AP - CASH

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AP – CASH & CASH EQUIVALENTS Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. Puma Company has a following cash balance at the end of the year Cash in bank Cash on hand Petty cash fund Sinking Fund Money Order Manager’s Check Certificate of deposit maturity of 3mos. Treasury bill with a maturity of 6mos Post dated Check Savings Deposit Voucher paid out of collection – not recorded IOUs signed by employees

1,000,000 1,500,000 500,000 2,000,000 1,000,000 900,000 10,000,000 10,000,000 1,000,000 1,000,000 2,000,000 5,000,000

The sinking fund is set aside for the payment of bonds due next year. What amount should be reported as Cash on December 31, 2018? a. 10,000,000 b. 7,900,000 c. 9,500,000 d. 9,000,000 2. The controller of the Red Wing Corporation is in the process of preparing the company’s 2018 financial statements. She’s trying to determine the correct balance of cash and cash equivalents to be reported as current asset in the statement of financial position. The following items are being considered: Balances in the company’s accounts at First National Bank; checking P13,500, savings P22,100 Undeposited customer checks of P5,200 Currency and coins on hand P580 Savings account at East Bay Bank with a balance of P400,000. This account is being used to accumulate cash for future plant expansion (2020) P20,000 in checking account at East Bay Bank. The balance in the account represent a 20% compensating balance for a P100,000 loan with the bank. Red Wing may not withdraw the funds until the loan is due in (2020) Treasury bills; 2-month maturity bills totaling P15,000(purchased 2-months before maturity), and 7-month bills totaling P20,000. Q1. What is the correct balance of cash? a. P41,380 b. P36,180 c. P441,380 d. P436,180 Q2. What is the correct amount for cash equivalents? a. P35,000 b. P15,000 c. P20,000 d. P0 Q3. What is the total amount of cash and cash equivalents to be reported in the current asset section of the 2018 statement of financial position? a. P56,380 b. P76,380 c. P476,380 d. P456,380

2 Q4. What would be the classification for the P400,000 savings account at East Bay Bank? a. Current Asset, as cash b. Noncurrent Asset, as long-term investment c. Current Asset, as temporary investments d. None of the choices given Q5. What is the classification for the P20,000 7-month treasury bills? a. Current Asset, as cash b. Noncurrent Asset, as long-term investment c. Current Asset, as temporary investments d. None of the choices given 3. You were able to gather the following from the December 31, 2016 trial balance of JP Corporation in connection with your audit of the company: Cash on hand Petty cash fund BPI current account Security Bank current account No. 01 Security Bank current account No. 02 PNB savings account PNB time deposit

P 500,000 10,000 1,000,000 1,080,000 (80,000) 1,200,000 500,000

Cash on hand includes the following items: a. Customer’s check for P40,000 returned by bank on December 26, 2016 due to insufficient fund but subsequently re-deposited and cleared by the bank on January 8, 2017. b. Customer’s check for P20,000 dated January 2, 2017, received on December 29, 2016. c. Postal money orders received from customers, P30,000. The petty cash fund consisted of the following items as of December 31, 2016. Currency and coins Employees’ vales Currency in an envelope marked “collections for charity” with names attached Unreplenished petty cash vouchers Check drawn by JP Corporation, payable to the petty cashier

P 2,000 1,600 1,200 1,300 4,000 P10,100

Included among the checks drawn by JP Corporation against the BPI current account and recorded in December 2016 are the following: a. Check written and dated December 29, 2016 and delivered to payee on January 2, 2017, P80,000. b. Check written on December 27, 2016, dated January 2, 2017, delivered to payee on December 29, 2016, 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, 2016. 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 after the end of the reporting period. Based on the above and the result of your audit, determine the adjusted balances of following: 1. Cash on hand a. P410,000 b. P530,000

c. P470,000 d. P440,000

3 2. Petty cash fund a. P6,000 b. P7,200

c. P2,000 d. P4,900

3. BPI current account a. P1,000,000 b. P1,120,000

c. P1,080,000 d. P1,040,000

4. Cash and cash equivalents a. P2,917,200 b. P3,074,900

c. P3,052,000 d. P3,066,000

4. You are making an audit of the Angel Company for the year ended December 31, 2017. The balance of the petty cash account on December 31, 2017 was P15,000. Your count of the imprest cash fund, made at 9:00 a.m. on January 3, 2018, in the presence of Ms G. Gonzaga revealed: Bills and Coins: Denomination 1,000 500 100 50 20 10 5 1 0.50 0.25 Checks: Date 12-28-2017 12-29-2017 12-31-2017

