Chapter 3

Chapter 3 Cash MULTIPLE CHOICE 1. C 6. B 11. B

2. B 7. C 12. C

3. D 8. C 13. C

4. A 9. C 14. D

5. B 10. D 15. D

Problem 1 (a)

Audit adjustments Cash Equivalents Cash

3,000,000

Other Non-current Financial Assets Cash

3,200,000

Cash

3,000,000 3,200,000 35,000

Accrued Salaries Expense Other Non-current Financial Assets Cash

35,000 900,000

Miscellaneous Expenses Advances to Employees Cash (Petty Cash Fund)

6,800 1,200

Cash

5,300

8,000

Accrued Utilities Expense Accounts Receivable Cash (b)

900,000

5,300 25,000 25,000

Cash and Cash Equivalents Savings account with Metrobank Checking account with Metrobank 800,000 + 5,300 Certificates of deposit Payroll fund 1,200,000 + 35,000 Tax fund Petty cash fund Undeposited collections 85,000 – 25,000 Correct cash and cash equivalents

P1,500,000 805,300 3,000,000 1,235,000 500,000 12,000 60,000 P7,112,300

Problem 2 (Sta. Monica, Inc.) Expenses

10,500 Petty Cash Fund

Correct balance of petty cash fund = P20,000 – P10,500 = P9,500

10,500

Chapter 3 Cash Problem 3 (Victor Company) (a) Correct amount of petty cash fund Currencies and coins

P6,400

(b) Per count Currencies and coins Paid petty cash vouchers Employee’s NSF check Wedding gift contribution (with bills) Total per count Cashier’s accountability: Petty cash fund, per ledger Wedding gift contribution Cash shortage

P 6,400 2,250 1,200 1,500 P11,350 P10,000 1,500

11,500 P 150

(b) Audit Adjusting Entries Delivery Expense 250 Office Supplies Expense 160 Employees Medicine 240 Transportation Expense 400 Repairs and Maintenance 400 Receivables from Employees 2,000 Cash Shortage (or Misc. Expenses or Receivables fr Employees) 150 Petty Cash Fund

3,600

Problem 4 (Rainbow Corporation) (a)

(b).

(c)

Total per count Cashier’s Accountability Petty Cash Fund, per ledger Unused postage stamps Unused office supplies Wedding gift contribution Cash shortage

P 35,000 P35,000 1,800 1,200 1,000

Telephone Expense Water Expense Office Supplies Expense (3,700 – 1,200) Postage Expense (2,800 – 1,800) Prepaid Expenses (1,200 + 1,800) Receivables from Employees (3,900 + 4,000) Petty Cash Fund

39,000 P 4,000

1,500 1,600 2,500 1,000 3,000 7,900 17,500

Correct amount of petty cash fund = P35,000 – P17,500 = Cash items in the petty cash fund: Bills and Coins Replenishment check Total

P17,500 P 2,500 15,000 P17,500

26

Chapter 3 Cash Problem 5 Bills and Coins (show details of denomination and pieces per denomination) Checks: Date Maker Amount 12-28-12 Urquiola, employee P 3,000.00 12-29-12 Sta. Maria, employee 1,500.00 12-31-12 L. Chua, customer 2,500.00 01-02-13 A. Bobadilla, customer 3,200.00 01-12-13 C. German, employee (check received 12-28-12) 1,500.00 Vouchers Date Voucher No. Particulars Amount 12-13-12 151 Freight out P 500.00 12-28-12 183 Supplies 300.00 12-29-12 184 Freight In 394.20 12-31-12 189 Freight on cabinet 741.10 01-02-13 001 Freight in 244.70 IOUs 12-21-12 S. Dechavez Unused office supplies Total per count Cashier’s accountability: Petty cash fund, per ledger P15,000.00 Unremitted cash sales Inv. # 118 December 30 P1,000.40 Inv. # 129 December 31 2,500.00 Inv. # 133 January 2 3,200.00 6,700.40 Unused office supplies 40.00 Cash shortage

