(Problems) - Audit of Cash

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet PROBLEM 1 In connection with your audit of the financial statements of Onor Company for the year ended Dec. 31, 2012, you gathered the following information. 1. The company maintains its current account with Tsunami Bank. The bank Statement on Dec. 31, 2012 showed a balance of P6380,340. Your audit of the company’s account with Tsunami Bank disclosed the following:  A check for P22,500 received from a customer whose account is current had been deposited and then returned by the bank on Dec. 28, 2012. No entry was made for the return of this check. The customer replaced the check on Jan 15, 2013.  A check for P5,720 was cleared by the bank as P7,520. The bank made the correction on Jan. 2, 2013.  A check for P3,500 representing payment of an employee advance was received and deposited on Dec. 27, 2012, but was not recorded until Jan. 3, 2013.  Post dated check totaling P67,300 were included in the deposits in transit. These represent collections of current accounts receivable from customers. The checks were actually deposited on Jan. 5, 2013.  Various debit memos for drafts purchased for payment of importation of equipment totaling P230,000 were not yet recorded. These purchases were previously set up as accounts payable. Said equipment arrived in Dec. 2012.  Interest earned on the bank balance for the 4 th quarter of 2012, amounting P1,950 was not recorded.  Bank service charges totaling P1,260 were not recorded.  Deposit in transit and outstanding checks at Dec. 31, 2012 totaled P136,250 and P276,380, respectively.

1) 2) 3) 4)

2. Various expenses from the company’s imprest petty cash fund dated December 2012 totaled P16,250, while those dated January 2013 amounted P5,903. Another disbursement from the fund dated December 2012 was a cash advance to an employee amounting to P3,500. A replenishment of the petty cash fun was made on January 8, 2013. 3. The company’s trial balance on December 31, 2012 includes the following accounts: Cash in bank – Tsunami Bank P784,320` Cash in bank – Earthquake Bank (restricted account for plant expansion, expected to be disbursed in 2013) 700,000 Petty cash fund 30,000 Time deposit, placed December 20, 2012 and due March 20, 2013 1,000,000 Money market placement – Prudential Bank 4,000,000 What is the adjusted petty cash fund balance on Dec. 31, 2012? A. P4,347 C. P30,000 B. P10,250 D. P24,097 The petty cash shortage on December 31, 2012 is? A. P0 C. P3,500 B. P5,903 D. P4,347 What is the adjusted Cash in bank – Tsunami Bank balance on December 31, 2012? A. P500,000 C. P432,710 B.P748,320 D. P429,110 The entry to adjust the Cash in Bank – Tsunami Bank account should include a Debit to A. Account receivable for P89,800 C. Account receivable for P228,200 B. Accounts Receivable for P86,300 D. Account receivable for P1,950

Problem 2: The accountant of SANTIAGO Company is in the process of preparing the company’s financial statements for the year ended December 31, 2012. He is trying to determine the correct balance of cash and cash equivalents to be reported as a current asset on the statement of financial position. The following items are being considered:  Balances in the company’s accounts at the Metropolitan Bank:  Current account P81,000  Savings account P132,600

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet     

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Undeposited customer checks of P22,200 (including a customer check dated January 2, 2013 for ₱3,000) Currency and coins on hand P3,480 Savings account at the Northern Philippines Bank with a balance of P2,400,000. This account is being used to accumulate cash for future plant expansion (in 2013) Petty cash of P4,000 (currency of P1,200 and unreplenished vouchers P2,800) P120,000 in a current account at the Northern Philippines Bank. This represents a 20% compensating balance for P600,000 loan with the bank. SANTIAGO Company is legally restricted to withdraw the funds until the loan is due in 2015. Treasury bills:  Two−month maturity bills P90,000  Seven−month bills 120,000 Time deposit P100,000

What is the correct balance of cash and cash equivalents to be reported in the current assets section of the statement of financial position? A) P547,480 C)P430,280 B) P427,480 D) P327,480 PROBLEM 3: Your audit of the December 31, 2012 financial statements of NAGADU CORP. reveals the following:  Current account at Prime Bank P(30,000)  Current account at Prudent Bank 135,000  Treasury Bills (acquired 3 months before maturity) 300,000  Treasury Bills (maturing date is Dec.31, 2013) 1,500,000  Payroll account 390,000  Foreign bank account – restricted (translated using the Dec. 31, 2012 exchange rate) 2,000,000  Postage stamps 1,250  Employee’s postdated check 4,500  IOU from the vice-president 8,000  Credit memos from a supplier for a purchase return 8,100  Travelers check 21,000  Money order 12,000  Petty cash fund (P3,000 in currency and expense Receipts for P12,000) 15,000 What amount would be reported as “cash and cash equivalents” in the statement of financial position on Dec. 31, 2012? A. P840,050 C. P849,400 B. P873,900 D. P861,900 PROBLEM 4: The cash account of the HANNAH CORPORATION as of December 31, 2012 was composed of the following: On deposit in current account with the Bank of PI P900,000 Cash collection not yet deposited in the bank 350,000 A customer’s check returned by the bank for insufficient fund 150,000 A check drawn by the Vice-President of the company dated January 15, 2013 70,000 A check drawn by a supplier dated December 28, 2012 for Goods returned by the company 60,000 A check dated May 31, 2012 drawn by the company against the Bank of Manila in payment of customs duties. since the importation did not materialize, the check was returned by the custom broker. This check an outstanding check in the reconciliation of the Bank of Manila 410,000 Petty cash fund of which P10,000 is in currency, P7,200 in form of employee’s IOU’s; and P2,800 is supported by approved petty cash vouchers for expenses all dated prior to closing of the books on December 31, 2012 20,000 TOTAL P1,960,000

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet Less: Overdraft with the Bank of Manila secured by a chattel mortgage on the inventories CASH BALANCE PER LEDGER

300,000 P1,660,000

What is the amount of cash to be reported in the December 31, 2012 statement of financial position of HANNAH Corporation? PROBLEM 5: The auditor for MELANIE, INC. examined the petty cash fund immediately after the close of business, July 31, 2012, the end of the company’s natural business year. The petty cash custodian presented the following during the count: Currency P1,650 Petty cash vouchers: Postage 420 Office supplies expense 900 Transportation expense 340 Computer repairs 800 Advances to office staf 1,500 A check drawn by MELANIE, Inc., payable to the petty cash custodian 7,200 Postage stamps 300 An employee’s check, returned by bank, marked NSF 1,000 An envelope containing currency of ₱1,890 for a gift for retiring employee 1,890 TOTAL P16,000 The general ledger shows an imprest petty cash fund balance of ₱16,000. 1) How much is the petty cash shortage overage? A. P2,190 overage C. P1,890 shortage B. P2,190 shortage D.P1,890 overage 2) What is the adjusted balance of the petty cash fund at July 31, 2012? A. P10,740 C. P7,200 B. P3,540 D.P8,850 PROBLEM 6: On January 1, FORTUNE CO. establishes a petty cash account and designates Tarzan as petty cash custodian. The original amount included in the petty cash fund is P10,000. The following disbursements are made from the fund: Office supplies P3,460 Postage 2,240 Entertainment 840 The balance in the petty cash box is P3,200. 1. The person responsible, at all times, for the amount of the petty cash fund is the A. Chairman of the board of directors C. Petty cash custodian B. President of the company D. general cashier 2. The following are appropriate procedures for controlling the petty cash fund, except A. To monitor variations in diferent types of expenditures, the petty cash custodian files petty cash vouchers by category of expenditure after replenishing the fund. B. To replenish the fund, the general cashier issues a company check to the petty cash custodian, rather than cash. C. To determine that the fund is being accounted for satisfactorily, surprise counts of the fund are made from time to time by the internal auditor or other responsible official. D. Each individual to whom petty cash is paid is required to present signed receipts to the petty cash custodian. 3. The entry to record the fund is A. Office supplies expense 3,460 Postage expense 2,240 Entertainment expense 840 Cash 6,540

