client.
b. the client’s cash account from the general ledger.
c. a cutoff bank statement directly from the bank.
d. the client’s year-end bank statement and reconcile it.
24. An imprest petty cash fund would least likely be used to pay for which of the following
items?
a. Minor office supplies
b. Monthly interest expense
c. Stamps for small mailings
d. Small contributions to a local charity
25. In an effort to satisfy the completeness objective, the auditor could perform which of the
following test of details of balance procedures?
a. Trace the book balance on the reconciliation to the general ledger.
b. Trace outstanding checks to subsequent period bank statements.
c. Perform a four-column proof of cash.
d. Review financial statements to make sure that material savings accounts and
certificates of deposit are disclosed separately.
26. The audit procedure which requires the auditor to record the last check number used on
the last day of the year and subsequently trace to the outstanding checks and the cash
disbursements records is performed to satisfy the audit objective of:
a. detail tie-in.
b. existence.
c. completeness.
d. cutoff.
27. The direct receipt of a confirmation from every bank with which the client does business
is:
a. required by auditing standards for every audit.
b. not necessary unless material fraud is suspected.
c. typically done but not required by auditing standards.
d. necessary for every audit except when there are an unusually large number of
active accounts.
28. The reason for testing the client’s bank reconciliation is to verify whether the client’s
recorded bank balance is the same amount as the actual cash in bank, except for
deposits in transit, checks outstanding, and other reconciling items. The information
needed to complete the tests of the reconciliation are provided by the:
a. client’s records and ledgers for the year under audit.
b. cutoff bank statement.
c. client’s records and ledgers for the subsequent year.
d. canceled checks for the year under audit.
29. Which of the following items would not normally appear on bank reconciliations?
a. Balance per bank
b. List of deposits in transit
c. Outstanding deposits
d. Outstanding checks
30. The concern in a monthly proof of cash is with:
a. adjusting account balances.
b. reconciling the amounts per books and bank.
c. determining the month-end balance.
d. identifying cash transfers.
31. A proof of cash is effective at identifying which of the following misstatements?
a. Checks written for incorrect amounts.
b. Checks issued to invalid vendors.
c. Fraudulent checks.
d. Checks recorded by the books for an amount different than the check.
32. The emphasis in verifying petty cash is normally on which of the following?
a. Year-end balance
b. Controls over petty cash
c. Transactions for the period
d. Balance sheet classifications
33. The process of transferring money from one bank account to another and improperly
recording the transaction is referred to as:
a. kiting.
b. lapping.
c. scamming.
d. embezzling.
34. If a bank does not respond to a bank confirmation request, an auditor may:
Ask the client to
communicate with the bank
Perform to ask them to complete
alternative and return the confirmation
procedures Send a second
request
a. No Yes Yes
b. No No Yes
c. Yes No Yes
d. Yes Yes No
35. The most important controls for petty cash relate to:
The use of a separate bank The use of an imprest fund
account
a. Yes Yes
b. No No
c. Yes No
d. No Yes
36. Which of the following cash transfers results in a misstatement of cash at December 31,
2007?
Bank Transfer Schedule
Recorded Disbursement Recorded Date
transfer paid by transfer received
in books by bank in books by bank
a. 12/31/07 1/04/08 12/31/07 12/31/07
b. 1/04/08 1/05/08 12/31/07 1/04/08
c. 12/31/07 1/05/08 12/31/07 1/04/08
d. 1/04/08 1/11/08 1/04/08 1/04/08
37. _____ is cash stolen from an organization before it is recorded in the accounting
records.
a. Theft
b. Cash larceny
c. Skimming
d. Floating
38. The most important balance-related audit objectives in the audit of cash include all but
which of the following?
a. Existence
b. Accuracy
c. Completeness
d. Occurrence
39. During his examination of a January 19, 2008 cutoff bank statement, an auditor noticed
that the majority of checks listed as outstanding at December 31, 2007, had not cleared
the bank. This would indicate:
a. a high probability of kiting.
b. a high probability of lapping.
c. that the 2007 cash disbursements records had been closed prior to December
31, 2007.
d. that the 2007 cash disbursements records had been held open past December
31, 2007.
The following information applies to the questions below:

Listed below are four interbank cash transfers, indicated by the numbers 1, 2, 3, and 4,
of a client for late December 2007 and early January 2008:
Bank Account One Bank Account Two
Disbursing Date Receiving Date
(Month/Day) (Month/Day)
Per Bank Per Books Per Bank Per Books
1. 12/31 12/30 12/31 12/30
2. 1/2 12/30 12/31 12/31
3. 1/3 12/31 1/2 1/2
4. 1/3 12/31 1/2 12/31
40. Based on the schedule of interbank transfers above, which of the cash transfers
indicates an error in cash cutoff at December 31, 2007?
a. 1
b. 2
c. 3
d. 4
41. Based on the schedule of interbank transfers above, which of the cash transfers would
appear as a deposit in transit on the December 31, 2007 bank reconciliation?
a. 1
b. 2
c. 3
d. 4
42. Based on the schedule of interbank transfers above, which of the cash transfers would
not appear as an outstanding check on the December 31, 2007 bank reconciliation?
a. 1
b. 2
c. 3
d. 4
43. Which of the following errors would be least likely to be discovered during the tests of
the bank reconciliation?
a. Payment was made to an employee for more hours than he worked.
b. Cash received by the client subsequent to the balance sheet date was recorded as
cash receipts in the current year.
c. Payments on notes payable were debited directly to the bank balance by the bank
were not entered in the client’s records.
d. Deposits were recorded in the cash receipts records near the end of the year,
deposited in the bank, and were included in the bank reconciliation as a deposit in
transit.
44. When a customer fails to include a remittance advice with a payment, it is common
practice for the person opening the mail to prepare one. Consequently, mail should be
opened by which of the following four company employees?
a. Receptionist.
b. Sales manager.
c. Credit manager.
d. Accounts receivable clerk.
45. Which of the following balance-related objectives applies to auditing the general cash
account?
Rights Classification Realizable value

