AP Computation - Cash and Cash Equivalents

Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 1 - Rev Justice Corporation Requirement No. 1 Cash on hand, per trial balance NSF check Post dated check received Cash on hand, as adjusted

372,000 (60,000) (30,000) 282,000

Requirement No. 2 Petty cash fund per total Employees' vales Currency in envelope marked "collections for charity" Unreplenished petty cash vouchers Petty cash fund, as adjusted

10,300 (1,600) (1,200) (800) 6,700

Requirement No. 3 BPI current account, per trial balance Unreleased check Post dated check delivered BPI current account, as adjusted Requirement No. 4 Cash on hand (see no. 1) Petty cash fund (see no. 2) BPI current account (see no. 3) Security Bank current account no. 1 Security Bank current account no. 2 PNB time deposit (assumed can be preterminated) Cash and cash equivalents, as adjusted

950,000 50,000 86,000 1,086,000

282,000 6,700 1,086,000 1,280,000 (40,000)

1,240,000 300,000 2,914,700

Note: The P500,000 PNB savings account will be presented separately from cash and cash equivalents since it has been earmarked for the acquisition of a noncurrent asset.

Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 2 BoomPanes COMPANY Bank Reconciliation December 31, 2014 BANK 106,000

Unadjusted balances, December 31 Add (deduct): a) Customer's uncollectible check (NSF) b) Dishonored note receivable (including P2,000 protest fee) c) Book error in recording collection (P15,400 - P14,500) d) Book errors in recording disbursements Check no. 142 (P12,425 - P12,245) - under Check no. 156 (P3,290 - P32,900) - over e) December bank service charges f) Note collected by bank (including interest income of P1,000 and net of service charge of P500) g) Deposits in transit 24,000 h) Outstanding checks (35,000) I) Bank error in recording deposit (20,000) j) Petty cash fund k) Stolen cash sales to be recovered from insurance co. l) Double counted deposit - NSF Adjusted balances, December 31

75,000

Adjusting Journal Entries 1) Accounts receivable Cash in bank

30,000

2) Accounts receivable Cash in bank

62,000

Notes receivable - discounted Notes receivable 3) Cash in bank Accounts receivable 4) Accounts payable Cash in bank 5) Cash in bank Accounts payable 6) Bank service charge Cash in bank

30,000 62,000 60,000 60,000 900 900 180 180 29,610 29,610 1,830 1,830

7) Cash in bank Bank service charge Notes receivable Interest income

25,500 500

8) Petty cash fund Cash in bank

10,000

9) Claims from insurance co. Cash in bank

60,000

10) Accounts receivable Cash in bank

25,000 1,000 10,000 60,000 20,000 20,000

BOOKS 203,000 (30,000) AJE No. 1 (62,000) AJE No. 2 900 AJE No. 3 (180) AJE No. 4 29,610 AJE No. 5 (1,830) AJE No. 6 25,500

AJE No. 7

(10,000) AJE No. 8 (60,000) AJE No. 9 (20,000) AJE No. 10 75,000

Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 3 Ngan Company Proof of Cash For the month of December, 2014 Beginning

Receipts

Unadjusted bank balances Undeposited collections November December Outstanding checks November December Erroneous bank debits November December Erroneous bank credits November December NSF check redeposited

230,000

420,000

200,000

(200,000) 120,000

Adjusted bank balances

(80,000)

10,000

Disb 500,000

Ending 150,000

120,000 (80,000) 60,000

(60,000)

(20,000)

20,000

(10,000)

(40,000)

(40,000) (30,000) (10,000)

(10,000)

320,000

290,000

410,000

200,000

Unadjusted book balances Customers' note collected by bank November December Bank service charges November December NSF checks November December

227,000

270,000

407,000

90,000

100,000

(100,000) 120,000

Adjusted book balances

320,000

(2,000)

(5,000)

-

290,000 -

(30,000)

120,000 (2,000) 3,000

(3,000) AJE No. 2

(5,000) 7,000

(7,000) AJE No. 3

410,000 -

200,000 -

Adjusting journal entries: 1) Cash in bank Note receivable

AJE No. 1

120,000 120,000

2) Bank service charge Cash in bank

3,000

3) Accounts receivable Cash in bank

7,000

3,000

7,000

Chapter 1 - Audit of Cash and Cash Equivalents

AJE No. 1

AJE No. 2

AJE No. 3

Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 4 Harthart Company Proof of Cash For the month of September, 2014 Beginning