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet B. Office supplies expense 3,460 Postage expense 2,240 Entertainment expense 840 Cash over and short 260 Petty Cash 6,800 C. Office supplies expense 3,460 Postage expense 2,240 Entertainment expense 840 Cash over and short 260 Cash 6,800 D. Office supplies expense 3,460 Postage expense 2,240 Entertainment expense 840 Petty Cash 6,540 4. The objective of establishing a petty cash fund is to A. Cash checks for employees B. Account for all cash receipts and disbursements C. Account for cash sales D. Facilitate payment of small, miscellaneous items 5. What is the efect of not replenishing the petty cash at year-end and not making the appropriate adjusting entry? A. A detailed audit is essential B. The petty cash custodian should turn over the petty cash to the general cashier C. Cash will be overstated and expenses understated D. Expenses will be overstated and cash will be understated PROBLEM 7: In connection with your audit of the financial statements of JEFF CORP. for the year ended December 31, 2012, you conducted a surprise count of the company’s petty cash fund and undeposited collection at 8:20 a.m. on January 3, 2013. Your count disclosed the following: Bills and Coins: Bill P100.00 50.00 20.00

Coins: 5.00 1.00 0.25

5 pieces 40 pieces 48 pieces

18 pieces 206 pieces 32 pieces

Postage Stamps (unused) - P365 Checks Date Dec. 30 Dec.30 Dec.31

payee cash Jef Corp. Jef Corp.

Dec.31 Dec. 31 Dec. 31

Jef Corp. Jef Corp. Taiwan Corp.

Unreimbursed vouchers Date Dec. 23 28 29 29

Maker custodian SLV, Inc. Mario Lansang, sales manager MSU corp. Ateneo Inc. Jef Corp.

Payee

Mario Lansang, sales manager Central Post Office messengers Byte, Inc.

Amount P1,200 14,000 1,680 17,800 8,300 27,000 Description

Advances for trip to Tagaytay City Postage stamps Transportation Computer Repair

Amou nt P20,00 0 1,620 150 800

Other items found inside the cash box: 1. Unclaimed pay envelope of Sinsinan MacDonut. Indicated on the pay slip is his salary of P7,500. Your inquiry revealed that Sinsinan’s salary is mingled with the petty cash fund. 2. The sales manager’s liquidation report for his Tagaytay City trip.

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet Cash Advance received on Dec.23 P20,000 Less: Hotel accommodation, meals, etc. P16,000 Bus fare for two 1,200 Cash given to Pablo, salesman 1,000 18,200 Balance P1,800 Accounted for as follows: Cash returned by Pablo to the sales manager P120 Personal check of the sales manager 1,680 TOTAL 1,800 Additional information: 1. The custodian is not authorized to cash checks. 2. The last official receipt included in the deposit on December 30 is No. 4351 and the last official receipt issued for the current year is No. 4355. The following official receipts are all dated December 31, 2012. OR # Amount Form of Payment 4352 P13,600 cash 4353 17,800 check 4354 3,600 cash 4355 8,300 check 3. The petty cash balance per ledger is P25,000. The last replenishment of the fund was made on December 22, 2012. 1. What is the amount of shortage due from the sales manager? A. P240 C. P120 B. P1,800 D. P0 2. What is the amount of undeposited collections on Dec.31, 2012? A. P44,300 C. P57,300 B. 84,300 D. P41,000 3. The adjusting entries on December 31, 2012 should include a net debit to Travel expense of A. P17,320 C. P18,200 B. P18,320 D. P18,080 4. The cash count should include total checks of A. P69,980 C. P41,780 B. P42,980 D. P41,300 5. What is the total cash shortage? A. P22,166 C. P22,406 B. P8,166 D. P20,486 PROBLEM 8: Tanya Velasco is reviewing the cash accounting for ABX, Inc. Tanya’s review will focus on the petty cash fund account and the bank reconciliation for the month ended may 31, 2012. She has collected the dfollowing information from ABX’s bookkeeper for this task. Petty cash Fund 1. The petty cash fund was established on May 2, 2012, in the amount of P10,000. 2. Expenditures from the fund by the custodian as of May 31, 2012, were ecvidenced by approved petty cash vouchers for the following; Various office supplies P3,920 IOU from employees 1,200 Shipping charges 2,298 Miscellaneous expense 1,526 On May 31, 2012, the petty cash fund was replenished and increased to ₱12,000; currency and coin in the fund at the time totaled ₱756. Bank Reconciliation Shore Bank Bank Statement Disbursements Balance, May 1, 2012

Receipts

Balance P350,760

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet Deposits Note payment direct from customer (interest of 1,200) Checks cleared during May Bank service charge Balance, May 31, 2012

P1,120,000 37,200 P1,246,000 1,080 260,880

ABX, Inc.’s Cash Account Balance, May 1, 2012 P354,000 Deposits during May 2012 1,240,000 Checks written during May 2012 1,273,000 Deposits in transit are determined to be P120,000, and checks outstanding at May 31 total P34,000. Cash on han (besides petty cash) at May 31, 2012, is P9,840. 1. What is the amount of petty cash shortage? A. P2,300 C. P300 B. P11,244 D. P0 2. The journal entry to record the replenishment of and increase in the petty cash fund includes a credit to. A. Cash of P10,944 C. Petty cash fund of P10,944 B. Cash of P11,244 D. Petty cash fund of P11,244 3. What amount of cash should be reported in the May 31, 2012, statement of financial position? A. P368,720 C. P368,420 B. P356,720 D. P358,880 PROBLEM 9: Presented below are a series of unrelated situations: 1. The accountants of NARCISA Co. provided the following data in reconciling the April 30 cash in bank balance: Balance per bank, April 30 P130,350 Balance per book, April 30 85,000 Bank service charge 2,000 Deposit in transit 49,000 Outstanding checks 17,650 Note collected by bank including P11,200 interest (Narcisa not yet informed) 136,000 Check drawn by XYZ Co. erroneously charged by Bank to Narcisa’s account 54,600 A transportation error was made in recording a sale and deposit in the sales journal and cash receipts journal in April. Correct amount P13,658 Recorded as P16,358 What is the adjusted cash balance on April 30? 2. The following information is included in EMIL CORPORATION’s bank statement for the month of march: A customer’s check has been marked “NSF” by the Bank and returned P13,000 Bank service charge for March 1,200 In comparing the bank statement to the company’s cash records, you found: Outstanding checks March 31 P184,000 Deposit made but are not yet shown in the April bank statement 14,000 The deposits in transit and outstanding checks have been correctly taken up in the company’s books. You also found a customer’s check for P17,400 that had not yet been deposited and had not been recorded in Emil’s books. Your client’s books show a cash balance of P36,420.