P6,717.50

11,700.00

2,180.00 300.00 40.00 P20,937.50

21,740.40 P 802.90

Audit Adjusting Entries: Receivables from Employees (1,500.00 + 300.00) Freight out Supplies Expense (100 – 40) Prepaid Expenses Furniture and Equipment Freight in Cash Shortage (Receivable from Employees) Petty Cash Fund

1,800 500 260 40 741.10 394.20 802.90

Cash in Bank (1,000.40 + 2,500.00) Sales

4,538.20

3,500.40 3,500.40

Correct balance of petty cash fund (P15,000 – 4,538.20)

P10,461.80

Composed of the following cash items at December 31, 2009 Bills and coins Checks dated December Petty cash vouchers dated January (undisbursed as of December 31) Total cash items as of December 31 Unremitted cash sales as of December 31 ( 1,000.40 + 2,500) Petty cash fund, per audit, December 31

27

P6,717.50 7,000.00 244.70 P13,962.20 (3,500.40) P10,461.80

Chapter 3 Cash

Problem 6 (Da King Company) Bills and coins 500 x 1 100 x 8 50 x 3 10 x 4 5x2 1x3 Checks: 12/29/12 M. Roxas, employee 12/30/12 J. Madrigal Company 01/02/13 J. Estrada Junk Shop 01/15/13 F. Chavez, employee (received 12/27/12) Paid petty cash vouchers: 12/16/12 Vo. No. 145 Freight on goods bought 12/26/12 164 Postage 12/29/12 165 Transportation of messenger 01/02/13 166 Repairs, completed Dec. 29, 2012 IOU Ed Gil, employee Postage stamps 10 pcs x P12 Total per count Cashier’s accountability Petty cash fund Unremitted collections 12/30/12 Refund for merchandise returned P 1,500 01/06/13 Sale of junk and scrap materials 2,450 Unused postage stamps Cash shortage Adjusting entries Receivable from Employees (1,800 + 1,200 + shortage of 1,247) Freight in/Cost of Goods Sold Transportation Expense Postage Expense (200 – 120) Prepaid Expenses Petty Cash Fund

P

500 800 150 40 10 3

P 1,503

P2,000 1.500 2,450 1,800

7,750

P500 200 50 1,500

2,250 1,200 120 P 12,823

P10,000 3,950 120

14,070 P1,247

4,247 500 50 80 120 4,997

Repairs and Maintenance Accrued Expenses

1,500

Cash in Bank Purchase Returns and Allowances /Cost of Goods Sold

1,500

1,500 1,500

Correct Petty Cash Fund = P10,000 – P4,997 = Cash items as of December 31: Bills and coins Checks dated December Petty cash voucher dated January 2013 Cash refund for purchase returns Correct petty cash fund balance

P5,003 P1,503 3,500 1,500 (1,500) P5,003

28

Chapter 3 Cash Problem 7 (Cisco Systems, Inc.) (1) Bank reconciliation: Per bank P 1,463,212 (140,000) 59,500

Unadjusted balances Outstanding checks Undeposited receipts Error in recording check issued for rental payment Bank charge for payment of loan and interest Bank service charges Deposit of another company Customer’s DAIF check Adjusted balances

Per books P1,352,312*

1,800 (45,000) (1,400) (87,500) P1,295,212

(12,500) P1,295,212

(2) Adjusting entry: Notes Payable – Bank Interest Expense Bank Service Charges Accounts Receivable Rent Expense Cash in Bank

40,000 5,000 1,400 12,500 1,800 57,100

(3) Cash and cash equivalents: Petty cash fund Cash in bank Treasury bills maturing in 2 months Total cash and cash equivalents

P

20,000 1,295,212 500,000 P1,815,212

Problem 8 (Sunshine Corporation) 1.

Per Bank P 424,000 (113,000) 48,000

Unadjusted Balances Outstanding checks Undeposited collections Customer’s note collected by bank Bank service charge Adjusted balances Cash shortage Cash balance, December 31, per audit 2.