a. Yes No Yes
b. No Yes No
c. Yes Yes Yes
d. No No No
46. A proof of cash is not an effective procedure for identifying which of the following types
of misstatements?
a. All recorded disbursements were paid by the bank.
b. All recorded cash receipts were deposited.
c. All amounts that were paid by the bank were recorded.
d. Some checks were written for incorrect amounts.
47. The standard bank confirmation form has been agreed upon by the:
a. SEC and FASB.
b. AICPA and the SEC.
c. SEC and the American Bankers’ Association.
d. AICPA and the American Bankers’ Association.
48. Listing all bank transfers made a few days before and after the balance sheet date and
tracing each to the accounting records for proper recording is a useful approach to test
for:
a. kiting.
b. lapping.
c. income smoothing.
d. channel stuffing.
49. Under which of the following circumstances would an auditor be most likely to intensify
an examination of a $500 imprest petty cash fund?
a. Reimbursement occurs twice each week.
b. The custodian endorses reimbursement checks.
c. Reimbursement vouchers are not prenumbered.
d. The custodian occasionally uses the cash fund to cash employee checks.
50. Contact with banks for the purpose of opening company bank accounts should normally
be the responsibility of the corporate:
a. board of directors.
b. treasurer.
c. controller.
d. executive committee.
51. On the last day of the fiscal year, the cash disbursements clerk drew a company check
on bank A and deposited the check in the company account in bank B to cover a
previous theft of cash. The disbursement has not been recorded. The auditor will best
detect this form of kiting by:
a. examining the composition of deposits in both bank A and bank B subsequent to
year-end.
b. examining paid checks returned with the bank statement of the next account period
after year-end.
c. preparing, from the cash disbursements records, a summary of bank transfers for
one week prior to and subsequent to year-end.
d. comparing the detail of cash receipts as shown by the client’s cash receipts
records with the detail on the confirmed duplicate deposit tickets for three days
prior to and subsequent to year-end.
PROBLEM NO. 15
Select the best answer for each of the following:
1. An auditor would consider a cashier’s job description to contain compatible duties if the
cashier receives remittance from the mailroom and also prepares the
a. Daily deposit slip. c. Remittance advices.
b. Prelist of individual checks. d. Monthly bank reconciliation.
2. Which of the following internal control procedures will most likely prevent the concealment
of a cash shortage resulting from improper write-off of a trade account receivable?
a. Write-offs must be supported by an aging schedule showing that only receivables
overdue for several months have been written off.
b. Write-offs must be approved by the cashier who is in a position to know if the
receivables have, in fact, been collected.
c. Write-offs must be approved by a responsible officer after review of credit department
recommendations and supporting evidence.
d. Write-offs must be authorized by company field sales employees who are in a position
to determine the financial standing of the customers.
3. An entity’s internal control structure requires every check request that there be an
approved voucher, supported by a prenumbered purchase order and a prenumbered
receiving report. To determine whether checks are being issued for unauthorized
expenditures, an auditor most likely would select items for testing from the population of all
a. Cancelled checks. c. Purchase orders.
b. Approved vouchers. d. Receiving reports.
4. Which of the following auditing procedures would the auditor not apply to a cutoff bank
statement?
a. Trace year end outstanding checks and deposits in transit to the cutoff bank statement.
b. Reconcile the bank account as of the end of the cutoff period.
c. Compare dates, payees and endorsements on returned checks with the cash
disbursements record.
d. Determine that the yearend deposit in transit was credited by the bank on the first
working day of the following accounting period.
5. A client maintains two bank accounts. One of the accounts, Bank A, has an overdraft of
P100,000. The other account, Bank B, has a positive balance of P50,000. To conceal the
overdraft from the auditor, the client may decide to
a. Draw a check for at least P100,000 on Bank A for deposit in Bank B. Record the receipt
but not the disbursement and list the receipt as a deposit in transit. Record the
disbursement at the beginning of the following year.
b. Draw a check for at least P100,000 on Bank B for deposit in Bank A. Record the receipt
but not the disbursement and list the receipt as a deposit in transit. Record the
disbursement at the beginning of the following year.
c. Draw a check for P100,000 on Bank B for deposit in Bank A. Record the disbursement
but not the receipt. List the disbursement as an outstanding check, but do not list the
receipt as a deposit in transit. Record the receipt at the beginning of the following
period.
d. Draw a check for at least P100,000 on Bank A for deposit in Bank B. Record the
disbursement but not the receipt and list the disbursement as an outstanding check.
Record the receipt at the beginning of the following year.
6. While performing an audit of cash, an auditor begins to suspect check kiting. Which of the
following is the best evidence that the auditor could obtain concerning whether kiting is
taking place?
a. Documentary evidence obtained by vouching credits on the latest bank statement to
supporting documents.
b. Documentary evidence obtained by vouching entries in the cash account to supporting
documents.
c. Oral evidence obtained by discussion with controller personnel.
d. Evidence obtained by preparing a schedule of interbank transfers.
7. Two months before year-end, the bookkeeper erroneously recorded the receipt of a long-
term bank loan by a debit to cash and a credit to sales. Which of the following is the most
effective procedure for detecting this type of error?
Analyze bank confirmation information.
a.
b. Analyze the notes payable journal.
c. Prepare year-end bank reconciliation.
d. Prepare a year-end bank transfer schedule.
8. Postdated checks received by mail in settlement of customer’s accounts should be
a. Returned to customer.
b. Stamped with restrictive endorsement.
c. Deposited immediately by the cashier.
d. Deposited the day after together with cash receipts.
9. The cashier of Milady Jewelries covered a shortage in the cash working fund with cash
obtained at December 31 from a bank by cashing but not recording a check drawn on the
company out of town bank. How would you as an auditor discover the manipulation?
a. By confirming all December 31 bank balances.
b. By counting the cash working fund at the close of business on December 31.
c. By investigating items returned with the bank cut-off statements of the succeeding
month.
d. By preparing independent bank reconciliations as of December 31
10. An essential phase of the audit of the cash balance at the end of the year is the auditor's
review of cutoff bank statement. This specific procedure is not useful in determining if
a. Kiting has occurred.
b. Lapping has occurred.
c. The cash receipts journal was held open.
d. Disbursements per the bank statement can be reconciled with total checks written.
COMPUTATIONAL- MULTIPLE CHOICE

72. Consider the following: Cash in Bank – checking account of $13,500, Cash on hand of $500, Post-dated
checks received totaling $3,500, and Certificates of deposit totaling $124,000. How much should be reported
as cash in the balance sheet?
a. $ 13,500.
b. $ 14,000.
c. $ 17,500.
d. $131,500.
72.b $13,500 + $500 = $14,000.
74. Kennison Company has cash in bank of $10,000, restricted cash in a separate account of $3,000, and a
bank overdraft in an account at another bank of $1,000. Kennison should report cash of
a. $9,000.
b. $10,000.
c. $12,000.
d. $13,000.
75. Kaniper Company has the following items at year-end:
Cash in bank $20,000
Petty cash 300
Short-term paper with maturity of 2 months 5,500
Postdated checks 1,400
Kaniper should report cash and cash equivalents of
a. $20,000.
b. $20,300.
c. $25,800.
d. $27,200.
75. c $20,000 + $300 + $5,500 = $25,800.
76. Lawrence Company has cash in bank of $15,000, restricted cash in a separate account of $4,000, and a
bank overdraft in an account at another bank of $2,000. Lawrence should report cash of
a. $13,000.
b. $15,000.
c. $18,000.
d. $19,000.
77. Steinert Company has the following items at year-end:
Cash in bank $30,000
Petty cash 500
Short-term paper with maturity of 2 months 8,200
Postdated checks 2,100
Steinert should report cash and cash equivalents of
a. $30,000.
b. $30,500.
c. $38,700.
d. $40,800.
77. c $30,000 + $500 + $8,200 = $38,700.
117. If a petty cash fund is established in the amount of $250, and contains $150 in cash and $95 in receipts
for disbursements when it is replenished, the journal entry to record replenishment should include credits to
the following accounts
a. Petty Cash, $75.
b. Petty Cash, $100.
c. Cash, $95; Cash Over and Short, $5.
d. Cash, $100.
*117. d $250 – $150 = $100.
118. If the month-end bank statement shows a balance of $36,000, outstanding checks are $12,000, a deposit
of $4,000 was in transit at month end, and a check for $500 was erroneously charged by the bank against the
account, the correct balance in the bank account at month end is
a. $27,500.
b. $28,500.
c. $20,500.
d. $43,500.
*118. b $36,000 – $12,000 + $4,000 + $500 = $28,500.
119. In preparing its bank reconciliation for the month of April 2010, Henke, Inc. has available the following
information.
Balance per bank statement, 4/30/10 $39,140
NSF check returned with 4/30/10 bank statement 450
Deposits in transit, 4/30/10 5,000
Outstanding checks, 4/30/10 5,200
Bank service charges for April 20
What should be the correct balance of cash at April 30, 2010?
a. $39,370
b. $38,940
c. $38,490
d. $38,470
*119. b $39,140 + $5,000 – $5,200 = $38,940.
120. Finley, Inc.’s checkbook balance on December 31, 2010 was $21,200. In addition, Finley held the
following items in its safe on December 31.
(1) A check for $450 from Peters, Inc. received December 30, 2010, which was not included in the checkbook
balance.
(2) An NSF check from Garner Company in the amount of $900 that had been deposited at the bank, but
was returned for lack of sufficient funds on December 29. The check was to be redeposited on January 3,
2011. The original deposit has been included in the December 31 checkbook balance.
(3) Coin and currency on hand amounted to $1,450.
The proper amount to be reported on Finley's balance sheet for cash at December 31,
2010 is
a. $21,300.
b. $20,400.
c. $22,200.
d. $21,750.
*120. c $21,200 + $450 – $900 + $1,450 = $22,200.
121. The cash account shows a balance of $45,000 before reconciliation. The bank statement does not include
a deposit of $2,300 made on the last day of the month. The bank statement shows a collection by the bank
of $940 and a customer's check for $320 was returned because it was NSF. A customer's check for $450 was
recorded on the books as $540, and a check written for $79 was recorded as $97. The correct balance in the
cash account was
a. $45,512.
b. $45,548.
c. $45,728.
d. $47,848.
*121. b $45,000 + $940 – $320 – $90 + $18 = $45,548.
122. In preparing its May 31, 2010 bank reconciliation, Catt Co. has the following information available:
Deposit in transit, 5/31/10 5,400
Note collected by bank in May 1,250
The correct balance of cash at May 31, 2010 is
a. $35,400.
b. $29,250.
c. $30,500.
d. $31,750.
*122. c $30,000 + $5,400 – $4,900 = $30,500.
132. In preparing its August 31, 2010 bank reconciliation, Bing Corp. has available the following
information:
Deposit in transit, 8/31/10 3,900
Return of customer's check for insufficient funds, 8/30/10 600
Bank service charges for August 100
At August 31, 2010, Bing's correct cash balance is
a. $22,800.
b. $22,200.
c. $22,100.
d. $20,500.
*132. a $21,650 + $3,900 – $2,750 = $22,800.
133. Tresh, Inc. had the following bank reconciliation at March 31, 2010:
Add: Deposit in transit 10,300
47,500
Less: Outstanding checks 12,600
Balance per books, 3/31/10 $34,900
Data per bank for the month of April 2010 follow:
Deposits $46,700
Disbursements 49,700
All reconciling items at March 31, 2010 cleared the bank in April. Outstanding checks at April 30, 2010 totaled
$6,000. There were no deposits in transit at April 30, 2010. What is the cash balance per books at April 30,
2010?
a. $28,200
b. $31,900
c. $34,200
d. $38,500
*133. a $37,200 + $46,700 – $49,700 = $34,200 (4/30 balance per bank)
$34,200 – $6,000 = $28,200.
COMPUTATIONAL- IDENTIFICATION
*Pr. 7-142—Bank reconciliation.
Benson Plastics Company deposits all receipts and makes all payments by check. The following information is
available from the cash records:
MARCH 31 BANK RECONCILIATION
Balance per bank $26,746
Add: Deposits in transit 2,100
Deduct: Outstanding checks (3,800)
Balance per books $25,046
Month of April Results
Per Bank Per Books
Balance April 30 $27,995 $28,855
April deposits 10,784 13,889
April checks 11,600 10,080
April note collected (not included in April deposits) 3,000 -0-
April bank service charge 35 -0-
April NSF check of a customer returned by the bank
(recorded by bank as a charge) 900 -0-
Instructions
(a) Calculate the amount of the April 30:
1. Deposits in transit
2. Outstanding checks
(b) What is the April 30 adjusted cash balance? Show all work.
(a) 1. Deposits in transit, $5,205 [$13,889 – ($10,784 – $2,100)]
2. Outstanding checks, $2,280 [$10,080 – ($11,600 – $3,800)]
(b) Adjusted cash balance at April 30, $30,920
($27,995 + $5,205 – $2,280) OR ($28,855 + $3,000 – $35 – $900)
PROBLEM NO. 1
In connection with your audit of Caloocan Corporation for the year ended December 31, 2006, you gathered the
following:
1. Current account at Metrobank P2,000,000
2. Current account at BPI (100,000)
3. Payroll account 500,000
4. Foreign bank account – restricted (in equivalent pesos) 1,000,000
5. Postage stamps 1,000
6. Employee’s post dated check 4,000
7. IOU from controller’s sister 10,000
8. Credit memo from a vendor for a purchase return 20,000
9. Traveler’s check 50,000
10. Not-sufficient-funds check 15,000
11. Money order 30,000
12. Petty cash fund (P4,000 in currency and expense receipts for P6,000) 10,000
13. Treasury bills, due 3/31/07 (purchased 12/31/06) 200,000
14. Treasury bills, due 1/31/07 (purchased 1/1/06) 300,000
Question:
Based on the above information and the result of your audit, compute for the cash and cash equivalent that would be
reported on the December 31, 2006 balance sheet.
a. P2,784,000 c. P2,790,000
b. P3,084,000 d. P2,704,000
Suggested Solution:
Current account at Metrobank P2,000,00
0
Payroll account 500,000
Traveler’s check 50,000
Money order 30,000
Petty cash fund (P4,000 in currency) 4,000
Treasury bills, due 3/31/07 (purchased 12/31/06)
200,000
Total P2,784,00
0
Answer: A
PROBLEM NO. 2
In the course of your audit of the Las Piñas Corporation, its controller is attempting to determine the amount of cash to
be reported on its December 31, 2006 balance sheet. The following information is provided:
1. Commercial savings account of P1,200,000 and a commercial checking account balance of P1,800,000 are held at PS
Bank.
2. Travel advances of P360,000 for executive travel for the first quarter of the next year (employee to reimburse
through salary deduction).
3. A separate cash fund in the amount of P3,000,000 is restricted for the retirement of a long term debt.
4. Petty cash fund of P10,000.
5. An I.O.U. from a company officer in the amount of P40,000.
6. A bank overdraft of P250,000 has occurred at one of the banks the company uses to deposit its cash receipts. At the
present time, the company has no deposits at this bank.
7. The company has two certificates of deposit, each totaling P1,000,000. These certificates of deposit have maturity
of 120 days.
8. Las Piñas has received a check dated January 2, 2007 in the amount of P150,000.
9. Las Piñas has agreed to maintain a cash balance of P200,000 at all times at PS Bank to ensure future credit
availability.
10. Currency and coin on hand amounted to P15,000.
Question:
Based on the above and the result of your audit, how much will be reported as cash and cash equivalent at December
31, 2006?
a. P3,025,000 c. P2,575,000
b. P2,825,000 d. P5,025,000
Suggested Solution:
Savings account at PS Bank P1,200,00
0
Checking account at PS Bank 1,800,00
0
Petty cash fund 10,000
Currency and coin
15,000
Total P3,025,00
0
Answer: A
PROBLEM NO. 3
The cash account of the Makati Corporation as of December 31, 2006 consists of the following:
On deposit in current account with Real Bank P
900,000
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 Corporation