Quantity 2 4 14 16 10 19 17 25 21 28

Maker Urquiola, employee Sta. Maria, employee L. Chua, customer

01-02-2018 A. Bobadilla, customer 01-12-2018 C. German, employee (check received 12-28-2017)

Bank PNB Security Bank Asia Trust

Amount 3,0001,5002,500-

FEBTC Union Bank

3,2001,500-

(These checks were all considered good when deposited after dates shown on the checks. The first four checks were actually deposited January 3; the German check was deposited January 13; all five checks proved to be good.) Vouchers: Date Voucher No. 12-13-2017 151 12-28-2017 183 12-29-2017 184 12-31-2017 189 01-02-2018 001 IOUs: 12-21-2017 S. Dechavez, employee

Particulars Freight out Supplies Freight In Freight on cabinet Freight in

Sales Invoices (for cash sales; collections handled by Ms. G. Gonzaga) Inv. # 118 December 30 # 129 December 31 # 133 January 2

Amount P 500300394.20 741.10 244.70 300-

1,000.40 2,5003,200-

(As a general rule, the petty cashier endeavoured to turn over the proceeds of cash sales to the general cashier every Friday. Proceeds on these sales were recorded and deposited by the general cashier.) Unused office supplies

40-

4 1. What is the cash shortage? a. 750.40

b. 802.90

c. 910.40

d. 850.90

2. Adjusting entries for the petty cash fund includes a credit to: a. Cash Shortage c. Petty Cash Fund

802.90

b. Petty Cash Fund

4,538.20

4,738.20

d. Cash Shortage

850.90

5. You are making an audit of the Kings Company for the year ended December 31, 2017. The balance of the petty cash fund account on December 31, 2017 was P10,000.00. Your count of the imprest cash fund, made at 10:00 am on January 5, 2018 in the presence of Ms. Leviste, the petty cash custodian disclosed the following fund composition: Bills and Coins: Denomination P 500.00 100.00 50.00 10.00 5.00 1.00

Quantity 1 8 3 4 2 3

Checks: Date 12-29-17 12-30-17 01-02-18 01-15-18

Maker Amount M. Roxas, employee 2,000.00 J. Madrigal Company 1,500.00 J. Estrada Junk Shop 2,450.00 F. Chavez, employee 1,800.00 (check received 12-27-17) (These checks were considered good when deposited after dates shown on the checks.) Vouchers: Date 12-16-17 12-26-17 12-29-17 01-02-18

Voucher # 145 164 165 166

Particulars

Amount

Freight on merchandise bought Postage Transportation of messenger Cost of labour cost for repairs done on office cabinets. Repair was completed on Dec. 29, 2017

?500.00 200.00 50.00 1,500.00

IOU: Ed Gil, employee Postage Stamps:

1,200.00

10 pieces of 12.00 stamps purchased on voucher # 164

120.00

Duplicate copies of provisional receipts: Date 12-3017 01-0218

PR # 2204 2205

Issued to J. Madrigal Company J. Estrada Junk Shop

Particulars Refund for merchandise returned Sale of junk and scrap items

Amount 1,500.00 2,450.00

You verified that Ms. Leviste handles miscellaneous receipts and issues provisional receipts. These miscellaneous collections are periodically turned over to the general cashier who issues official receipts. 1. How much is the cash shortage or overage? a. 1,247.00 c. 1,472.00

b. 2,174.00 d. 0

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2. What is the correct petty cash fund balance as of December 31? a. 10,000.00 c. 5,003.00