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet What is Emil Corporation correct cash balance at March 31? 3. The following information pertains to a checking account of a company at June 30, 2012. Balance per bank statement P200, 000 Interest earned for the second quarter 500 Outstanding checks 15, 000 Customer’s checks returned for insufficient funds 5, 000 Deposit in transit 25, 000 What is the adjusted cash balance at June 30, 2012? 4. A company is reconciling its bank statement with internal records. The cash balance per the company’s books is P45,000. There are P5, 000 of bank charges not yet recorded, P7,500 of outstanding checks, P12,500 of deposits in transit, and P 15,000 of bank credits and collections not yet taken up in the company’s books. What is the cash balance per bank? 5. A company shows a cash balance of P 175,000 on its bank statement dated June 30. As of June 30, there are P55, 000 of outstanding checks and P37,500 of deposits in transit. What is the correct cash balance on the company nooks as of June 30? 6. The cash account shows a balance of P225,000 before reconciliation. The bank statement does not include a deposit of P11, 500 made on the last day of the month. The bank statement shows a collection by bank of P4,700 and a customer’s check for P1,600 was returned because it was NSF. A customer’s check for P2,250 was recorded on the books as P2,700, and a check written for P395 was recorded as P485. What should be the correct cash balance? 7. On July 5, 2012, EMILIA CORP. received its bank statement for the month ending June 30. The statement showed a P209,500 balance while cash account balance on June 30 was P35,000. In reconciling the balances, the auditor discovered that: 1. The June 30 collections of P176,000 were recorded on the books but were not deposited until July. 2. The bank service charges for the month of June totaled P3,000. 3. A paid check for P24,300 was entered incorrectly in the cash payments as P34,200. What is the total outstanding check at June 31, 2012? Answer the questions relating to each of the seven situations. . . PROBLEM 10: The bank statement for the current account of IAN Co. showed a December 31, 2012, balance of P585,284. Information that might be useful in preparing bank reconciliation is as follows: a) Outstanding checks were P52,810 b) The December 31, 2012, cash receipts of P23,000 were not deposited in the bank until January 2, 2013. c) One check written in payment of rent P8,940 was correctly recorded by the bank but was recorded by IAN Co. as a P9,840 disbursement d) In a accordance with prior authorization, the bank withdrew P18,000 directly from the current account as payment on a mortgage not payable. The interest portion of that payment was P14,000. Ian Co. has made no entry to record the automatic payment. e) Bank service charges of P740 were listed on the bank statement f) A deposit of P35,000 was recorded by the bank on December 12, but it did not belong to Ian Co. g) The bank statement included a charge of P3,400 for a not-sufficient-fund check. The company will seek payment from the customer. h) Ian Co. maintains an P8,000 petty cash fund that was appropriately reimbursed at the end of December.

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet i) According to instructions from Ian Co. on December 31, the bank withdrew P40,000 from the account and purchased Treasury bills for Ian Co. the company recorded the transaction in its books on December 31 when it received notice from the bank. Half of the treasury bills mature in 3 months and the other half in 6 months. 1. What is the cash bank balance per books on December 31, 2012? A. P549,714 C. P534,914 B. P543,514 D. P541,714 2. What is the adjusted cash in bank balance on December 31, 2012? A. P520,474 C. P518,674 B. P527,274 D. P520,154 3. What amount would Ian Co. report as cash and cash equivalents in the current asset section of the December 31, 2012, statement of financial position? A. P928,474 C. P720,474 B. P728,474 D. P735,274 PROBLEM 11: The following data were taken from GARAY’s check register for the month of April. Garay’s bank reconciliation for March showed one outstanding check, check no. 178 for P2,150 (written on March 20), and one deposit for P4,350 (made on March 31). 2012, April

Item

1

Beginning Balance Deposit Check No. 179 Check No. 180 Deposit Check No. 181

1 1 4 27 29

checks

deposits

balanc e 6,150

26,167

32,317 32,567 21,898 33,672 20,490

250 10,673 11,774 13,217

The following is from Garay’s Bank statement for April: Date Item Checks Deposi Balance ts 2012, April Beginning Balance 3,950 1 3 Check No. 179 250 3,700 3 Deposit 4,350 8,050 5 Check no. 180 10,673 (2,623) 5 Automatic loan 8,150 5,527 5 Deposit 26,417 31,944 20 NSF check 1,000 30,944 20 Service charge 600 30,344 30 interest 82 30,426 Assume that any errors or discrepancies you find are Garay’s, not the bank’s. What is the adjusted cash balance as of April 30? A. P26,833 C. P30,4226 B. P26,838 D P26,872 PROBLEM 12: The following information pertains to FLINT CORP: Flint Corp BANK RECONCILIATION November 31, 2012 Balance per bank statement Less: outstanding checks No. 4321 4329

P435,000 P6,000 15,000

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet 4340 4341

1,700 4,675

27,375 P407,625 16,200 P423,825

Add: Deposit in Transit Balance per books

Date

Payee

Dec. 1

San Beda, Inc Miriam Corp. UE Enterprises PSBA Corp. Payroll BU, Inc. New Era Co. UST, Inc. Petty cash fund Payroll

3 7 12 15 16 18 21 22 28 TOTAL

CHECK REGISTER December 2012 No. Vouchers Payable 4342 P10,000

discount

Cash

P500

P9,500

4343 4344

4,200 3,755

-

4,200 3,755

4345 4346 4347 4348 4349 4350

12,000 96,000 6,300 14,200 7,000 10,000

120 142 -

11,880 96,000 6,300 14,058 7,000 10,000

4351

98,000 P261,455

P762

98,000 P260,69 3

BANK STATEMENT BANKABLE BANK PERIOD: November 30, 2012 – December 31, 2012 No: 001-43-44 Date Description Check Debit No. Balance last statement Dec. 1 Cash deposit P15,000 1 Check issued 4329 9,500 4 Check issued 4342 4,675 4 Check issued 4341 5 Check 4,200 6 Check 4343 8 Check 3,755 10 Check 4344 96,000 15 Encashment 4346 10,000 22 Encashment 4350 98,000 28 Encashment 4351 29 Debit memo – 1,000 service charge 29 Credit memointerest Deposits in transit at December 31 totaled P49,000.

Credit

Balance P435,000

P16,200

1. What is the total book receipt for December? A. P113,550 C. P63,000 B. P80,750 D. P112,000 2. What is the cash balance per books on December 31, 2012? A. P275,132 C. P291,332 B. P266,132 D. P274,370 3. What is the total outstanding check on December 31, 2012? A. P68,313 C. P46,938 B. P39,238 D. P40,938 4. What is the adjusted cash balance on November 31, 2012?

49,000 14,000

1,550

451,200 436,200 426,700 422,025 471,025 466,825 480,825 477,070 381,070 271,070 273,070 272,070 273,620

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet A. P446,375 C. P423,825 B. P417,825 D. P435,000 5. What is the adjusted cas354h balance on December 31, 2012? A. P281,682 C. P226,682 B. P275,682 D. P274,920 PROBLEM 13: EDGARDO CO. was organized on January 2, 2012. The following items are from the company’s trial balance on December 31, 2012. Ordinary share capital P1,500,000 Share premium 150,000 Merchandise inventory 69,000 Land 1,000,000 Building 1,400,000 Furniture and fixture 367,000 Accounts receivable 165,400 Accounts payable 389,650 Notes payable-bank 500,000 Sales 6,235,200 Operating expenses (including depreciation of P400,000) 1,005,150 Additional information as follows: 1. Deposits in transit, December 31 2. Service charges for December 3. Outstanding checks, December 31 4. Bank balance, December 31 5. Edgardo Co.’s mark up on sales is 30%

P384,660 2,000 475,000 892,000

1. What is the total collections from sales? A. P6,114,967 C. P6,235,200 B. P4,119,240 D. P6,069,800 2. What is the total payments for merchandise purchases? A. P3,905,990 C. P4,043,990 B. P4,649,140 D. P5,914,550 3. What is the total cash receipts per books? A. P7,819,800 C. P8,219,800 B. P.8,169,800 D. P8,069,800 4. What is the total cash disbursements per books? A. P7,816,140 C. P8,021,290 B. P7,416,140 D. P7,278,140 5. What is the cash balance per books on December 31? A. P653,660 C. P1,203,660 B. P803,660 D. P707,060 6. What is the adjusted cash balance on December 31? A. P801,660 C. P1,201,660 B. P651,660 D. P803,660 PROBLEM 14: In connection with your audit of the cash account of ANNIE CROP., you gathered the following information. a. Balance per bank, December 1, 2012 P145,000 b. Total bank receipts (credits) in December 346,000 c. Balance per bank, December 31, 2012 114,500 d. Outstanding checks, Nov. 30, 2012 (including P12,000 paid by bank in December) 67,000 e. Outstanding checks, December 31,2012 (including checks issued in November) 94,462 f. Deposit in transit, November 30, 2012 39,458 g. A customer’s check received on December 4, 2012, was returned by bank on December 7 marked “NSF”. It was redeposited on December 8, 2012. The only entry made was to take up the collection

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet on December 4, 2012.