dated January 15, 2007 70,000
A check drawn by a supplier dated December 28, 2006 for
goods returned by the Corporation 60,000
A check dated May 31,2006 drawn by the Corporation
against the Piggy Bank 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 Piggy Bank 410,000
account
Petty Cash fund of which P5,000 is in currency; P3,600 in
form of employees’ I.O.U. s; and P1,400 is supported by
approved petty cash vouchers for expenses all dated
prior to closing of the books on December 31, 2006
10,000
Total 1,950,00
0
Less: Overdraft with Piggy Bank secured by a Chattel mortgage
on the inventories
300,000
Balance per ledger P1,650,00
0
Question:
At what amount will the account “Cash” appear on the December 31, 2006 balance sheet?
a. P1,315,000 c. P1,495,000
b. P1,425,000 d. P1,725,000
Suggested Solution:
Current account with Real Bank P
900,000
Undeposited collection 350,000
Supplier's check for goods returned by the Corporation 60,000
Unexpended petty cash 5,000

Current account with Piggy Bank (P410,000 - P300,000)
110,000
Total P1,425,00
0
Answer: B
PROBLEM NO. 4
You noted the following composition of Malabon Company’s “cash account” as of December 31, 2006 in connection with
your audit:
Demand deposit account P2,000,00
0
Time deposit – 30 days 1,000,00
0
NSF check of customer 40,000
Money market placement (due June 30, 2007) 1,500,00
0
Savings deposit in a closed bank 100,000
IOU from employee 20,000
Pension fund 3,000,00
0
Customer’s check dated January 1, 2007 50,000
Customer’s check outstanding for 18 months
40,000
Total P7,760,00
0
Additional information follows:

a) Check of P200,000 in payment of accounts payable was recorded on December 31, 2006 but mailed to suppliers on
January 5, 2007.
b) Check of P100,000 dated January 15, 2007 in payment of accounts payable was recorded and mailed on December
31, 2006.
c) The company uses the calendar year. The cash receipts journal was held open until January 15, 2007, during which
time P400,000 was collected and recorded on December 31, 2006.
Question:
The cash and cash equivalents to be shown on the December 31, 2006 balance sheet is
a. P3,310,000 c. P2,910,000
b. P1,910,000 d. P4,410,000
Suggested Solution:
Demand deposit account as adjusted:
Demand deposit account per books P2,000,000
Undelivered check 200,000
Postdated check issued 100,000
Window dressing of collection (400,000) P1,900,00
0
Time deposit - 30 days 1,000,00
0
Petty cash fund
10,000
Cash and cash equivalents P2,910,00
0
Answer: C
PROBLEM NO. 5
You were able to gather the following from the December 31, 2006 trial balance of Mandaluyong Corporation in
connection with your audit of the company:
Cash on hand P
500,000
BPI current account 1,000,00
0
Security Bank current account No. 01 1,080,00
0
Security Bank current account No. 02 (80,000)
PNB savings account 1,200,00
0
PNB time deposit 500,000
Cash on hand includes the following items:
a. Customer’s check for P40,000 returned by bank on December 26, 2006 due to insufficient fund but subsequently
redeposited and cleared by the bank on January 8, 2007.
b. Customer’s check for P20,000 dated January 2, 2007, received on December 29, 2006.
c. Postal money orders received from customers, P30,000.
The petty cash fund consisted of the following items as of December 31, 2006.
Currency and coins P
2,000
Employees’ vales 1,600
Currency in an envelope marked “collections for charity” with
names attached 1,200
Unreplenished petty cash vouchers 1,300
Check drawn by Mandaluyong Corporation, payable to the petty
cashier
4,000
P10,1
00
Included among the checks drawn by Mandaluyong Corporation against the BPI current account and recorded in
December 2006 are the following:
a.Check written and dated December 29, 2006 and delivered to payee on January 2, 2007, P80,000.
b. Check written on December 27, 2006, dated January 2, 2007, delivered to payee on December 29, 2006,
P40,000.
The credit balance in the Security Bank current account No. 2 represents checks drawn in excess of the deposit balance.
These checks were still outstanding at December 31, 2006.
The savings account deposit in PNB has been set aside by the board of directors for acquisition of new equipment. This
account is expected to be disbursed in the next 3 months from the balance sheet date.
Questions:
Based on the above and the result of your audit, determine the adjusted balances of following:
1. Cash on hand
a. P410,000 c. P470,000
b. P530,000 d. P440,000
2. Petty cash fund
a. P6,000 c. P2,000
b. P7,200 d. P4,900
3. BPI current account
a. P1,000,000 c. P1,080,000
b. P1,120,000 d. P1,040,000
4. Cash and cash equivalents
a. P2,917,200 c. P3,052,000
b. P3,074,900 d. P3,066,000
Suggested Solution:
Question No. 1
Unadjusted cash on hand P500,000
NSF check (40,000)
Post dated check received (20,000)
Adjusted cash on hand P440,000
Question No. 2
Petty cash fund per total P10,100
Employees' vales (IOU) (1,600)
Currency in envelope marked "collections for charity" (1,200)
Unreplenished petty cash vouchers (1,300)