b. 4,997.00 d. 20,000.00

6. On April 1, 2018, Mark Company established an imprest petty cash fund for P10,000 by writing a check drawn against its checking account. On April 30, 2018, the fund contained the following: Currency and coins 3,000 Receipts for office supplies 4,000 Receipts for postage still unused 3,000 Receipts for transportation 800 On April 30, 2018, the entity wrote a check to replenish the fund. What is the amount of replenishment under the imprest fund system? a. 8,200 b. 6,600 c. 7,000 d. 3,000 7. Mark Company provided the following data for the purpose of reconciling the cash balance per book with the balance per bank statement on December 31, 2018: Balance per bank statement 2,000,000 Balance per book 850,000 Outstanding checks (including certified check of P100,000) 500,000 Deposit in transit 200,000 December NSF checks (of which P50,000 had been re-deposited and cleared by December 27) 150,000 Erroneous credit to Mark’s account, representing proceeds of loan granted to another company 300,000 Proceeds of note collected by bank for Mark, net of service charge of P20,000 750,000 The cash in bank balance to be shown on Mark’s December 31, 2018 balance sheet is a. 1,500,000 c. 1,400,000 b. 1,800,000 d. 1,450,000 8. The Jostine Company had a weak internal control structure over its cash transactions. Facts about its cash position at November 30, 2018 were as follows: The cash books showed a balance of P 1,890,162, which included undeposited receipts. A credit of P 10,000 on the bank’s records did not appear on the books of the company. The balance per bank statement was P 1,555,000. Outstanding checks were no. 62 for P 11,625, no. 183 for P 15,000, no. 284 for P 25,325, no. 8621 for P 19,071, no. 8622 for P 20,680, and no. 8632 for P 14,528. The cashier stole all undeposited receipts in excess of P 379,441 and prepared the following reconciliation: Balance per books, November 30, 2018 Add: outstanding checks 8621 8622 8632 Less: undeposited receipts Balance per bank, November 30, 2018 Deduct unrecorded credit True cash, November 30, 2018 1. How much did the cashier stole? a. P71,000 b. P71,950

c. P81,110 d. P 94,650

P1,890,162 P 19,071 20,680 14,528

44,279 P 1,934,441 379,441 P 1,555,000 (10,000) P 1,545,000

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2.. What is the correct amount of cash to be shown on the statement of financial position on November 30, 2018? a. P 1,882,612 c. P 1,862,212 b. P 1,828,212 d. P 1,682,612 9. The Sunshine Corporation engaged your services to audit its accounts. In your examination of cash, you find that the Cash account represents both cash on hand and cash in bank. You further noted that there is very poor internal control over cash. Your audit covers the period ended December 31, 2017. You made a cash count on January 15, 2018, and cash on hand on this date was determined to be P52,000. Examination of the cashbooks and other evidences of transaction disclosed the following: 1. January 1 through 15, 2018 collections per duplicate receipts, P199,000. 2. Total of duplicate deposit slips, all dated January 2 through 15, P110,000, includes a deposit representing collections of December 31. 3. Cash book balance on December 31, 2017 is P465,000, representing both cash on hand and cash in bank. 4. Bank statement for December shows a balance of P424,000. 5. Outstanding checks at December 31: November checks:

Number 183

December check:

P

4,500

198

12,500

Number 252

6,000

254

4,000

280

52,000

301

9,000

319

25,000

6. Undeposited collections at December 31, P48,000. 7. An amount of P19,000 representing proceeds of a customer’s note was credited by bank, but is not yet taken up in the company’s books. 8. Bank service charge for December, P1,500. The company cashier presented to you the following reconciliation statement at December 2017, which he prepared: Balance per books, December 31, 2017 Add: outstanding checks Number 252

456,000 P

6,000

254

4,000

280

25,000

301

900

319

15,000

Total

50,900 P

506,900

Bank charges

(1,500)

Undeposited collections

(51,000)

Balance per bank

P

454,400

7 1. How much is the amount of Cash shortage as of December 31, 2017? a) 121,500

b) 123,500

c) 132,500

d) none of the above

2. How much is the additional shortage in January 2018? a) 102,400

b) 85,000

c) 58,000

d) none of the above

3. Which is to be included in the audit adjusting entries at December 31, 2017? a) Dr: Cash 1,600

b) Cr: Cash 106,000 c) Cr: Loss 123,500

d) none of the above

10. Teresa Company had the following bank reconciliation on June 30, 2018: Balance per bank statement, June 30 Add: Deposit in transit Total Less: Outstanding checks Balance per book, June 30 The bank statement for the month of July showed the following: Deposits (including P200,000 note collected for Teresa) Disbursement (including P140,000 NSF check and P10,000 service charge)