11,143

1. What is the total book receipt in December? A. P295,399 C. P334,857 B. P306,542 D. P346,000 2. What is the total bank disbursement in December? A. P315,500 C. P231,500 B. P376,500 D. P201,000 3. What is the total book disbursement in December? A. P447,519 C. P403,662 B. P331,519 D. P392,519 PROBLEM 15: Your audit of the cash account of JUNIE CORP. disclosed the following information: 1. Cash in bank balance per books, Dec. 31, 2012 P35,000 2. Bank statement balance, Dec. 31, 2012 60,000 3. Note collected by bank in December (principal plus interest of P800, less collection fee of P200) 27,600 4. Debit memo for a checkbook ? 5. Deposit in transit, Dec. 31, 2012 15,200 6. Transportation error made by bank in recording deposit of Dec. 28: Correct amount P45,000 Recorded as 54,000 9,000 7. Erroneous bank debit 8. Included in the cash bank account is petty cash fund of P10,000. Your count on Dec. 31, 2012, revealed the following fund items: Currency and coins P3,000 Supplies 2,400 Transportation 100 IOUs 4,000 9,500 9. Erroneous bank debit 11,000 1. What is the principal amount of the note collected by bank in December? A. P27,600 C. P28,200 B. P26,800 D. P27,000 2. What is the adjusted cash in bank balance at December 31, 2012? A. P52,500 C. P53,000 B. P52,700 D. P51,900 3. The cost of checkbook is A. P600 C. 0 B. P300 D. P100 4. What is the amount of petty cash shortage at December 31, 2012? A. P400 C. P100 B. P500 D. P0 5. What is the adjusted petty cash balance? A. P9,500 C. P3,000 B. P3,500 D. P10,000 PROBLEM 16: The cash receipts and the cash payments of LIEZEL COMPANY for April 2012 follow: Cash receipts (cr) Cash payments (cp) Date Cash debit Check no. Cash credit April 2 P208,700 4113 P44,500 8 20,350 4114 7,350 10 27,950 4115 96,500 16 109,350 4116 33,200 22 92,700 4117 73,600 29 53,000 4118 50,000 30 16,850 4119 31,600 TOTAL 528,900 4120 83,750 4121 5,000

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet 4122 120,650 TOTAL P546,200 The cash account of Liezel Company shows the following information at April 30, 2012: Date April 1 30 30

item balance

ref. CR 6 CP 11

CASH debit

credit

528,900 546,200

balance 95,550 624,450 78,250

Liezel Company received the following bank statement on April 30, 2012. Bank statement for April Beginning balance Deposits and other P16,300 EFT credits: April 1 4 208,700 9 20,350 12 27,950 17 109,350 22 68,400 BC 23 92,700 Checks and other P44,550 Debits: April 7 13 69,500 14 45,150 US 15 7,350 18 33,200 21 10,950 EFT 26 73,600 30 50,000 30 1,000 SC Ending balance Explanation: US - BC - SC - -

2012 P95,550

543,750

(335,300) P304,00 0

EFT - - ELECTRONIC FUND TRANSFER unauthorized signature bank collection service charges

Additional data for the bank reconciliation include the following: a. The EFT deposit was a receipt of monthly rent. The EFT debit was a monthly insurance payment. b. The unauthorized signature check was received form Lester Doon. c. The P68,400 bank collection of a note receivable on April 22 included P9,250 interest revenue. d. The correct amount of check number 4115, a payment on account , is P69,500. (Liezel’s accountant mistakenly recorded the check for P96,500.) 1. What is the amount A. P53,000 B. P69,850 2. What is the amount A. P241,000 B. P337,500 3. What is the amount A. P543,750 B. P527,450 4. What is the amount A. P290,150 B. P335,300

of deposits in transit on April 30? C. P45,150 D. P115,000 of outstanding checks on April 30? C. P286,150 D. P310,500 of bank reconciliation on April? C. P459,050 D. P528,900 of bank disbursements in April? C. P289,150 D. P316,150

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet 5. What is the correct cash balance as of April 30? A. P132,850 C. P122,150 B. P87,700 D. P223,150 PROBLEM 17: FERLYN COMPANY’s check register shows the following entries for the month of December: Date Checks Deposits Balance 2012, Dec Beg. Balance P89,300 1 5 Deposit P65,000 154,300 7 Check no. P32,500 120,800 14344 11 Check no. 14,000 106,800 14345 26 Deposit 49,000 155,800 29 Check no. 8,600 147,200 14346 Ferlyn’s bank reconciliation for November revealed one outstanding check (no. 14343) for P12,000 (written on November 28), and one deposit in transit for P5,550 (made on November 29). The following is from Ferlyn’s bank statement for December 2012: Date checks Deposits Balance 2012, Dec. 1 Beg. Balance P95,750 1 deposit P5,550 101,300 4 Check no. P32,500 68,800 14344 5 Deposit 56,000 124,800 14 Check no. 14,000 110,800 14345 15 Loan 500,000 610,800 proceeds 20 NSF check 7,600 603,200 29 Service 1,000 602,200 charge 31 Interest 3,600 605,800 Assume that all errors were committed by Ferlyn Company, not the bank. Based on the preceding information, determine the following: 1. Adjusted cash balance on November 30 a. P89,300 C. P102,200 b. P95,750 D. P101,300 2. Outstanding checks on December 31 a. P46,500 C. P8,600 b. P45,500 D. P20,600 3. Deposit in transit on December 31] a. P52,600 C. P5,550 b. P49,000 D. P43,450 4. Total bank receipts in December a. P114,000 C. P565,150 b. P119,550 D. P61,550 5. Adjusted cash balance on December 31 a. P663,800 C. P748,200 b. P634,200 D. P597,200 PROBLEM 18: In connection with an audit, you are given the following bank reconciliation. BANK RECONCILIATION

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet December 31, 2012 Balance per ledger, December 31, 2012

P34,350

Add: Collections received on the last day of December And charged to “Cash in Bank” on books but Not deposited Debit memo for customer’s check returned unpaid (Check is on hand but no entry has been made On the books) Debit memo for bank service charge for December

5,325 4,000 1,000 P46,675

Deduct: Outstanding checks (see detailed list below) Credit memo for proceeds of a note receivable Which had been left at the bank for Collection but which has not been Recorded as collected Check for an account payable entered on books a P12,625 but drawn and paid by bank as P16,225 Computed balance Unlocated diference Balance per bank (checked to confirmation) LIST OF OUTSTANDING CHECKS December 31, 2012 Check No. 14344 14358 14367 14399 14401 14407

P18,625

8,000 3,600

32,225 P14,450 36,600 P51,050

Amount P 5,820 1,295 3,543 2,001 4,892 5,074 P18,625

1. What is the correct amount of outstanding checks on December 31? A. P18,625 C. P17,625 B. P22,625 D. P21,625 2. The journal entry to correct the outstanding checks should include a A. Debit to Cash in bank of P4,000 B. Credit to Cash in bank of P4,000 C. Debit to accounts payable of P4,000 D. No journal entry is necessary 3. The correct amount of “unlocated diference” is A. P32,600 C. P36,600 B. P35,600 D. P0 4. The Cash in bank to be shown on the company’s December 31, 2012 statement of financial position is A. P34,750 C. P33,750 B. P37,350 D. P37,750 5. The journal entry to adjust the Cash in bank account of December 31 should be A. Debit Cash in bank of P8,000 B. Credit to Cash in bank of P8,600 C. Net credit to Cash in bank of P600 D. Net debit to Cash in bank of P600 PROBLEM 20:

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet In auditing the HECTOR COMPANY, you obtained the bank statement, cancelled checks, and other memoranda which relate to the company’s bank account for December 2012. In reconciling the bank balance with that shown on the company’s books, you observed the facts set forth below: (1) Balance per bank statement, 12/31/12 P47,174 (2) Balance per books, 12/31/12 19,289 (3) Outstanding checks, 12/31/12 63,000 (4) Receipts of 12/31/12, deposited 1/2/13 6,260 (5) Service charge for November, per bank memo of 12/15/12 1,000 (6) Proceeds of bank loan, 12/15/12, discounted For 3 months at 18% per annum, Omitted from company books 47,750 (7) Deposit of 12/22/12, omitted from bank Statement 9,170 (8) Check of Milano Company, returned on 12/21/12, for absence of counter-signature And redeposited with complete signature on 1/3/13, no entry on the books having been Made for the return or redeposit 77,320 (9) Error on bank statement in entering deposit of 12/18/12; Correct amount P1,600 Entered in statement 160 1,440 (10) Check No. 021261 of Yek Company, Charged by bank im error to Company’s account 13,600 (11) Proceeds of note of Harthur Co., Collected by bank, 12/10/12, not Entered in cash book (principal amount of P25,000 plus interest of P1,125, less Collection fee) 25,625 (12) Erroneous debit memo of 12/28/12, to charge Company’s account with settlement of bank loan Which was paid by check no. 112170 on same Date 5,000 (13) Error on bank statement in entering Deposit of 12/4/12: Entered as P14,200.62 Correct Amount 12,400.62 1,800 (14) Deposit of Bunso Co. 12/02/12, Credited in error to this company 3,500 1. What is the principal amount of the loan obtained from bank in December? a. P50,000 c. P48,125 b. P47,750 d. P49,625 2. What amount of prepaid interest should be shown on Hector’s December 31, 2012 statement of financial position? a. P2,250 c. P375 b. P0 d. P1,875 3. The amount of collection fee is a. P625 c. P375 b. P1,625 d. P0 4. What is the adjusted Cash in bank balance as of December 31, 2012? a. P14,344 c. P17,944 b. P11,464 d. P9,344 5. The Cash in bank per ledger as of December 31, 2012, should be increased (decreased) by a. P4,945 c. P(4,945) b. P5,945 d. P(5,945) PROBLEM 21:

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet You are auditing general cash for DION COMPANY for the fiscal year ended July 31, 2012. The client has not prepared the July 31 bank reconciliation. After a brief discussion with the owner you agree to prepare the reconciliation, with assistance from one of Dion Company’s clerks. You obtain the following information:

Beginning balance Deposits Cash receipts journal Checks cleared Cash disbursement journal July bank service charge Note paid directly NSF check Ending Balance

General Ledger P 46,110

Bank Statement P 57,530 250,560

254,560 (236,150) (218,110)

P82,560

(870) (61,000) (3,110) P 6,960

Information in General Ledger and Bank Statement Balance per bank P57,530 Deposits in transit 6,000 Outstanding checks 17,420 Balance per books 46,110 Additional information obtained is: 1. Checks clearing that were outstanding on June 30 totaled P16,920. 2. Checks clearing that were recorded in the July disbursements journal totaled P204,670. 3. A check for P10,600 cleared the bank, but had not been recorded in the cash disbursements journal. It was for an acquisition of inventory. Dion uses the periodic inventory method. 4. A check for P3,960 was charged to Dion Company but had been written on a diferent company’s bank account. 5. Deposits included P6,000 from June and P244,560 for July. 6. The bank charged Dion Company’s account for a not-sufficient-fund check totaling P3,110. The credit mnager concluded that the customer intentionally closed its account and the owner left the city. The check was turned over to a collection agency. 7. A note for P58,000, plus interest, was paid directly to the bank under an agreement signed four months ago. The note payable was recorded at P58,00 on Dion Company’s book. Based on facts given, answer the following: 1. The checks outstanding on June 30 amount to a. P 9,980 c. P13,940 b. P10,830 d. P3,340 2. The deposits in transit on June 30 amount to a. P6,890 c. P6,000 b. P10,000 d. P9,110 3. The adjusted cash balance on July 31 is a. P6,980 c. P3,870 b. P10,940 d. P3,020 4. Which of the following audit procedures would be used to verify the payment of note in July? a. Check the arithmetical accuracy of the July 31 reconciliation. b. Check the absence of not on July 31 bank confirmation. c. Trace payment to duplicate deposit slip. d. Obtain cutof bank statement. 5. The auditor would perform the following procedures to verify the unrecorded check of P10,600, except a. Obtain cutof bank statement b. Examine checks returned with July bank statement. c. Trace check number to absence in July cash disbursements journal and recording in August. d. Examine supporting documentation.

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet

PROBLEM 22 The cash account of VELASCO COMPANY shows the following activities: Date Debit Credit Balance Nov. 30 Balance P115,000 Dec. 2 November bank charges P50 114,950 4 November bank credit for notes receivable collected P10,000 124,950 15 NSF check 1,300 123,650 20 Loan proceeds 48,500 172,150 21 December bank charges 60 172,090 31 Cash receipts book 707,300 879,390 31 Cash disbursements book 4 471,390 08,000

Date Dec. 1 2 3 4 5 8 9 1

CASH BOOKS RECEIPTS PAYMENTS OR No. Amount Check No. Amount 110-120 P11,0 801 P 2,000 00 121-136 21,300 802 3,000 137-150 20,000 803 1,000 151-165 56,000 804 3,000 166-190 39,000 805 12,000 191-210 66,000 806 19,000 211-232 88,000 807 26,000 233-250 77,000 808 30,000

0 1

251-275

21,000

809

61,000

1

276-300

30,000

810

7,000

1

301-309

55,000

811

8,000

1

310-350

8,000

812

1

351-390

19,000

813

16, 000 20,000

1

391-420

9,000

814

22,000

1

421-480

17,000

816

36,000

2

481-500

21,000

817

11,000

2

501-525

32,000

818

50,000

2

-

-

819

7,000

2

-

-

820

4,000

2

526-555

74,000

821

3,000

2

556-611

5,000

822

12,000

2

-

-

823

13,000

2

612-630

38,000

824

29,000

1 2 5 6 7 8 9 2 3 3 3 6 8 8 9

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet 2

-

-

825

2,000

2

-

-

826

11,000

9 9 Totals

P707, 300 Date Dec. 1 2 3 4 5 8 9 10 11 12 15 16 17 18 19 22 23 23 23 26 28 28 29 29 29 Totals

BANK STATEMENT Check No. Charges 792 P2,500 802 3,000 804 3,000 EC 81,000 805 12,000 CM 16 799 7,050 DM 57 1,300 808 30,000 803 1,000 809 61,000 DM 61 60 813 20,000 CM 20 815 6,000 816 36,000 811 8,000 801 2,000 814 22,000 818 50,000 DM 112 120 821 3,000 CM 36 820 4,000 P353,0 30

P408,000 Credits P8,500 11,000 21,300 20,000 81,000 95,000 12,000 154,000 77,000 21,000 85,000 8,000 19,000 48,500 47,000 32,000 74,000 5,000 12,000 P831,300