Petty cash fund, as adjusted P 6,000
Alternative computation:
Currency and coins P 2,000
Replenishment check 4,000
Petty cash fund, as adjusted P 6,000
Question No. 3
Unadjusted BPI current account P1,000,00
0
Unreleased check 80,000
Post dated check delivered
40,000
Adjusted BPI current account P1,120,00
0
Question No. 4
Cash on hand (see no. 1) P
440,000
Petty cash fund (see no. 2) 6,000
BPI current account (see no. 3) 1,120,00
Security Bank current account (net of 0
overdraft of P80,000) 1,000,00
0
PNB time deposit
500,000
Cash and cash equivalents, as adjusted P3,066,00
0
Answers: 1) D; 2) A; 3) B; 4) D
PROBLEM NO. 6
The books of Manila's Service, Inc. disclosed a cash balance of P687,570 on December 31, 2006. The bank statement as
of December 31 showed a balance of P547,800. Additional information that might be useful in reconciling the two
balances follows:
(a) Check number 748 for P30,000 was originally recorded on the books as P45,000.
(b) A customer's note dated September 25 was discounted on October 12. The note was dishonored on December 29
(maturity date). The bank charged Manila's account for P142,650, including a protest fee of P2,650.
(c) The deposit of December 24 was recorded on the books as P28,950, but it was actually a deposit of P27,000.
(d) Outstanding checks totaled P98,850 as of December 31.
(e) There were bank service charges for December of P2,100 not yet recorded on the books.
(f) Manila's account had been charged on December 26 for a customer's NSF check for P12,960.
(g) Manila properly deposited P6,000 on December 3 that was not recorded by the bank.
(h) Receipts of December 31 for P134,250 were recorded by the bank on January 2.
(i) A bank memo stated that a customer's note for P45,000 and interest of P1,650 had been collected on December 27,
and the bank charged a P360 collection fee.
Questions:
Based on the above and the result of your audit, determine the following:
1. Adjusted cash in bank balance

a.P583,200 c. P589,200
b. P577,200 d. P512,400
2. Net adjustment to cash as of December 31, 2006
a. P104,370 c. P 98,370
b. P110,370 d. P175,170
Suggested Solution:
Question No. 1
Balance per bank statement, 12/31/06 P547,800
Add: Deposits in transit P134,250
Bank error-deposit not recorded 6,000 140,250
Total 688,050
Less: Outstanding checks 98,850
Adjusted bank balance, 12/31/06 P589,200
Balance per books, 12/31/06 P687,570

Add: Book error - Check No. 748 P15,000
Customer note collected by bank 46,290 61,290
Total 748,860
Less: Dishonored note 142,650
Book error-improperly recorded 1,950
deposit
NSF check 12,960
Bank service charges 2,100 159,660
Adjusted book balance, 12/31/06 P589,200
Question No. 2
Unadjusted balance per books, 12/31/06 P687,570 Adjusted book balance, 12/31/06
589,200
Net adjustment to cash – credit P 98,370
Answers: 1) C; 2) C
PROBLEM NO. 7
Shown below is the bank reconciliation for Marikina Company for November 2006:
Balance per bank, Nov. 30, 2006 P150,00

0
Add: Deposits in transit
24,000
Total 174,00
0
Less: Outstanding checks P28,000
Bank credit recorded in error 10,000
38,000
Cash balance per books, Nov. 30, 2006 P136,00
0
The bank statement for December 2006 contains the following data:
Total deposits P110,000
Total charges, including an NSF check of P8,000 and a service charge of P400 96,000
All outstanding checks on November 30, 2006, including the bank credit, were cleared in the bank 1n December 2006.
There were outstanding checks of P30,000 and deposits in transit of P38,000 on December 31, 2006.
Questions:
Based on the above and the result of your audit, answer the following:
1. How much is the cash balance per bank on December 31, 2006?
P154,000
a. c. P164,000
b. P150,000 d. P172,400
2. How much is the December receipts per books?
a. P124,000 c. P110,000
b. P 96,000 d. P148,000
3. How much is the December disbursements per books?
a. P96,000 c. P89,600
b. P79,600 d. P98,000
4. How much is the cash balance per books on December 31, 2006?
a. P150,000 c. P180,400
b. P170,400 d. P162,000
5. The adjusted cash in bank balance as of December 31, 2006 is
a. P141,600 c. P172,000
b. P162,000 d. P196,000
Suggested Solution:
Question No. 1
Balance per bank, Nov. 30, 2006 P150,000
Add: Total deposits per bank statement 110,000
Total 260,000
Less: Total charges per bank statement 96,000
Balance per bank, Dec. 31, 2006 P164,000
Question No. 2
Total deposits per bank statement P110,000
Less deposits in transit, Nov. 30 24,000
Dec. receipts cleared through the bank 86,000
Add deposits in transit, Dec. 31 38,000
December receipts per books P124,000
Question No. 3
Total charges per bank statement P96,000
Less: Outstanding checks, Nov. 30 P28,000
Correction of erroneous bank credit 10,000
December NSF check 8,000
December bank service charge 400 46,400
Dec. disb. cleared through the bank 49,600
Add outstanding checks, Dec. 31 30,000
December disbursements per books P79,600
Question No. 4
Balance per books, Nov. 30, 2006 P136,000
Add December receipts per books 124,000
Total 260,000
Less December disbursements per books 79,600
Balance per books, Dec. 31, 2006 P180,400
Question No. 5
Balance per bank statement, 12/31/06 P164,00
0
Deposits in transit 38,000
Outstanding checks ( 30,00
0)
Adjusted bank balance, 12/31/06 P172,00
0
Balance per books, 12/31/06 P180,40
0
NSF check ( 8,00
0)
Bank service charges ( 40
0)
Adjusted book balance, 12/31/06 P172,00
0
Answers: 1) C; 2) A; 3) B; 4) C; 5) C
PROBLEM NO. 8
The accountant for the Muntinlupa Company assembled the following data:
June 30 July 31
Cash account balance P 15,822 P
39,745
Bank statement balance 107,082
137,81
7
12,880
Outstanding checks 27,718
30,112
Bank service charge 72 60
Customer's check deposited July 10, returned by 8,250 bank on July 16
marked NSF, and redeposited immediately; no entry made on books for
return or redeposit
Collection by bank of company's notes receivable 71,815 80,900
The bank statements and the company's cash records show these totals:
Disbursements in July per bank statement P218,373
Cash receipts in July per Muntinlupa's books 236,452
QUESTIONS:
Based on the application of the necessary audit procedures and appreciation of the above data, you are to provide the
answers to the following:
1. How much is the adjusted cash balance as of June 30?

a. P87,565 c. P107,082
b. (P3,695) d. P15,822
2. How much is the adjusted bank receipts for July?
a. P253,787 c. P245,537
b. P214,802 d. P232,881
3. How much is the adjusted book disbursements for July?
a. P220,767 c. P181,782
b. P212,517 d. P206,673
4. How much is the adjusted cash balance as of July 31?
a. P137,817 c. P22,513
b. P112,335 d. P120,585
5. How much is the cash shortage as of July 31?
a. P8,250 c. P196,144
b. P71,815 d. P0
Suggested Solution:
Muntinlupa Company
Reconciliation of Receipts, Disbursements, and Bank Balance For the month ended July 31
Beginning Ending
June 30 Receipts Disb. July 31
Balance per bank

statement P107,082 P249,108a P218,373 P137,81
7
Deposits in transit:
June 30 8,201 (8,201)
July 31 12,880
12,880
Outstanding checks:
June 30 (27,718) (27,718)
July 31 30,112
(30,112)
NSF check redeposited
(8,250) (8,250)
Adjusted bank balance
P 87,565 P245,537 P212,517 P120,58
5
Balance per books P 15,822 P236,452 P212,529b P