P359,000 P359,000

Understated book balance 456,000 – 465,000 Overstated bank balance 424,000 – 454,400 Omitted outstanding checks 183 198 Understated outstanding checks 52,000 – 25000 9,000 – 900 25,000 – 15,000 Overstated undeposited collections Omission of bank credit memo Total cash shortage

Per Books P465,000 19,000 (1,500) P482,500 (123,500) P359,000 P 9,000 30,400 4,500 12,500 27,000 8,100 10,000 3,000 19,000 P123,500

29

Chapter 3 Cash

3.

Undeposited collections, December 31 Collections, January 1 – 15 Total amount available for deposit Amount deposited, per deposit slips Undeposited collections, January 15 Cash on hand, January 15 Additional cash shortage in January

.4.

Adjusting Entries Bank Charges Receivable from Employees (or Loss) Cash Notes Receivable

P 48,000 199,000 P247,000 (110,000) P137,000 (52,000) P 85,000

1,500 123,500 106,000 19,000

Problem 9 (Pamela Manufacturing Company) Unadjusted bank balance Outstanding checks November 30 December 31 Deposits in transit November 30 December 31 Check of Pamplona Company Adjusted Balances

Balance per books Error in recording check no. 359 Bank service charge November December NSF check returned in November Interest charged by the bank Adjusted Balances

Nov. 30 876,750

Receipts 9,153,760

Disbursements. 8,526,550

Dec. 31 1,503,960

(254,720) 335,610

(335,610) 209,180 5,830 1,383,360

(254,720) 164,220

(164,220) 209,180

786,250

9,198,720

(5,830) 8,601,610

Nov. 30 821,950 2,700

Receipts 9,198,720

Disbursements 8,613,010

9,198,720

(3,500) 2,250 (34,900) 24,750 8,601,610

(3,500) (34,900) 786,250

Audit adjusting entries: Cash in Bank Office Furniture

2,700

Bank Service Charge Cash in Bank

2,250

Interest Expense Cash in Bank

24,750

2,700 2,250

30

24,750

Dec. 31 1,407,660 2,700 (2,250) (24,750) 1,383,360

Chapter 3 Cash Problem 10 (Golden Bells Company) Unadjusted bank balance Deposits in transit November 30 December 31 Outstanding checks November 30 December 31 Erroneous bank charges November 30 December 31 Erroneous bank credit November 30 December 31 Adjusted balances

Unadjusted book balances (squeezed) NSF checks returned by bank November 30 December 31 Bank service charges November December Note collected by bank November December Adjusted balances

Nov. 30 2,500,000

Receipts 2,300,000

58,000

(58,000) 47,000

Disbursements 1,700,000

47,000

(97,000) 25,000

Dec. 31 3,100,000

(97,000) 46,000

(46,000)

(37,000)

37,000

(25,000)

(45,000)

(45,000)

2,441,000

(50,000) 2,214,000

1,567,000

(50,000) 3,088,000

Nov. 30 2,390,000

Receipts 2,206,000

Disbursements 1,549,000

Dec. 31 3,047,000

(15,000) 25,000

(25,000)

(10,000) 18,000

(18,000)

1,567,000

84,000 3,088,000

(15,000) (10,000) 76,000 2,441,000

(76,000) 84,000 2,214,000

Accounts Receivable Cash in Bank

25,000

Bank Service Charges / Miscellaneous Expenses Cash in Bank

18,000

Cash in Bank Notes Receivable

84,000

25,000 18,000 84,000

31

Chapter 3 Cash Problem 11 (Starr Company) Unadjusted bank balance Deposits in transit April 30 May 31 (squeezed) Outstanding checks April 30 May 31 Adjusted balances

Unadjusted book balances (squeezed) DAIF checks returned by bank April 30 May 31 Bank service charges April May Check issued by the treasurer to himself Proceeds of loan granted by bank May Adjusted balances

Apr. 30 470,360 29,360

May 1-31 Receipts Disb. 883,200 1,320,600 (29,360) 40,560

40,560

(144,800) 354,920

894,400

Apr. 30 363,040

May 1-31 Receipts 654,400

(144,800) 133,600 1,309,400

(133,600) (60,080)

Disb. 621,240*

May 31 396,200

(8,000)

(8,000)

(120)

(120) 280 696,000

(280) (696,000)

1,309,400

240,000 (60,080)

354,920

240,000 894,400

*621,240 = 613,120 + 8,000 + 120 (a)

1. 2. 3. 4.