Receipts

Disb

Unadjusted bank balances Deposits in transit August 31 September 30 Outstanding checks August 31 September 30 Certified check Bank error - Check of Yin Company Cash receipts used for payment

14,010

281,070

275,450

Adjusted bank balances

12,490

282,190

273,100

21,580

Unadjusted book balances Bank collections not in books August 31 September 30 Bank service charges not in books August 31 September 30 NSF checks Returned in Sept., not recorded Returned in Aug., recorded in Sept. Returned and recorded in Sept. Book errors Customer check (P465-P165) Disb check (P3,250-P325)

13,290

279,540

274,635

18,195

Adjusted book balances

12,490

2,740

(2,740) 3,110

(4,260)

750

1,200

(1,050)

1,050 900

(4,260) 3,870 (700) (2,010) 750

-

(640) AJE No. 2

800

(800) AJE No. 3

900

273,100 -

300 2,925 21,580 -

Adjusting journal entries: 1) Cash in bank Accounts/Notes receivable

1,600 1,600

2) Bank service charge Cash in bank

640

3) Accounts receivable Cash in bank

800

4) Cash in bank Accounts receivable

300

5) Cash in bank Accounts payable

AJE No. 1

(950) 640

(2,925)

-

(3,870) 700 2,010

1,600

300

282,190

19,630

3,110

(1,200) 1,600

(950)

Ending

640

800

300 2,925 2,925

AJE No. 4 AJE No. 5

Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 5 Ubirhed Company Proof of Cash For the month of December, 2014 Unadjusted bank balances Add (deduct) adjustments: Undeposited collections November December Outstanding checks November December Erroneous bank debit-November

Beginning

Receipts

76,500

104,000

20,000

(20,000) 54,900

(42,500)

Disb

Ending

51,000

129,500

54,900 (42,500) 90,490

(90,490) -

10,000

(10,000)

Adjusted bank balances

64,000

128,900

98,990

93,910

Unadjusted book balances Add (deduct) adjustments: Bank service charges November December NSF checks December Customers' note collected by bank November Book errors in December

39,300

183,900

101,800

121,400

(300)

25,000

Uncollected customer's note treated as receipts Error in recording a check (SB P990, AR P9,900)

Adjusted book balances

64,000 (3)

(300) 400

(400)

6,000

(6,000)

(8,910)

(30,000) 8,910

98,990 (5)

93,910 (6)

(25,000) (30,000) 128,900 (4)

Undeposited collections, December 31: Deposit in transit, Nov. 30 Add collections in December: December book receipts Less receipts not representing collections in December: Customers' note collected by bank, Nov. 30 25,000 Note with the bank treated as receipts 30,000 Total Less deposits credited by the bank in December: December bank receipts Less receipts not representing deposits: Erroneous bank debit, Nov.; corrected Dec.

20,000 183,900

55,000

128,900 148,900

104,000 10,000

94,000 54,900 (1)

Outstanding checks, December 31: Outstanding checks, Nov. 30 Add checks issued in December: December book disbursements Less disbursements not representing checks for December: Book error (SB P990, AR P9,900) 8,910 Bank service charge, Nov.; recorded Dec. 300 Total Less checks paid by the bank in December: December bank disbursements

42,500 101,800

9,210

51,000

92,590 135,090

Chapter 1 - Audit of Cash and Cash Equivalents Less disbursements not representing checks: NSF checks, Dec. Bank service charge, Dec.

Answers: B, B, B, B, B, B

6,000 400

6,400

44,600 90,490 (2)

Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 6 FourTwo Company Proof of Cash For the month of December, 2014 11/30/14

Receipts

Disb

12/31/14

96,800

842,400

131,200

808,000

18,000

(18,000) 88,800

Unadjusted bank balances Deposits in transit November 30 December 31 Outstanding checks November 30 December 31

88,800

(16,000)

(16,000) 216,800

(No. 276,284,285,286,288,290,292,293,294)

Adjusted bank balances

98,800

913,200

Unadjusted book balances 58,640 Unrecorded CMs November 30 40,320 December 31 (CM84) Bank service charges November 30 (160) December 31 (DM98) NSF check - December (DM 97) Book errors Understatement of OR no. 419 (P72,400 - 72,000) Underfooting of CRJ (P448,800-P440,800) Overfooting of CDJ (P288,000-P304,000)

881,120

Adjusted book balances

913,200 -

* (P40,320+P400,000+P440,800)