39,745
Bank service charge:
June (72) (72)
July 60 (60)
Collection of notes
receivable:
June 71,815 (71,815)
July 80,900 80,900
Adjusted book balance
P 87,565 P245,537 P212,517 P120,58
5
a
(P137,817 + P218,373 – P107,082) b (P15,822 + 236,452 –
P39,745)
Answers: 1) A; 2) C; 3) B; 4) D; 5) D
PROBLEM NO. 9
In the audit of Pasig Company’s cash account, you obtained the following information:
The company’s bookkeeper prepared the following bank reconciliation as of November 30, 2006:
Bank balance – November 30, 2006 P90,800
Undeposited collections 5,000
Bank service charges 100 Bank collection of customer’s note (8,000)
Outstanding checks:
Number Amount
7159 P3,000
7767 5,000
7915 2,000 (10,000)
Book balance – November 30, 2006 P77,900

Additional data are given as follows:
a. Company recordings for December:

Total collections from customers P165,000
Total checks drawn 98,000
b. Bank statement totals for December :

Charges P123,800
Credits 169,000
c. Check no. 7159 dated November 25, 2006, was entered as P3,000 in payment of a voucher for P30,000. Upon
examination of the checks returned by the bank, the actual amount of the check was P30,000.
d. Check no. 8113 dated December 20, 2006 was issued to replace a mutilated check (no.7767), which was returned by
the payee. Both checks were recorded in the amount drawn, P5,000, but no entry was made to cancel check no.
7767.
e. The December bank statement included a check drawn by Sipag Company for P1,500.
f. Undeposited collections on December 31, 2006 - P8,000.
g. The service charge for December was P150 which was charged by the bank to another client.
h. The bank collected a note receivable of P7,000 on December 28, 2006, but the collection was not received on time
to be recorded by Pasig.
i. The outstanding checks on December 31, 2006, were:
Check No. Amount Check No. Amou
nt
7767 P5,000 8910 P2,3
00
8856 1,300 8925 4,100
QUESTIONS:
Based on the above and the result of your audit, determine the following:
1. Unadjusted cash balance per books as of December 31, 2006

a. P152,800 c. P144,900
b. P152,750 d. P165,700
2. Adjusted cash balance as of November 30, 2006
a. P85,800 c. P63,800
b. P58,800 d. P90,800
3. Adjusted book receipts for December 2006
a. P170,500 c. P172,000
b. P182,000 d. P173,000
4. Adjusted bank disbursement for December 2006
a. P120,150 c. P125,150
b. P 76,150 d. P 98,150
5. Adjusted cash balance as of December 31, 2006
a. P132,650 c. P137,800
b. P137,650 d. P134,650
Suggested Solution:
Question No. 1
Unadjusted book balance, 11/30/06 P77,900
Add unadjusted book receipts: Collection from customers P165,000
Note collected by bank in Nov. presumed recorded in Dec. 8,000 173,000
Total 250,900
Less unadjusted book disbursements:
Checks drawn 98,000

BSC for Nov. presumed recorded in Dec. 100 98,100
Unadjusted book balance, 12/31/06 P152,800
Question Nos. 2 to 5
Pasig Company
Proof of Cash
For the month ended December 31, 2006
Beginning Ending
Nov. 30 Receipts Disb. Dec. 31
Balance per bank statement P90,800 P169,000 P123,800 P136,000a

November 30 5,000 (5,000)
December 31 8,000 8,000
Outstanding checks:
November 30 (32,000) (32,000)
December 31 7,700 (7,700)
Bank errors – Dec.
Check of Sipag Co. (1,500) 1,500
BSC charged to another client 150 (150)
Adjusted bank balance P63,800 P172,000 P 98,150 P137,650
Balance per books P77,900 P173,000 P98,100 P152,800

Customer's note
collected by bank:
November 8,000 (8,000)
December 7,000 7,000
November (100) (100)
December 150 (150)
Book errors:
Check no. 7159

(P30,000-P3,000) (27,000) (27,000
)
Check no. 7767
(mutilated check) 5,000 5,000
P63,800 P172,000 P 98,150 P137,650
a
(P90,800 + P169,000 – P123,800)
Answers: 1) A; 2) C; 3) C; 4) D; 5) B
PROBLEM NO. 10
You obtained the following information on the current account of Parañaque Company during your examination of its
financial statements for the year ended December 31, 2006.
The bank statement on November 30, 2006 showed a balance of P306,000. Among the bank credits in November was
customer’s note for P100,000 collected for the account of the company which the company recognized in December
among its receipts. Included in the bank debits were cost of checkbooks amounting to P1,200 and a P40,000 check
which was charged by the bank in error against Parañaque Co. account. Also in November you ascertained that there
were deposits in transit amounting to P80,000 and outstanding checks totaling P170,000.
The bank statement for the month of December showed total credits of P416,000 and total charges of P204,000. The
company’s books for December showed total debits of P735,600, total credits of P407,200 and a balance of P485,600.
Bank debit memos for December were: No. 121 for service charges, P1,600 and No. 122 on a customer’s returned check
marked “Refer to Drawer” for P24,000.
On December 31, 2006 the company placed with the bank a customer’s promissory note with a face value of P120,000
for collection. The company treated this note as part of its receipts although the bank was able to collect on the note
only in January, 2007.
A check for P3,960 was recorded in the company cash payments books in December as P39,600.
QUESTIONS:
Based on the application of the necessary audit procedures and appreciation of the above data, you are to provide the
answers to the following:
1. How much is the undeposited collections as of December 31, 2006?

a. P339,600 c. P219,600
b. P179,600 d. P139,600
2. How much is the outstanding checks as of December 31, 2006?

a. P191,960 c. P361,960
b. P397,600 d. P363,160
3. How much is the adjusted cash balance as of November 30, 2006?

a. P216,000 c. P176,000
b. P256,000 d. P157,200
4. How much is the adjusted bank receipts for December?

a. P635,600 c. P475,600
b. P515,600 d. P435,600
5. How much is the adjusted book disbursements for December?

a. P395,960 c. P225,960
b. P431,600 d. P397,160
6. How much is the adjusted cash balance as of December 31, 2006?

a. P625,640 c. P220,000
b. P195,640 d. P375,640
Suggested Solution:
Question No. 1
Deposits in transit, 11/30/06 P80,000

Add collections in December:
December book receipts
P735,600
Less receipts not representing
collections in December:
Customer’s note collected by
bank in Nov. recorded in Dec. P100,000
Uncollected customer's note
treated as receipts 120,000 220,000 515,600
Total 595,600
Less deposits credited by the bank in
December:
December bank receipts P416,000
Less receipts not representing

deposits:
Erroneous bank debit, Nov.;
corrected Dec. 40,000 376,000
Deposits in transit, 12/31/06 P219,600
Question No. 2
Outstanding checks, 11/30/06 P170,000

Add checks issued in December:
December book disbursements P407,200
Less disbursements not
representing checks issued in
December:
Bank service charge, Nov.;
recorded Dec. P1,200
Error in recording a check
(should be P3,960, recorded
as P39,600) 35,640 36,840 370,360
Total 540,360
Less checks paid by the bank in
December:
December bank disbursements P204,000
Less disbursements not
representing checks:
Bank service charge, Dec. P1,600
NSF check, Dec. 24,000 25,600 178,400
Outstanding checks, 12/31/06 P361,960
Question Nos. 3 to 6
Parañaque Company Proof

of Cash
Beginning Ending
Balance per bank

statement P306,000 P416,000 P204,000 P518,000
November 30 80,000 (80,000)
December 31 219,600 219,600
Outstanding checks:
November 30 (170,000) (170,000)
December 31 361,960 (361,960)
Erroneous bank debit-
November 40,000 (40,000)
Adjusted bank balance
P256,000 P515,600 P395,960 P375,640
Balance per books P157,200b P735,600 P407,200 P485,60