(b)

Adjusting entries:

May 31 32,960

P363,040 P40,560 P696,000 P(60,080)

Bank Service Charges Cash in Bank

280 280

Loss from Theft/Receivable from Officers Cash in Bank

696,000 696,000

Cash in Bank Notes Payable – Bank

240,000

32

240,000

Chapter 3 Cash Problem 12 (Rocky Mountain High) Unadjusted bank balance Deposits in transit November 30 December 31 (102,000 – 12,000) Payment from collections Outstanding checks November 30 December 31 = 62,000 + 105,000 + 30,000 + 40,000 Adjusted balances

Unadjusted book balances (squeezed) Bank charges in December (200,000 + 28,000) Adjusted balances

Nov. 30 P888,800

Receipts P555,500

Disbursements P666,600

148,900

(148,900) 90,000 12,000

12,000

(116,200)

Dec. 6

90,000 (116,200)

921,500

508,600

Nov. 30 921,500

Receipts 508,600

921,500

508,600

237,000 799,400

(237,000) 630,700

Disbursements 571,400 228,000 799,400

Dec. 6 858,700 (228,000) 630,700

Answers: (a) P148,900 (b) P116,200 (c) P921,500 (d) P630,700 Problem 13 1. 2. 3. 4. 5.

A,D C, G. B, F E, H J, N

6. M, P 7. I, L 8. K, O 9. D, H 10. B, F

11. 12. 13. 14. 15.

D, F A, D F, G D, F J, N

16. I, L 17. Not a reconciling item 18. J, N 19. L, N 20. N, O

Problem 14 (Contronics Company)

Balances, per ledger Disbursed in 2012 Bank credit memo Balances per audit

Petty Cash Fund P 15,000 (6,000)

Purchasing Fund P 35,000 (20,000)

P9,000

P15,000

Adjusting entries Gasoline Expense Miscellaneous Expenses Transportation Expense Petty Cash Fund

Cash in Bank P134,500 58,000 192,500

Total P184,500 (26,000) 58,000 P216,500

4,500 500 1,000 6,000

Purchases or Inventory Purchasing Fund

20,000

Cash in Bank Notes Receivable

58,000

20,000 58,000

33

Chapter 3 Cash Problem 15 (Fortune Company) (a) Audit Adjustments Sales Cash

285,200

Cash

285,200

19,300 Utilities Payable

19,300

Accounts Receivable Cash

57,800

Accounts Receivable Cash

32,500

57,800 32,500

No entry, dividend fund is part of cash. Accounts Receivable Cash

3,500 3,500

Cash Shortage/ Receivable from Employees Cash

550 550

No entry, payroll fund is part of cash. Cash Shortage / Receivable from Employees Miscellaneous Expenses Cash

300 5,500 5,800

Cash

13,500 Miscellaneous Income

13,500

(b) Correct amount of cash Cash balance, per ledger Cash sales of 2013 Unreleased check for utilities Postdated checks received Customers’ NSF checks Stale check Shortage in the change fund 2012 vouchers in petty cash fund Cash shortage in the petty cash fund Unrecorded deposits (sale of scrap) Cash balance, per audit

P1,640,000 (285,200) 19,300 (57,800) (32,500) (3,500) (550) (5,500) (300) 13,500 1,287,450

Supply the Answers Note to the Teacher: Please supply the petty cash imprest balance of another figure for variation in your other classes.) Summary of Answers: 1. 2.

308.40 4,606.60

34

P50,000

in problem B. (You may supply

Chapter 3 Cash 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24.

5,000 shortage 35,000 800 5,700 400 5,300 53,800 838,600 157,950 780,650 or 761,650 (NSF checks may be treated as deduction from receipts) 625,700 or 606,700 (NSF checks may be treated as deduction from receipts) 3,000 92,000 145,600 71,950 1,828,212 imprest system – deposit of collections intact to the bank segregation of duties of custodial function and bookkeeping function 125,250 194,550 255,700 55,000 SUPPORTING COMPUTATIONS

A.

B.

1.

2.