3,000,000 400,000 3,400,000 900,000 2,500,000 P9,000,00 7,000,000

All reconciling items on June 30 cleared through the bank in July. The outstanding checks totaled P600,000 and the deposit in transit amounted to P1,000,000 on July 31. Q1. What is the cash balance per book on July 31, 2018? a. 5,400,000 b. 5,350,000 c. 5,550,000 d. 4,500,000 Q2. What is the amount of cash receipts per book in July 2018? a. 9,400,000 b. 9,600,000 c. 8,600,000 d. 9,800,000 Q3. What is the amount of cash disbursements per book in July 2018? a. 6,550,000 b. 6,700,000 c. 7,300,000 d. 6,850,000 11. Your client, Angel Company, presented you with the following data: Bank balances November 30 December 31 Bank receipts in December Book balances November 30 December 31 Book receipts in December

P 2,500,000 3,100,000 2,300,000

P 2,390,000 3,047,000 2,206,000

Deposits in transit November 30 December 31

58,000 47,000

Outstanding checks November 30

97,000

8 December 31

46,000

NSF checks returned by bank (recorded by client in the month following the return) November December

15,000 25,000

Bank service charges (recorded by client in the month following the month the charge) November 10,000 December 18,000 Note collected by bank (recorded by the client in the following month) November 76,000 December 84,000 Erroneous bank charges (corrected by the bank in the following month) November 30 25,000 December 31 37,000 Erroneous bank credits (corrected by the bank in the following month) November 45,000 December 50,000 1) How much is the audit adjusted balance of receipts as of December 31? a) 2,241,000 b) 2,214,000 c) 2,421,000 d) 2,124,000 e) none of the above 2) How much is the audit adjusted balance of disbursements as of December 31? a) 1,576,000 b) 1,657,000 c) 1,765,000 d) 1,567,000 e) none of the above 3) Which is to be included in the audit adjusting entries for December 31? a) Cr: Cash in Bank 19,000 b) Dr: Cash in Bank 83,000 c) Dr: Accounts Receivable 19,000 d) none of the above 12. You are auditing the cash in bank account of Rose V Manufacturing Company as of December 31, 2018. Your examination revealed the following: From the bank statement: Balance, December 1, 2018

P

876,750

Deposits (20)

9,153,760

Check (64) plus debit memos

(8,524,300)

Service charges for new checks

(

Balance, December 31, 2018

P

2,250)

1,503,960

From the company’s records: Nov. 1 Nov. 30 CR Dec. 31 CR CD – Cash disbursements CR – Cash receipts

CASH 652,070 Nov. 30 CD 6,654,410 6,824,290 Dec. 1 – Bank reconciliation 38,400 9,198,720 Dec. 31 CD 8,574,610

Your review of last month’s bank reconciliation and the current bank statement reveals the following. 1. Outstanding checks: November 30, 2018 December 31, 2018 2. Deposit in transit:

November 30, 2018

P254,720 335,610 164,220

9 December 31, 2018

209,180

3. Check no 359 for Office Repairs was written for P6,950 but recorded in the cash disbursements journal as P9,650. The bank deducted the check as P6,950. The error happened in November and is not yet recorded as of December 31. 4. A check written on the account of the Pamplona Company for P5,830 was deducted by the bank from the Rose V’s account. 5. Included with the bank statement was debit memorandum dated December 31 for P24,750 for interest on a note taken out by the Rose V Manufacturing Company on November 30. 6. The service charge for the new checks has not been recorded. 7. The November 30 bank reconciliation showed as reconciling items a service charge of P3,500 and a customer’s DAIF check for P34,900. 1. How much is the audit adjusted balance of Receipts as of December 31? a) 9,198,720 b) 9,918,270 c) 9,891,720 d) 9,189,270 e) none of the above 2. How much is the audit adjusted balance of Disbursements as of December 31? a) 8,601,610 b) 8,610,601 c) 8,601,601 d) 8,610,610 e) none of the above 3. Which is to be included in the audit adjusting entries? a) Dr: Cash in Bank 2,700 b) Cr: Cash in bank 2,200 d) None of the above

c) Dr: Interest expense 20,000

13. Your audit senior instructed you to prepare a four column proof of cash receipts and disbursements for the month of December, 2016. The bank reconciliation prepared by Joshtine Company at November 30 is reproduced below: Unadjusted bank balance Add: deposit in transit Total Less outstanding checks: No. 276 P2,400 282 7,200 284 4,800 285 1,600 Adjusted balance