0
Customer's note collected
by bank - November
100,000 (100,000)
November (1,200) (1,200)
December 1,600 (1,600)
NSF check - December
24,000 (24,000
)
Book errors - December
Uncollected
customer's note
treated as receipts
(120,000) (120,000
)
Error in recording a
check (should be
P3,960, recorded
as P39,600)
(35,640) 35,640
P256,000 P515,600 P395,960 P375,64
0
a
(P306,000 + P416,000 – P204,000)
b
(P485,600 + 407,200 – P735,600)
Answers: 1) C; 2) C; 3) B; 4) B; 5) A; 6) D
PROBLEM NO. 11
You were able to obtain the following information in connection with your audit of the Cash account of the Pasay
Company as of December 31, 2006:
November 30 December 31
a. Balances per bank P480,000 P420,000
b. Balances per books 504,000 539,000

c. Undeposited collections 244,000 300,000
d. Outstanding checks 150,000 120,000
e. The bank statement for the month of December showed total credits of P240,000 while the debits per books
totaled P735,000.
f. NSF checks are recorded as a reduction of cash receipts. NSF checks which are later redeposited are then
recorded as regular receipts. Data regarding NSF checks are as follows:
1. Returned by the bank in Nov. and recorded by the company in Dec., P10,000. 2. Returned by the
bank in Dec. and recorded by the company in Dec., P25,000.
3. Returned by the bank in Dec. and recorded by the company in Jan., P29,000.
g. Check of Pasaway Company amounting to P90,000 was charged to the company’s account by the bank in error on
December 31.
h. A bank memo stated that the company’s account was credited for the net proceeds of Anito’s note for P106,000.
i. The company has hypothecated its accounts receivable with the bank under an agreement whereby the bank
lends the company 80% of the hypothecated accounts receivable. The company performs accounting and
collection of the accounts. Adjustments of the loan are made from daily sales reports and deposits.
j. The bank credits the company account and increases the amount of the loan for 80% of the reported sales. The
loan agreement states specifically that the sales report must be accepted by the bank before the company is
credited. Sales reports are forwarded by the company to the bank on the first day following the date of sale. The
bank allocates each deposit 80% to the payment of the loan, and 20% to the company account. Thus, only 80% of
each day’s sales and 20% of each collection deposits are entered on the bank statement. The company
accountant records the hypothecation of new accounts receivable (80% of sales) as a debit to Cash and a credit to
the bank loan as of the date of sales. One hundred percent of the collection on accounts receivable is recorded
as a cash receipt; 80% of the collection is recorded in the cash disbursements books as a payment on the loan. In
connection with the hypothecation, the following facts were determined:
• Included in the undeposited collections is cash from the hypothecation of accounts receivable. Sales were
P180,000 on November 30, and P200,000 at December 31. The balance was made up from collections which
were entered on the books in the manner indicated above.
• Collections on accounts receivable deposited in December, other than deposits in transit, totaled P725,000.
k. Interest on the bank loan for the month of December charged by the bank but not recorded in the books,
amounted to P38,000.
QUESTIONS:
1. How much is the adjusted cash balance as of November 30, 2006?

a. P574,000 c. P430,000
b. P394,000 d. P350,000
2. How much is the adjusted book receipts for December, 2006?
a. P860,000 c. P876,000
b. P280,000 d. P296,000
3. How much is the adjusted book disbursements for December, 2006?
a. P180,000 c. P180,000
b. P905,000 d. P760,000
a. P690,000 c. P440,000
b. P530,000 d. P490,000
5. How much is the cash shortage as of December 31, 2006?
a. P32,000 c. P8,000
b. P90,000 d. P0
Suggested Solution:
Pasay Company
Proof of Cash
Beginning Ending
Balance per bank statement P480,000 P240,000 P300,000a

P420,000
November 30 100,000c (100,000) December 31 140,000d
140,000
Outstanding checks:
November 30 (150,000) (150,000)
December 31 120,000 (120,000)
Erroneous bank
debit-December (90,000) 90,000

Deposits with loan payment
(P725,000 x 80%) 580,000 580,000
Adjusted bank balance P430,000 P860,000 P760,000
P530,000
Balance per books P504,000 P735,000 P700,000b P539,000

NSF checks:
Returned in Nov.,
recorded in Dec. (10,000) 10,000

Returned and
recorded in Dec. 25,000 25,000

Returned in Dec.,
recorded in Jan. 29,000 (29,000)

Customer's note collected by bank -
December 106,000 106,000
Anticipated loan
proceeds from AR hypothecation:
Nov. 30 sales
(P180,000 x 80%) (144,000) 144,000

Dec. 31 sales
(160,000)
(P200,000 x 80%) (160,000)
Anticipated loan payment from undeposited

collections:
Nov. 30
(P100,000 x 80%) 80,000 80,000
Dec. 31
(P140,000 x 80%) (112,000) 112,00
0
Interest charge for
bank loan in Dec. 38,000
(38,000)
P430,000 P860,000 P760,000 P530,00
0
a
(P480,000 + P240,000 – P420,000) b (P504,000 + 735,000 –
P539,000) c [P244,000 – (P180,000 x 80%)]
d[
P300,000 – (P200,000 x 80%)]
Answers: 1) C; 2) A; 3) D; 4) B; 5) D
PROBLEM NO. 12
In connection with your audit, Quezon Metals Company presented to you the following information:
Quezon Metals Company

Comparative Balance Sheets
December 31, 2006 and 2005
2006 2005
Assets
Current Assets:
Cash P 476,000 P
392,000
Available for sale securities 236,000 -
Accounts Receivable 1,248,000 1,016,00
0
Inventory 1,112,000 956,000
Prepaid expenses 140,000
84,000
Total Current Assets 3,212,000
2,448,000
Property, plant, and equipment 2,144,000 1,636,00
0
Accumulated depreciation (304,000)
(212,000)
1,840,000
1,424,000
Total Assets P5,052,000 P3,872,00
0
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable P 848,000 P
792,000
Accrued expenses 392,000 304,000
Dividends Payable 160,000 -
Total Current Liabilities 1,400,000 1,096,00
0
Notes Payable - due 2008 500,000 -
Total Liabilities 1,900,000
1,096,000
Stockholders' Equity:
Common Stock 2,400,000 2,200,00
0
Retained earnings 752,000
576,000
Total Stockholders' Equity 3,152,000
2,776,000
Total Liabilities and Stockholders' Equity P5,052,000 P3,872,00
0
Quezon Metals Company

Condensed Comparative Income Statements
For the Years Ended December 31, 2006 and 2005
2006 2005
Net sales P14,244,000 P13,016,00
0
Cost of Goods Sold
Gross Profit
Expenses 2,084,000
1,944,000
Net Income P 1,004,000 P
800,000
Additional information for Quezon:

(a) All accounts receivable and accounts payable relate to trade merchandise.
(b) The proceeds from the notes payable were used to finance plant expansion.
(c) Capital stock was sold to provide additional working capital.
QUESTIONS:
Based on the above and the result of your audit, compute the following for 2006:
1. Cash collected from accounts receivable, assuming all sales are on account.
P14,012,000
a. c. P14,476,000
b. P 796,000 d. P16,508,000
2. Cash payments made on accounts payable to suppliers, assuming that all purchases of inventory are on account.
a. P11,368,000 c. P10,944,000
b. P11,212,000 d. P11,256,000
3. Cash payments for dividends.
a. P 828,000 c. P 668,000
b. P1,020,000 d. P1,180,000
4. Cash receipts that were not provided by operations.
a. P192,000 c. P700,000
b. P500,000 d. P 0
5. Cash payments for assets that were not reflected in operations.
a. P1,412,000 c. P 508,000
b. P 744,000 d. P1,176,000
Suggested Solution:
Question No. 1
Accounts receivable, 1/1/06 P 1,016,000
Add sales for 2006 14,244,000
Total collectible accounts 15,260,000
Less accounts receivable, 12/31/06 1,248,000
Cash collected from accounts receivable P14,012,000
Question No. 2
Accounts payable, 1/1/06 P 792,000
Add purchases for 2006:
Cost of goods sold for 2006 P11,156,000
Add Inventory, 12/31/06 1,112,000
Total goods available for sale 12,268,000
Less Inventory, 1/1/06 956,000 11,312,000

Total accounts to be paid 12,104,000
Less accounts payable, 12/31/06 848,000
Cash payments made on AP P11,256,000
Question No. 3
Retained earnings, 1/1/06 P 576,000
Add net income for 2006 1,004,000
Total 1,580,000
Less retained earnings, 12/31/06 752,000
Total dividends declared 828,000
Less increase in dividends payable 160,000
Cash payments for dividends P 668,000
Question No. 4
Proceeds from notes payable P500,000
Proceeds from issuance of common stock
(P2,400,000 - P2,200,000) 200,000
Cash receipts not provided by operations
(cash provided from financing) P700,000
Question No. 5
Purchase of available for sale securities P236,000
Purchase of PPE (P2,144,000 - P1,636,000) 508,000
Cash payments for assets that were not reflected in operations P744,000
Answers: 1) A; 2) D; 3) C; 4) C; 5) B
PROBLEM NO. 13
The Valenzuela Corporation was organized on January 15, 2006 and started operation soon thereafter. The Company
cashier who acted also as the bookkeeper had kept the accounting records very haphazardly. The manager suspects him
of defalcation and engaged you to audit his account to find out the extent of the fraud, if there is any.
On November 15, when you started the examination of the accounts, you find the cash on hand to be P25,700. From
inquiry at the bank, it was ascertained that the balance of the Company’s bank deposit in current account on the same
date was P131,640. Verification revealed that the check issued for P9,260 is not yet paid by the bank. The corporation
sells at 40% above cost.
Your examination of the available records disclosed the following information:
Capital stock issued at par for cash P1,600,00