1. C 2. C 3. C 4. C 5. D

98,800 -

*

332,000

680,000

304,000

635,760

(40,320) 64,000

64,000

4,000 40,000

(160) (4,000) (40,000)

(16,000)

400 8,000 16,000

332,000 -

680,000 -

400 8,000

(2)

(216,800) (1)

(3)

(4)

Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 7 - Submarine Company Requirements No. 1 and 2 Bills and coins Denomination Quantity P100.00 10 50.00 80 20.00 70 10.00 54 1.00 410 0.50 324 0.25 64 Checks Date Drawer Dec. 30 Ms. Au Dec. 30 Emong De Leon Dec. 31 Apol Boba Dec. 31 Datu Macmod Dec. 31 Tom Guts Unreplenished vouchers Date Account Dec. 23 Advances Dec. 27 Postage Dec. 29 Transportation Dec. 29 Repairs Total cash and cash items counted Less accountabilities: Petty cash Unclaimed salaries Excess travel advance returned Collections per offical receipts Unreceipted collection from Emong De Leon Cash shortage Requirement No. 3 Petty cash fund per GL Unreplenished vouchers Excess travel advance Petty cash fund balance, 12/31/14

Amount 1,000 4,000 1,400 540 410 162 16

7,528

Amount 2,400 28,000 3,360 35,600 16,600

85,960

Amount 14,000 3,240 300 1,600

20,000 15,000 3,360 86,600 28,000

Total

19,140 112,628

AJE 3 AJE 4 152,960 AJE 5 (40,332) AJE 6

20,000 (19,140) 3,360 4,220

Requirement No. 4 1 Advances to officers and employees Postage expense Transportation expense Repairs and maintenance Petty cash fund 2 Unused postage Postage expense 3 Cash Salaries payable

AJE 1

14,000 3,240 300 1,600 19,140 730 730 15,000 15,000

Chapter 1 - Audit of Cash and Cash Equivalents 4 Travel expense [P9,000+P800+(P600-P240)] Petty cash fund (personal check of sales manager) Advances to officers and employees

10,160 3,360

5 Cash Accounts receivable

28,000

6 Receivable from custodian Cash

40,332

13,520

28,000

40,332

Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 9 - Napoles Company Requirement a: BANK 20,000

Unadjusted balances, December 31 Add (deduct): Underfooting of cash receipts journal Unrecorded loan proceeds Overfooting of cash disbursements journal Bank charge - dishonored note guaranteed December bank service charges Outstanding checks Deposit in transit (P5,200-P1,800+P2,900) Total Cash shortage - actual Adjusted balances

(1,200) (5,600) 6,300 19,500 19,500

BOOKS 61,000 6,400 8,000 500 (5,000) (1,200)

69,700 (50,200) 19,500 -

Requirement b: Actual cash shortage (see above) GL/SL discrepancy on collections (credits to AR): Amount per individual credits to AR sl Less amount per general ledger, corrected Maximum probable shortage

50,200 70,400 66,400

4,000 54,200

PROBLEM NO. 10 - Dinar Company

Unadjusted balances Petty cash fund Outstanding checks Deposit in transit Total Cash shortage Adjusted balances Cash receipts: Owners' investment Proceeds from loan Collections from customers (see below) Total Cash disbursements: Purchases (P250,000 - P15,000) Store fixtures (P50,000 - P5,000) Loan payment Expenses paid Cash balance per books, 12/31 Collections from customers: Purchases Less merchandise inventory, 12/31 Cost of sales Add gross profit (P220,000 x 120%) Sales Less AR, 13/31

BANK 30,200 (4,500) 5,000 30,700 30,700 -

BOOKS 122,000 (see below) (1,300)

120,700 (90,000) 30,700

150,000 98,000 414,000 662,000 235,000 45,000 80,000 180,000

250,000 30,000 220,000 264,000 484,000 70,000 414,000

540,000 122,000

Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 10 - CPAR Company Nov. 30 Unadjusted bank balances Undeposited receipts: November December Outstanding checks: November December Erroneous bank debit Payment to creditor in cash Adjusted bank balances Unadjusted book balances NSF checks: Returned, recorded in December Returned, recorded in January Unrecorded bank collections: November December Bank service charges: November December Book error in December Adjusted book balances

1. B 2. B 3. C 4. D 5. D

107,800 45,300

December Receipts Disb 1,102,250

1,094,850

(45,300) 50,600

(13,375)