Correct petty cash fund = 1,156.60 + 3,450

3.

Total per count Cashier’s accountability Petty cash fund Check payable to Meralco Birthday gift contribution Unused postage Cash shortage

4. C.

Total per count Cashier’s accountability Petty cash fund Postage stamps Other collections Cash shortage

5.

6.

P 10,761.60 P 10,500 220 350

11,070 P308.40 P4,606.60 P 53,500

P 50,000 3,500 4,500 500

Correct petty cash fund = P17,000 + P18,000

58,500 P 5,000 P35,000

Total per count Cashier’s accountability Petty cash fund Undeposited collections Cash shortage

P19,700 P 15,000.00 5,500.00

Bills and coins Customers’ checks Undeposited collections Petty cash fund, per audit

20,500 P 800 P6,400 4,800 (5,500) P5,700

35

Chapter 3 Cash D.

7.

Total per count (exclude the unsigned pay envelope with no contents) Cashier’s accountability Petty cash fund P15,000 Unreleased payroll 5,000 Cash shortage

P 19,600

8.

Bills and coins Vouchers with January 2013 dates Employee’s check dated December 2012 Total cash items as of December 31 Unreleased payroll Correct petty cash balance on December 31

P7,300 200 2,800 P10,300 (5,000) P5,300

9.

Unadjusted balances Bank credit memo Bank debit memo Outstanding checks Check of Kin Error in recording check Cash on hand Balances before cash shortage Cash shortage Cash balance, per audit

E.

10.

F. Unadjusted balances per bank Outstanding checks January 31 February 28 Deposits in transit January 31 February 28 Adjusted balances Unadjusted balances, per books Bank credit memo January February Bank service charges January February NSF checks returned by bank January February Adjusted balances

20,000 P 400

Bank P850,000

Books P750,500 150,000 (4,500)

(120,400) 21,000 (3,600) 88,000 P838,600 P838,600

January 31 13,500

Receipts 790,450

(65,000) 54,500 3,000 January 31 (92,250) 123,500

(54,500) 44,700 780,650 Receipts 805,350

(25,000) 3,000

36

Disbursements 647,700

Feb. 28 156,250

(65,000) 43,000

(43,000)

625,700 Disbursements 630,300

44,700 157,950 Feb. 28 82,800

(123,500) 98,800

(3,250)

780,650

P892,400 ( 53,800) P838,600

98,800 (3,250) 4,650

(4,650)

(25,000) 19,000 625,700

(19,000) 157,950

Chapter 3 Cash G.

December Disbursements Per bank Per books P195,000 P190,400 (90,000)

15. Unadjusted disbursements Outstanding checks, November 30 Customers’ NSF checks November December Bank service charges November December Balances before outstanding checks, December 31

(6,000) 12,000

P105,000

Outstanding checks, December 31 H. 16.

June Receipts Per bank Per books P310,000 420,000 (30,300) (15,000) 50,000 900 P295,000 P440,600 295,000 P145,600

Unadjusted receipts in June Collections made directly by bank in May Deposits in transit, May 31 Loans granted by bank in June Error in recording deposit Balances before deposits in transit, June 30 Deposits in transit, June 30

I.

17. 18.

Per bank 1,555,000

Unadjusted balances Credit memo for collections by bank Outstanding checks Undeposited receipts Balances before shortage Amount stolen Actual cash existing

19. and 20.

(106,229) 379,441 P1,828,212 P1,828,212

21. 24. 23.

Per books 1,890,162 10,000 P1,900,162 (71,950) P1,828,212

Features of internal control missing: Imprest system and segregation of duties

J. 22.

(2,400) 3,000 P197,000 105,000 P92,000

Unadjusted balances Erroneous bank credit Outstanding checks (246,750 – 15,000 – 37,200) Unreleased checks Postdated checks issued and recorded as disbursements Customer’s postdated check Deposits in transit (175,250 – 50,000) Note collected by bank Balances before cash shortage Cash shortage Actual cash existing

37

Per bank P350,000 (25,000) (194,550)

Per books P293,500 15,000 37,200 (50,000)

125,250 P255,700 P255,700

15,000 P310,700 (55,000) P255,700