0
Real state purchased and paid in full 1,000,00
0
Mortgage liability secured by real state 400,000
Furniture and fixtures (gross) bought on which there is
still balance unpaid of P30,000 145,000
Outstanding notes due to bank 160,000
Total amount owed to creditors on open account 231,420
Total sales 1,615,04
0
Total amount still due from customers 426,900
Inventory of merchandise on November 15 at cost 469,600
Expenses paid excluding purchases 303,780
QUESTIONS:
Based on the above and the result of your audit, compute for the following as of November 15, 2006:
1. Collections from sales

a. P1,188,140 c. P1,615,040
b. P1,153,600 d. P2,041,940
2. Payments for purchases
a. P1,854,620 c. P1,207,204
b. P1,391,780 d. P 922,180
3. Total cash disbursements
a. P2,340,960 c. P2,810,560
b. P3,273,400 d. P2,625,984
4. Unadjusted cash balance
a. P 74,740 c. P1,007,180
b. P722,156 d. P 537,580
5. Cash shortage
a. P574,076 c. P859,100
b. P389,500 d. P 0
Suggested Solution:
Question No. 1
Sales P1,615,04
0
Less accounts receivable, 11/15
426,900
Collections from sales P1,188,14
Question No. 2 0
Cost of sales (P1,615,040/1.4) P1,153,60
0
Add Merchandise inventory, 11/15
469,600
Purchases 1,623,20
0
Less Accounts payable, 11/15
231,420
Payments for purchases P1,391,78
Question No. 3 0
Purchase of real estate P1,000,00
0
Payment for furniture and fixtures
(P145,000 - P30,000) 115,000
Expenses paid 303,780
Payments for purchases (see no. 2)
1,391,780
Total cash disbursements P2,810,56
Question No. 4 0
Proceeds from issuance of common stock P1,600,00
0
Proceeds from mortgage note payable 400,000
Proceeds from notes payable - bank 160,000
Collections from sales (see no. 1) 1,188,140
Total cash receipts 3,348,140
Less cash disbursements (see no. 3) 2,810,560
Unadjusted cash balance P 537,580
Question No. 5
Cash accountability P537,580
Less cash accounted (Adjusted cash
balance):
Unadjusted bank balance P131,640
Deposit in transit 25,700
Outstanding checks (9,260) 148,080
Cash shortage P389,500
Answers: 1) A; 2) B; 3) C; 4) D; 5) B
PROBLEM NO. 14
You were engaged to audit the accounts of Taguig Corporation for the year ended December 31, 2006. In your
examination, you determined that the Cash account represents both cash on hand and cash in bank. You further noted
that the company’s internal control over cash is very poor.
You started the audit on January 15, 2007. Based on your cash count on this date, cash on hand amounted to P19,200.
Examination of the cash book and other evidence of transactions disclosed the following:
a. January collections per duplicate receipts, P75,200.

b. Total duplicate deposit slips, all dated January, P44,000. This amount includes a deposit representing collections on
December 31.
c. Cash book balance at December 31, 2006 amounted to P186,000, representing both cash on hand and cash in bank.
d. Bank statement for December showed a balance of P170,400.
e. Outstanding checks at December 31:
November checks December checks
No. 280 P1,800 No. 331 P2,400
290 6,600 339 1,600
345 20,000
353 3,600 364 10,000
f. Undeposited collections at December 31, 2006 amounted to P20,000.

g. An amount of P4,400 representing proceeds of a clean draft on a customer was credited by bank, but is not yet
taken up in the company’s books.
h. Bank service charges for December, P400.
The company cashier presented to you the following reconciliation statement for December, 2006, which he has
prepared:
Balance per books, December 31, 2006 P180,60

0
Add outstanding checks:
No. 331 P2,400
339 1,600
345 2,000
353 3,600
364 1,000
10,600
Total 191,20
0
Bank service charge (400)
Undeposited collections
(20,400
)
Balance per bank, December 31, 2006 P170,40
0
QUESTIONS:

P152,800
a. c. P180,200
b. P144,400 d. P 0
2. How much is the cash shortage as of December 31, 2006?
a. P45,600 c. P37,200
b. P 4,400 d. P41,200
3. How much is the cash shortage for the period January 1 to 15, 2007?
a. P30,800 c. P31,200
b. P32,400 d. P32,000
4. Which of the following is not a method used by the cashier to cover-up the shortage as of December 31, 2006?
a. Understating outstanding checks by P27,000.
b. Not recording the bank collection of P4,400.
c. Understating the book balance by P5,400.
d. Overstatement of undeposited collections by P400.
Suggested Solution:
Questions No. 1 and 2
Bank Books
Unadjusted balances P170,400 P186,00
0
Add (deduct) adjustments:
Outstanding checks: (46,000)
Undeposited collections 20,000
Unrecorded bank collection 4,400
Bank service charge
(400)
Balances 144,400 190,00
0
Shortage
(45,600
)
Adjusted balances P144,400 P144,40
Question No. 3 0
Collections per records P75,20
0
Add undeposited collections, Dec. 31 20,000
Total cash that should be deposited in January 95,20
0
Less January deposits 44,000
Undeposited collections, Jan. 15 51,20
0
Less undeposited collections per cash count 19,200
Shortage, Jan. 1 to 15, 2007 P32,00
Question No. 4 0
Cover-up for the December 31, 2006 shortage:
Non-recording of bank collection P
4,400
Understatement of book balance
(P186,000 - P180,600) 5,400
Understatement of outstanding checks
(P46,000 - P10,600) 35,40
0
Overstatement of undeposited collections
(P20,400 - P20,000) 400
Total shortage, December 31, 2006 P45,60
0
PROBLEM 1-1
The cash account of the Mapagkumbaba Inc. as of December 31, 2017 consists of the following:
On deposit in current account with Real Bank P 900,000
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 Corporation

70,000
dated January 15, 2013
A check drawn by a supplier dated December 28, 2017 for

60,000
goods returned by the Corporation
A check dated May 31,2017 drawn by the Corporation against the

Piggy Bank 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 Piggy
Bank account 410,000
Petty Cash fund of which P5,000 is in currency; P3,600 in form of

employees’ I.O.U. s; and P1,400 is supported by approved petty cash
vouchers for expenses all dated
prior to closing of the books on December 31, 2017 10,000
Total P1,950,000
Less: Overdraft with Piggy Bank secured by a Chattel ( 300,000)
Balance per ledger P1,650,000
At what amount will the account “Cash” appear on the December 31, 2017 balance sheet?
a. P1,425,000
b. P1,495,000
c. P1,315,000
d. P1,725,000
Solution: Answer (a)

Current account with Real Bank P 900,000
Undeposited collection 350,000

Supplier's check for goods returned by the Corporation 60,000
Unexpended petty cash 5,000
Current account with Piggy Bank (P410,000 - P300,000) 110,000

P1,425,000
Total
Coins and currencies P5,000
Replenishment check 43,000 48,000
Total P4,248,000
PROBLEM 1-2
In the course of your audit of the Mabait Corporation, its controller is attempting to determine the amount of cash to
be reported on its December 31, 2017 balance sheet. The following information is provided:
a. Commercial savings account of P1,200,000 and a commercial checking account balance of P1,800,000 are held at PS
Bank.
b. Travel advances of P360,000 for executive travel for the first quarter of the next year (employee to reimburse
through salary deduction).
c. A separate cash fund in the amount of P3,000,000 is restricted for the retirement of a long term debt.
d. Petty cash fund of P10,000.
e. An I.O.U. from a company officer in the amount of P40,000.
f. A bank overdraft of P250,000 has occurred at one of the banks the company uses to deposit its time, the cash
receipts. At the present company has no deposits at this bank.
g. The company has two certificates of deposit, each totaling P1,000,000. These
certificates of deposit have maturity of 120 days.
h. Las Conde has received a check dated January 2, 2013 in the amount of P150,000.
i. Las Conde has agreed to maintain a cash balance of P200,000 at all times at PS Bank to ensure
future credit availability.
j. Currency and coin on hand amounted to P15,000.
Based on the above and the result of your audit, how much will be reported as cash and cash equivalent at December
31, 2017?
a. P2,075,000
b. P3,025,000
c. P2,825,000
d. P5,025,000
Solution: Answer (b)
Savings account at PS Bank P1,200,000
Checking account at PS Bank 1,800,000
Currency and coin 15,000
Total P3,025,000
PROBLEM 1-3
You noted the following composition of Maragondon Company’s “cash account” as of December 31, 2017 in connection
with your audit:
Demand deposit account P2,000,000
Time deposit – 30 days 1,000,000
NSF check of customer 40,000
Money market placement (due June 30, 2013) 1,500,000
IOU from employee 20,000
Customer’s check dated January 1, 2013 50,000
Customer’s check outstanding for 18 months 40,000
Total P7,760,000
Additional information follows:
a) Check of P200,000 in payment of accounts payable was recorded on December 31, 2017 but mailed to suppliers
on January 5, 2013.
b) Check of P100,000 dated January 15, 2013 in payment of accounts payable was recorded and mailed on
December 31, 2017.
c) The company uses the calendar year. The cash receipts journal was held open until January 15, 2013, during
which time P400,000 was collected and recorded on December 31, 2017.
The cash and cash equivalents to be shown on the December 31, 2017 balance sheet
is
a. P3,310,000
b. 1,910,000
c. P2,910,000
d. P4,410,000
Solution: Answer (c)
Demand deposit account as adjusted:
Demand deposit account per books P2,000,000
Undelivered check 200,000
Postdated check issued 100,000
Window dressing of collection (400,000)
Total P1,900,000
Time deposit - 30 days 1,000,000