Dec. 31 115,200

50,600

139,725

6,050 1,113,600

(13,375) 7,150 (4,750) 6,050 1,089,925

163,400

82,725

1,110,950

1,080,275

113,400

5,200

5,200 4,300

60,750

(60,750) 58,200

(3,750)

139,725 (1)

1,113,600 (2)

(7,150) 4,750

(4,300)

58,200 (3,750) 2,100 1,800 1,089,925 (3)

(2,100) (1,800) 163,400 (4)

Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO.11 - ReSA Company Franc Company Proof of Cash For the month of August, 2014 July 31

August Receipts Disb

Unadjusted bank balances Deposits in transit: July August Outstanding checks July August (check nos. 436, 457 and 460) Erroneous bank debit, corrected NSF check redeposited

52,000

Adjusted bank balances

48,900

33,400

9,100

73,200

Unadjusted book balances Note collected by bank, July Unrecorded deposit in July Bank service charges July August NSF check not redeposited

40,000 8,000 1,000

42,400 (8,000) (1,000)

8,460

73,940

Adjusted book balances

48,900 -

900

25,140

9,740

August 31

(900) 9,400

(4,000) (100) (140)

(100)

9,400 (4,000) 3,600 (100) (140)

(100) 440 300 33,400 -

Unadjusted book receipts for August: August collections credited by bank (P10,000 + P14,000) Deposit in transit, August 31 Unrecorded deposit in July recorded in August Note collected by bank in July recorded in August

67,400

9,100 -

(3,600)

(440) (300) 73,200 -

24,000 9,400 1,000 8,000 42,400

1B

Chapter 1 - Audit of Cash and Cash Equivalents Unadjusted book disbursements for August: Checks drawn in August (checks no. 455 to 460) BSC for July recorded in August Note: Nos. 1 and 2 can alternatively be solved by working back from the adjusted bank balances. 3. D (P33,400) 4. A (P9,100) 5. D (P73,200)

8,360 100 8,460

2A

Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO.12 - PRTC Company Nov. 30

December Receipts Disb

Dec. 31

Unadjusted bank balances 742,800 Outstanding checks: November 30 (254,096) December 31 Erroneous bank debit Deposits with loan payment (P4.8M x 80%) Undeposited collections: December 31

5,401,800

5,369,904

774,696

(300,184) 9,292

3,840,000

(254,096) 300,184 (9,292) 3,840,000

Adjusted bank balances

488,704

9,370,240

9,246,700

612,244

Unadjusted book balances NSF checks:

619,304

9,341,780

9,290,692

670,392

(1,000)

Returned in Nov., recorded in Dec. Returned and recorded in Dec. Returned in Dec., recorded in Jan.

Unrecorded bank collection in Dec.

128,440

1,000 25,000

128,440

25,000 9,200

8,060

(9,200) 8,060

Anticipated loan proceeds from AR hypothecation

Nov. 30 sales (P162,000 x 80%) Dec. 31 sales (P169,000 x 80%)

(129,600)

129,600 (135,200)

(135,200)

Anticipated loan payment from undeposited collections

(P128,440 x 80%) Interest charge for bank loan in Dec. Adjusted book balances

1. C 2. B 3. B 4. B 5. D

(102,752) 24,560 488,704 (1)

9,370,240 (2)

9,246,700 (3)

102,752 (24,560) 612,244 (4)

Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO.13 - CRC-Ace Corporation 1D Sales Less: Accounts receivable, 11/15 Collections from sales

1,615,040 426,900 1,188,140

2D Cost of sales (P1,615,040/1.4) Add: Merchandise inventory, 11/15 Purchases Less: Accounts payable, 11/15 Payments for purchases

1,153,600 469,600 1,623,200 231,420 1,391,780

3C 4B Cash receipts: Issuance of common stock for cash Mortgage note payable Notes payable - bank Collections from sales (see no. 1) Total Cash disbursements: Purchase of real estate Furniture and fixtures (P145,000 - P30,000) Expenses paid Payments for purchases (see no. 2) Cash balance per books, 11/15

1,600,000 400,000 160,000 1,188,140 3,348,140 1,000,000 115,000 303,780 1,391,780

2,810,560 537,580

5A Unadjusted balances Deposit in transit Outstanding checks Balances Shortage Adjusted balances

Per bank Per books 131,640 537,580 25,700 (9,260) 148,080 537,580 (389,500) 148,080 148,080

(3) (4)