Additional information: 1. DMs 61 and 112 are for service charges. 2. EC is error corrected 3. DM 57 is for an NSF check. 4. CM 20 is for loan proceeds, net of P150 interest charges for 90 charge. 5. CM 16 is for the correction of an erroneous November bank charge. 6. CM 36 is for customers’ notes collected by bank in December. 7. Bank balance on December 31 is P592,270. 1. The total outstanding checks t November 30 should be a. P9,550 c. P13,050 b. P7,050 d. P15,550 2. The total outstanding checks at December 31 should be a. P147,000 c. P153,000 b. P16,550 d. P159,000 3. The deposit in transit at November 30 should be a. P8,500 c. P48,500 b. P19,500 d. P0 4. The deposit in transit at December 31 should be a. P44,000 c. P46,500 b. P0 d. P38,000 5. The adjusted book balance at November 30 should be a. P125,000 c. P115,000 b.P124,950 d. P136,950

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet 6. The adjusted bank receipts for the month of December should be a. P763,800 c. P765,800 b. P773,800 d. P767,800 7. The adjusted book disbursements for the month of December should be a. P403,480 c. P415,480 b. P415,540 d. P409,480 8. The adjusted bank balance at December 31 should be a. P592,270 c. P558,270 b. P477,270 d. P483,270 PROBLEM 23 Shown below is the May 31, 2012, bank reconciliation prepared by your client’s staf. RECONCILIATION May 31, 2012 Bank Balance P652,000 Add: Deposit in transit 10,000 Total P662,000 Less: Outstanding checks No. 640 P10,000 652 8,000 653 2,000 Book Balance Add: Proceeds of note receivable Collected in May P70,000 Deposit on May 31 not Recorded on books until June 2,000

P570,800

72,000 P642,800 800 P642,000

Total Less: Bank service charge Adjusted book balance The June 2012 bank statement is shown below: Pasig Bank Period Covered: May 31, 2012-June 30,2012 Account No.: 0021261 Date Checks Deposits June 1 8,000 10,000 June 8 2,000 June 11 14,000 20,000 June 13 1,000 DM 1,000 June 16 4,000 June 21 12,000 56,000 June 27 18,000 June 29 1,000 EC 1,000 EC June 30 200 SV June 30 3,000 DM SV- Service Charges EC- Error Corrected

DM-Debit Memo CM- Credit Memo

The paid checks accompanying this bank statement (all clearing in June) are the following: No. 652 P8,000 No. 654 P14,000 No.657 P12,000 No. 653 P2,000 No. 655 P4,000 No. 658 P18,000 The check register reveals that the last check issued in June is No. 659 for P5,000 and that Check No. 656 is for P2,600. Cash received for the period June 22 through June 30 of P70,000 was deposited in the bank on July 1.

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet The debit memos on June 13 and June 30 represent customer’s NSF checks returned by the bank. The June 13 NSF check was immediately redoposited without entry. The June 30 NSF was redoposited on July 1 without entry. 1. What is the total bank receipts in June? a. P87,000 c. P77,000 b. P88,000 d. P78,000 2. What is the total bank disbursements in June? a. P59,200 c. P58,200 b. P58,000 d. P63,200 3. What is the balance per bank statement on June 30,2012? a. P676,800 c. P732,400 b. P627,200 d. P729,200 4. What is the total book receipts in June? a. P88,000 c. P146,000 b. P220,000 d. P218,000 5. What is the total book disbursements in June? a. P53,000 c. P56,400 b. P57,400 d. P63,200 6. What is the book balance on June 30, 2012? a. P732,200 c. P732,400 b. P729,200 d. P676,800 PROBLEM 24 The following information was obtained in an audit of the cash account of CHELSEE COMPANY as of December 31, 2012. Assume that the CPA has satisfied himself as to the propriety of the cash book, the bank statement, and the returned checks, except as noted: 1. The bookkeeper’s bank reconciliation at November 30, 2012. Balance per bank statement P194,000 Add: Deposit in transit 11,000 Total P205,000 Less: Outstanding checks No. 1434 P1,400 No. 1562 7,500 No. 1571 5,800 No. 1584 8,000 No. 1591 300 23,000 Balance per books P182,000 2. A summary of the bank statement for December 2012. Balance brought forward P194,000 Deposits 1,487,000 Total P1,681,000 Charges (1,325,000) Balance, December 31, 2012 P 356,000 3. Included in cancelled checks returned with the December bank statement were the checks listed below. 4. The Chelsee Company discounted its own 60-day note for P90,000 with the bank on December 1, 2012. The discount rate was 6 percent. The accountant recorded the proceeds as a cash receipt at the face value of the note. 5. The accountant records customers’ dishonored checks as a reduction of cash receipts. When the dishonored checks are redeposited they are recorded as a regular cash receipt. Two NSF checks for P1,800 and P2,200 were returned by the bank during December. Both checks were redopsited and were recorded by the accountant. 6. Cancellations of Chelsee Company checks are recorded by a reduction of cash disbursements.

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet 7. December bank charges were P200. In addition, a P100 service charge was made in December for the collection of a note receivable in November. These charges were net recorded on the books. 8. Check No. 1434 listed in the November outstanding checks was drawn by 2010. Since the payee cannot be located, the president of Chelsee Company agreed to the CPA’s suggestion that the check be written back into the accounts by a journal entry. 9. Outstanding checks at December 31, 2012, totaled P49,400, including checks 1434 and 1584. 10.The cutof bank statement disclosed that the bank had recorded a deposit of P24,000 on January 2, 2013. The accountant had recorded this deposit on the books on December 31, 2012, and then mailed the deposit to the bank. Cancelled Checks Returned with the December Bank Statement Numb Date of Amount of Comments er Check Check 1562 11/28/12 P750 This check was in payment of an invoice for P7,500 and was recorded in the cash book as P7,500. 1571

11/28/12

5,800 This check was in payment of an invoice for P5,800 and was recorded in the cash book as P5,800.

1583

12/04/12

1,500 Examination of this check revealed that it was unsigned. A discussion with the client disclosed that it had been mailed inadvertently before it was signed. The check was endorsed and deposited by the payee and processed by the bank even though it was a legal nullity. The check was recorded in the cash disbursements journal.

1588

12/12/12

8,000 This check replaced 1584, which was returned by the payee because it was mutilated. Check 1584 was not cancelled on the books

---

12/19/12

2,000 This was a counter check drawn at the bank by the president of the company as a cash advance for travel expense. The president overlooked informing the bookkeeper about the check.

---

12/20/12

3,000 The drawer of this check was the Chelsee Company.

1595

12/20/12

3,500 This check had been labeled NSF and returned to the payee because the bank had erroneously believed that the check was drawn by the Chelsee Company. Subsequently, the payee was advised to redeposit the check.

1599

01/05/13

100,000 This check was given to the payee on December 30, 2012, as a postdated check with the understanding that it would not be deposited

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet until January 5. The check was not recorded on the books in December. 1. What is the correct amount of outstanding checks on December 31? a. P41,400 c. P48,000 b. P33,250 d. P40,000 2. What is the amount of cash receipts per book in December? a. P1,496,900 c. P1,495,100 b. P1,504,900 d. P1,487,000 3. What is the amount of cash disbursements per book in December? a. P1,254,850 c. P1,256,850 b. P1,252,850 d. P1,248,850 4. What is the cash in bank balance per book of December 31? a. P426,050 c. P430,050 b. P428,250 d. P343,200 5. What is the adjusted balance as of December 31? a. P343,000 c. P347,000 b. P340,000 d. P344,200 PROBLEM 25 The following information was obtained in connection with the audit of PINKY COMPANY’S cash account as of December 31, 2012. Outstanding checks, 11/30/12 Outstanding checks, 12/31/12 Deposit in transit, 11/30/12 Cash balance per general ledger 12/31/12 Actual company collections from its customers during December Company checks paid by bank in December Bank service charges recorded on company books in December Bank service charges per December bank statement Deposits credited by bank during December November bank service charges recorded on company books in December

P16,250 12,500 12,500 37,500 152,500 130,000 2,500 3,250 145,000 1,500

The cash receipts book of December is underfooted by P2,500. The bank erroneously charged the company’s account for a P3,750 check of another depositor. This bank error was corrected in January 2013. 1. How much is the deposit in transit on December 31, 2012? a. P5,000 c. P22,500 b. P20,000 d. P17,500 2. The total unrecorded bank service charges as of December 31, 2012 is a. P750 c. P1,750 b. P2,250 d. P4,250 3. What is the total book receipts in December? a. P150,000 c. P155,000 b. P152,500 d. P147,500 4. What is the total amount of company checks issued in December? a. P130,000 c. P133,750 b. P123,000 d. P126,250 5. What is the total book disbursements in December? a. P123,750 c. P126,250 b. P128,500 d. P128,750 6. What is the book balance on November 30, 2012? a. P16,250 c. P37,500 b. P21,250 d. P35,000 7. What is the bank balance on November 30,2012?