P96,800 18,000 114,800

16,000 P98,800

Unadjusted book balance Add: CM - Note collected Total Less: DM bank charges

Adjusted balance

P58,640 40,320 98,960 160

. P98,800

The December bank statement, which has a beginning balance of P96,800, is reproduced below: May Bank Account Name: Joshtine Company Date Debits December 01 December 02 P7,200 December 04 24,000 December 06 December 08 December 10 40,000 DM97 December 11 December 16 20,000 December 18 December 21 December 28 36,000 December 31 4,000 DM98

Credits P18,000 40,000 48,000 400,000 CM83 56,000 64,000 72,400 80,000 64,000 CM84

10 Totals P131,200 DM97 – Customer’s DAIF check DM98 – Service Charges

P842,400 CM83 – Note collected by the bank CM84 – Account collected by the bank

The company’s cash receipts and cash disbursements journals for the month of December 2016 are provided below: Cash Disbursements Journal Cash Receipts Journal Date OR No. Amount Date Check No. Amount Dec. 01 415 P40,000 Dec. 01 286 P16,000 05 416 48,000 03 287 24,000 10 417 56,000 10 288 32,000 17 418 64,000 14 289 20,000 20 419 72,000 20 290 28,000 27 420 80,000 23 291 36,000 31 421 88,800 26 292 40,000 28 293 44,000 . 31 294 48,000 Total P440,800 Total P304,000 The company’s Cash in Bank ledger appears below:

12/01/2016 12/2016/2016 12/31/2016

Balance GJ GJ (CM83) CRJ

Cash in Bank P58,640 12/31/2016 40,320 400,000

CDJ

P304,000

440,800

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 outstanding checks as of December 31, 2016? a. P208,000 c. P216,800 b. P232,800 d. P224,000 2. How much is the adjusted book receipts for December, 2016? a. P913,200 c. P904,800 b. P985,200 d. P771,600 3. How much is the adjusted book disbursements for December, 2016? a. P347,840 c. P348,000 b P332,000 d. P339,200 4. How much is the adjusted cash balance as of December 31, 2016 a. P664,000 c. P688,800 b. P680,000 d. P672,800 5. How much is the cash shortage as of December 31, 2016? a. P24,240 c. P23,840 b. P15,840 d. P 0 14. The Jerome Corporation was organized on January 15, 2018 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.

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Your examination of the available records disclosed the following information: Share capital issued at par for cash Real state purchased and paid in full Mortgage liability secured by real state Furniture and fixtures (gross) bought on which there is still balance unpaid of P30,000 Outstanding notes due to bank Total amount owed to creditors on open account Total sales Total amount still due from customers Inventory of merchandise on November 15 at cost Expenses paid excluding purchases

P1,600,000 1,000,000 400,000 145,000 160,000 231,420 1,615,040 426,900 469,600 303,780

Based on the above and the result of your audit, compute for the following as of November 15, 2018: 1. Collections from sales a. P1,188,140 b. P1,153,600

c. P1,615,040 d. P2,041,940

2. Payments for purchases a. P1,854,620 b. P1,391,780

c. P1,207,204 d. P 922,180

3. Total cash disbursements a. P2,340,960 b. P3,273,400

c. P2,810,560 d. P2,625,984

4. Unadjusted cash balance a. P 74,740 b. P722,156

c. P1,007,180 d. P 537,580

5. Cash shortage a. P574,076 b. P389,500

c. P859,100 d. P 0

15. The following information is shown in the accounting records of a company: Balances as of January 1, 2018 Cash Merchandise inventory Accounts Receivable Accounts payable Balances as of December 31, 2018 Merchandise Inventory Accounts receivable Accounts payable

P93,000 129,000 100,500 79,500 P117,000 136,500 72,000

Total sales and cost of goods sold for 2018 were P1,197,000 and P874,500, respectively. All sales and all merchandise purchases were made on credit. Various operating expenses of P160,500 were paid in cash. Assume that there were no other pertinent transactions. The cash balance on December 31, 2018 would be a. 162,500 b. 223,500 c. 384,000 d. 457,500