Cash and cash equivalents P2,910,000
1. Emily Company provided the bank statement for the month of December which included the following information:
Ending balance, December 31 2,800,000
Bank service charge for December 12,000
Interest paid by bank to Emily Company for December 10,000
In comparing the bank statement to its own cash records, the entity found the following:
Deposits made but not yet recorded by the bank 350,000
Checks written and mailed but not yet recorded by the bank 650,000
In addition, the entity discovered that it had drawn and erroneously recorded a check for P46,000 that should have
been recorded for P64,000. What is the cash balance per ledger on December 31?
a. 2,500,000
b. 2,800,000
c. 2,520,000
d. 2,540,000
Solution: Answer (a)

Balance per bank P2,800,000
Outstanding checks ( 650,000)
Adjusted bank balance P2,500,000
Balance per ledger (SQUEEZE) 2,520,000
Unrecorded customer check 10,000

Bank service charge ( 12,000)
NSF check ( 18,000)
Adjusted book balance P2,500,000
2. The bank statement of Maloko Corporation for April, 2013 showed an ending balance of P169,263. Deposit in
transit on April 30 was P18,200. Outstanding checks as of April 30 were P59,435. During the month of April, the bank
charged back NSF checks in the amount of P3,435 of which P1,835 had been redeposited by April 30. The company
made no entry for the return and for the redeposit of the checks.
On April 23, the bank charged Maloko Corporation’s account for a P2,200 item which should have been charged against
the account of Maloka Corporation; the error was not detected by the bank. During April, the proceeds from notes
collected by the bank for Maloko Corporation were P7,548 and bank charges for this service were P180.
What is the unadjusted book balance for “Cash” of Maloko Corporation at April 30, 2013?
a. 132,008
b. 126,295
c. 124,460
d. 124,310
Balance per bank statement P169,263
Deposit in transit, April 30 18,200
Outstanding checks, April 30 ( 59,435)
Erroneous charge by bank 2,200
NSF checks not yet redeposited (3,435 – 1,835) 1,600
Proceeds of note collected by bank ( 7,548)
Bank service charge 180
Unadjusted book balance for cash, April 30, 2013 P 124,460
3. On June 30, 2013, the bank statement of Bongangbongga Company had an ending balance of P3,735,000. The
following data were assembled on the course of reconciling the bank balance:
• The bank erroneously credited Bongangbongga Company for P21,000 on June 22

• During the month, the bank charged back NSF checks amounting to P23,000 of which P8,000 had been
redeposited by June 25
• Collection for June 30 totaling P103,000 was deposited the following month
• Checks outstanding on June 30 amounted to P302,000
• Note collected by the bank for Bongangbongga Company was P80,000 and the corresponding bank charge
was P5,000.
What is the unadjusted cash in bank per ledger on June 30, 2013?
a. 3,515,000
b. 3,557,000
c. 3,455,000
d. 3,497,000
Balance per bank P3,735,000

Erroneous bank credit ( 21,000) Deposit in transit 103,000
Outstanding checks ( 302,000)
Adjusted bank balance P3, 515,000
Balance per book (SQUEEZE) P3,455,000

NSF checks (23,000 – 8,000) ( 15,000)
Note collected by bank 80,000
Service charge ( 5,000)
Adjusted book balance P3,515,000
PROBLEM NO. 1- Composition of Cash and Cash Equivalents

The following data pertain to PRTC Corporation at December 31, 2015:
Current account at Metrobank P 1,800,000
Current account at Allied Bank (100,000)
Foreign bank account (in equivalent pesos) 800,000
Postage stamps 1,000
Employee's postdated check 4,000
IOUs from employees 10,000
Credit memo from a vendor for a purchase return 20,000
Traveler's check 50,000
Money order 30,000
Petty cash fund (P4,000 in currency and expense receipts for P6,000) 10,000
DAIF check of customer 15,000
Customer's check dated 1/1/16 80,000 Time deposit - 30 days 200,000
Money market placement (due 6/30/16) 500,000
Treasury bills, due 3/31/16 (purchased 12/31/15) 200,000
REQUIRED: Determine the cash and cash equivalents to be reported on the entity's December 31, 2015
statement of financial position.
SOLUTION:
Items included: Current account at Metrobank 1,800,000
Foreign bank account (in equivalent pesos) 800,000
Traveler’s check 50,000
Money order 30,000
Petty cash fund - currency 4,000
Time deposit – 30 days 200,000
3,584,000
Items not included:
Current account at Allied Bank (100,000) Short term borrowing
Savings deposit in a closed bank 150,000 Other noncurrent assets
Postage stamps 1,000 Unused supplies (Other CA)
Employee’s post dated check 4,000 Trade and other receivables
IOU from employees 10,000 Trade and other receivables
Credit memo from a vendor for a purchase return 20,000 Deduction from accounts payable
Petty cash fund - expense receipts 6,000 Expenses
Pension fund 2,000,000 Noncurrent asset
DAIF check of customer 15,000 Trade and other receivables
Customer’s check dated 1/1/13 80,000 Trade and other receivables
Money market placement (due 6/30/13) 500,000 Short term investment
Treasury bills, due 1/31/13 (purchased 2/1/12) 300,000 Short term investment

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CASH AND CASH EQUIVALENTS

TRUE OF FALSE- Conceptual

g 1. A fund of cash maintained within the company for small cash

MULTIPLE CHOICE- Conceptual

The following information applies to the questions below:

Rights Classification Realizable value

COMPUTATIONAL- MULTIPLE CHOICE

A check drawn by the Vice-President of the Corporation

Unexpended petty cash 5,000

Additional information follows:

Cash on hand includes the following items:

Employees' vales (IOU) (1,600)

Currency in envelope marked "collections for charity" (1,200)

Unreplenished petty cash vouchers (1,300)

1. Adjusted cash in bank balance

Balance per books, 12/31/06 P687,570

Net adjustment to cash – credit P 98,370

Balance per bank, Nov. 30, 2006 P150,00

Total deposits P110,000

Add: Total deposits per bank statement 110,000

Less: Total charges per bank statement 96,000

Balance per bank, Dec. 31, 2006 P164,000

Add deposits in transit, Dec. 31 38,000

December receipts per books P124,000

Less: Outstanding checks, Nov. 30 P28,000

Correction of erroneous bank credit 10,000

December NSF check 8,000

December bank service charge 400 46,400

Dec. disb. cleared through the bank 49,600

Add outstanding checks, Dec. 31 30,000

December disbursements per books P79,600

Add December receipts per books 124,000

Less December disbursements per books 79,600

Balance per books, Dec. 31, 2006 P180,400

Collection by bank of company's notes receivable 71,815 80,900

Disbursements in July per bank statement P218,373

Cash receipts in July per Muntinlupa's books 236,452

1. How much is the adjusted cash balance as of June 30?

Balance per bank

Balance per books P 15,822 P236,452 P212,529b P

Bank balance – November 30, 2006 P90,800

Undeposited collections 5,000

Bank service charges 100 Bank collection of customer’s note (8,000)

7915 2,000 (10,000)

Book balance – November 30, 2006 P77,900

a. Company recordings for December:

Total checks drawn 98,000

b. Bank statement totals for December :

1. Unadjusted cash balance per books as of December 31, 2006

Add unadjusted book receipts: Collection from customers P165,000

Note collected by bank in Nov. presumed recorded in Dec. 8,000 173,000

Less unadjusted book disbursements:

Checks drawn 98,000

Unadjusted book balance, 12/31/06 P152,800

Balance per bank statement P90,800 P169,000 P123,800 P136,000a

Balance per books P77,900 P173,000 P98,100 P152,800

Check no. 7159

1. How much is the undeposited collections as of December 31, 2006?