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet a. P23,000 c. P43,500 b. P18,500 d. P16,250 8. What is the total bank receipts in December? a. P120,000 c. P145,000 b. P140,000 d. P150,000 9. What is the total bank disbursements in December? a. P154,500 c. P129,500 b. P132,500 d. P137,000 10.What is the bank balance on December 31, 2012? a. P21,500 c. P31,000 b. P26,500 d. P33,250 PROBLEM 26 In your audit HARRY INC’s cash account as of December 31, 2012, you ascertain the following information: The bookkeeper’s bank reconciliation on November 30, 2012, is as follows: Balance per bank statement, November 30 P24,298 Add: Deposits in transit 3,648 Total P27,946 Less: Outstanding checks No. 3408 P 440 No. 3413 300 No. 3414 6,820 No. 3416 3,924 No. 3417 800 12,284 Balance P15,662 Add: Bank service charge for November 36* Balance per general ledger, November 30 P15,698 *Entered in Check Register in December The Cash Receipts Journal shows total receipts for December of P371,766. The Check Register reflects total checks issued in December of P377,632. A collection of P5,912 was recorded on company books on December 31 but was not deposited until January 2, 2013. The balance per bank statement at December 31, 2012 is P17,516. This statement shows total receipts of P373,502 and checks paid of P380,284. Your examination reveals the following additional information: 1. Check No. 3413 dated November 24, 2012, was entered in the Check Register as P300. Your examination of the paid checks returned with the December bank statement reveals that the amount of this check is P30. 2. Check No. 3417 was mutilated and returned by the payee. A replacement check (no. 3453) was issued. Both checks were entered in the Check Register but no entry was made to cancel check no. 3417. 3. The December bank statement includes an erroneous charge of P480. 4. On January 3, 2013, the bank informed your client that a December bank service charge of P42 was omitted from statement. 5. Your examination of the bank credit memo accompanying the December bank statement discloses that it represents proceeds from the note receivable collection in December for P4,000. 6. The outstanding checks at December 31, 2012, are as follows: No. 3408 P440 No. 3418 P2,814 No. 3417 800 No. 3419 5,788 1. What is the total book disbursements for the month of December? a. P377,668 c. P377,632 b. P377,710 d. P377,596 2. What is the book balance at December 31? a. P9,832 c. P9,754

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet b. P9,868 d. P9,796 3. The outstanding checks at December 31 totaled a. P8,602 c. P9,042 b. P9072 d. P9,796 4. What is the adjusted bank balance on November 30? a. P16,690 c. P16,804 b. P16,732 d. P16,774 5. The adjusted book receipts for the monthe of December should be a. P375,724 c. P371,238 b. P371,766 d. P375,766 6. The adjusted book disbursements for the month of December should be a. P377,590 c. P377,674 b. P377,662 d. P377,632 7. What is the adjusted book balance on December 31? a. P14,824 c. P14,908 b. P14,866 d. P14,782 8. A proof of cash used by an auditor a. Provides that the client’s year-end balance of cash is fairly stated. b. Confirms that the client has properly separated the custody function from the recording function with respect to cash. c. Validates that the client’s bank did not make an error during the period being examined. d. Determines whether any unauthorized disbursements or unrecorded deposits were made for the given time period. PROBLEM 27 The following data are assembled by the accountant of the HAROLD COMPANY: Nov. 30, 2012 Dec. 31, 2012 Cash account balance P41,175.00 P100,712.50 Bank statement balance 267,705.00 344,542.50 Deposits in transit 20,502.00 32,200.00 Outstanding checks 69,295.00 75,280.00 Bank service charges 1,800.00 1,500.00 NSF check* 20,625.00 Company’s notes receivable collected 179,53 202,250.00 by bank 7.50 *Redeposited in the same month. No entries made to take up the return and redeposit. The bank statement and the company’s cash records show the following totals: Cancelled checks and debit memos per bank statement P545,932.50 Cash receipts per cash book 411,592.50 Checks written per cash book 529,792.50 Deposits and credit memos per bank statement 622,770.00 1. What is the total book receipt in December? a. P613,842.50 c. P411,592.50 B. P591,130.00 d. P580,330.00 2. What is the total book disbursements in December? a. P531,592.50 c. P533,092.50 b. P529,792.50 d. P531,292.50 3. What is the adjusted book balance on November 30? a. P220,712.50 c. P218,912.50 b. P222,512.50 d. P217,412.50 4. The adjusted bank receipts in December should be a. P634,168.50 c. P632,667.50 b. P622,770.00 d. P634,467.50 5. The adjusted book disbursements in December should be a. P545,932.50 c. P548,917.50 b. P552,517.50 d. P551,917.50 6. What is the adjusted book balance on December 31?

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet a.P301,462.50 b. P302,662.50

c. P322,087.50 d. P280,537.50

PROBLEM 28 The auditor of TSIKOY COMPANY gathered the following information. 1. The November 30 bank statement balance included bank service charges P2,000. 2. The November 30 cash balance in the general ledger was P244,500. 3. Outstanding checks on November 30 were P63,000 while undeposited receipts were P36,000. 4. The bank service charges as shown on the bank statement totaled P3,000. 5. The December 31 cash balance in the general ledger was P319,750, which recognized P482,750 for December receipts and P405,500 for checks written during December. In transit to the bank were receipts of P28,750. Checks of P15,000 written to prior to December and checks of P60,500 written in December had not yet cleared the bank. 1. What is the total book disbursement for December? a. P403,500 c. P407,500 b. P404,500 d. P405,500 2. What is the November 30 bank balance? a. P271,500 c. P268,500 b. P269,500 d. P266,500 3. What is the total bank receipts in December? a. P490,000 c. P497,250 b. P482,750 d. P488,000 4. What is the total bank disbursements in December? a. P419,000 b. P408,500 b. P405,500 d. P396,000 5. What is the bank balance on December 31? a. P316,750 b. P322,750 b. P363,500 c. P366,500 PROBLEM 29 RODELIO CO. has a current account in Pinoy Bank. Your audit or the company’s cash account reveals the following: 1. Balances taken from the company’s general ledger: Cash balance, Nov. 30, 2012 P637,860 Cash balance, Dec. 31, 2012 576,420 Receipts, Dec. 31, 2012 306,220 2. Balances taken from the December bank statement: Bank balance, Nov. 30, 2012 P685,180 Bank balance, Dec. 31, 2012 637,220 Disbursements (debits) 356,080 3. Outstanding checks, Nov. 30, 2012 (P26,140 was Paid by bank in December) 64,140 4. Checks written and recorded in December: not Included in the checks returned with the December bank statement 36,080 5. Deposit in transit, Nov. 30, 2012 15,260 6. Deposit in transit, Dec. 31, 2012 16,140 7. A bank credit memo was issued in December to Correct an erroneous charge made in November 1,500 8. Note collected by bank in December (company was not informed of the collection) 2,060 9. A check for P2,020 (payable to a supplier) was Recorded in the Check Register in December as P3,000 980 10.A check for P2,240 was charged by the bank as P2,420 in December 180 11.Rodelio Co. issued a stop payment order to the bank in December. This pertains to a check written in

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet December which was not received by the payee. A new check was written and recorded in the Check register in December. The old check was Written of by a journal entry also in December. 12.Bank service charge, Nov. 30, 2012

780 60

1. What is the total book disbursements in December? a. P367,660 c. P369,720 b. P244,780 d. P368,540 2. What is the total bank receipts in December? a. P260,160 c. P306,060 b. P308,120 d. P309,020 3. What is the total outstanding checks on December 31? a. P100,220 c, P62,220 b. P38,000 d. P74,080 4. What is the adjusted bank balance on November 30? a. P636,300 c. P637,800 b. P685,180 d. P634,800 5. What is the adjusted book receipts in December? a. P307,500 c. P303,380 b. P306,220 d. P305,440 6. What is the adjusted bank disbursements in December? a. P353,980 c. P345,960 b. P365,840 d. P366,020 7. What is the adjusted book balance on December 31? a. P577,500 c. P576,420 b. P577,400 d. P579,460 PROBLEM 30 Data for the ANNABELLE, INC. are shown below: Cash account balance Bank statement balance Deposits in transit Outstanding checks Bank service charges for the month, not shown on company books NSF checks returned by bank, not shown on company books Bank collections from company customers, not shown on company books

Nov. 30 P20,340 107,060 8,200 27,700

Dec. 31 P48,540 137,820 12,880 30,100

720

600

4,300

8,240

72,240

80,900

Additional information: 1. Deposits and credit memos per bank statement P249,100 2. Cancelled checks and debit memos per bank statement 218,340 3. Cash receipts per cash book 172,880 4. Checks written per cash book 211,900 1. What is the total book receipts in December? a. P172,880 c. P253,780 b. P245,120 d. P181,540 2. What is the total book disbursements in December? a. P211,900 c. P211,180 b. P216,200 d. P216,920 3. What is the adjusted cash balance on November 30? a. P89,000 c. P71,160 b. P87,560 d. P96,160 4. What is the adjusted cash balance on December 31? a. P120,600 c. P137,080

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet b. P94,840 d. P155,040 5. What is the adjusted book receipts in December? a. P253,780 c. P244,420 b. P236,460 d. P270,180 6. What is the adjusted bank disbursements in December? a. P215,940 c. P248,440 b. P220,740 d. P204,260 PROBLEM 31 The bookkeeper-cashier of the TANYING COMPANY absconded on the evening of April 16, 2013, apparently with a large portion of the company’s cash. He had taken with him certain accounting records, including the cash journals and the general ledger. You are called upon to ascertain, if possible, the shortage with which the missing employee may be charged. You obtained the following information from the available subsidiary journals, ledgers, and other data. Balances at close of business, April16, 2013: Accounts receivable P442,550 Accounts payable 207,300 Cash in bank, less checks outstanding 98,830 Transactions, January 1_April 16, 2013: Sales, per receivable clerk Cash sales Sales allowances in customer’s accounts Cash purchase of furniture, per dealer’s invoice Total merchandise purchases Expenses paid, supported by paid invoices and payrolls Cash dividend declared, P50,000 (of which, P10,000 remains unpaid)

P5,876,170 none 18,330 3,000 3,615,260 1,865,830 40,000

A check for P100,000 had been cashed by the bookkeeper shortly before hid departure. Although the signature on the check had been obviously forged, it was paid by the bank and returned with other cancelled checks. A statement of financial position prepared from the books and other files follows: Tanying Company Statement of Financial Position December 31, 2012 ASSETS Cash Accounts receivable Inventory (at cost) Furniture Less: Accumulated depreciation Total assets

P32,670 226,230 440,350 P74,560 31,800

42,760 P742,010

LIABILITIES AND SHAREHOLDER’S EQUITY Account payable P114,720 Share capital 500,000 Retained earnings 127,290 Total liabilities and shareholders’ equity P742,010 1. What is the total amount paid for merchandise purchases? a. P3,615,260 c. P3,522,680 b. P3,293,240 d. P3,707,840 2. What is the total amount of collections from sales?

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet a. P5,641,520 c. P6,074,160 b. P5,659,850 d. P6,092,490 3. What is the total amount of cash disbursements from January 1-April 1, 2013? a. P5,524,090 c. P5,431,510 b. P5,202,070 d. P5,432,510 4. What is the cashier’s accountability (correct cash balance before shortage) on April 15, 2013? a. P242,680 c. P143,850 b. P98,830 d. P43,850 5. What is the amount of cash shortage chargeable against the cashier? a. P100,000 c. P143,850 b. P43,850 d. P242,680 PROBLEM 32 The JUNNEL COMPANY had weak internal controls over its cash transactions. Facts about its cash position at November 30, 2012 were as follows: The cash books showed a balance of P94,508, which included undeposited receipts. A credit of P500 on the bank’s records did not appear on the books of the company. The balance per bank statement was P77,750. Outstanding checks were no. 8420 for P581, no. 8422 for P750, no. 8430 for P1,266, no. 8621 for P954, no. 8623 for P1,034, and no. 8632 for P726. The cashier stole all undeposited receipts in excess of P18,972 and prepared the following reconciliation: Balance per books, Nov. 30, 2012 P94,508 Add: Outstanding checks 8621 P 954 8623 1,034 8632 726 2,214 96,722 Less: Undeposited receipts 18,972 Balance per bank, Nov. 30, 2012 77,750 Less: Unrecorded credit 500 True cash, Nov. 30, 2012 P77,250 1. What is the correct amount of cash that should be on hand for deposit on November 30, 2012? a. P23,069 c. P22,569 b. P18,972 d. P22,069 2. How much was stolen by the cashier? a. P3,597 c. P4,097 b. P3,097 d. P0 3. The cashier attempted to conceal his theft by I. Not listing all outstanding checks. II. Underfooting outstanding checks shown on the reconciliation. III. Adding an item to the bank balance that should be deducted from the book balance. a. I and II only c. I and III only b. II and III only d. I, II, and III 4. Taking only the information given, which of the following internal control deficiencies allowed the cashier to steal cash and conceal his theft? a. The cashier is also responsible for preparing the reconciliation. b. No one other than the cashier is responsible for tracing cash receipts to the deposits in the bank. c. Both a and b d. Neither a nor b. 5. What is the adjusted cash balance as of November 30, 2012? a. P95,008 c. P94,008 b. P91,411 d. P87,814 PROBLEM 33 Presented below is the cash receipts book of APPLE INC.:

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet

Date The the

are net

June 1 10 15 20 20 25 26 26 30 30

Cash Sales BA BO BE Cash Sales BU BO BE BO BA BA 3,200

June 3 3,200 4

4,800

CASH RECEIPTS BOOK June 1-30, 2012 Accounts Cash Sales Receivab Sales Discoun le t P800 P3,200 P64 6,000 120 4,800 96 2,400 10,800 216 4,000 12,000 240 3,600 3,600 800 P45,200 P3,200 P936 June 10

June 2 6,000

30

800

Net Cash

P800 3,136 5,880 4,664 2,400 10,504 4,000 11,680 800 P47,464 BO 6,000

following are company’s accounts receivable subsidiary ledgers. All the debits represent sales. The credit terms 2%-10 days, 30 days. June 15

9

4,000

26

15

3,600

30

,000 3,600

June 2 10,800 10

BU 6,000 4,800

June 25

June 15 4,800 16 12,000

BE 4,800

June 20

12,000

26

1. What is the correct amount of cash receipts in June? a. P47,000 c. P48,000 b. P47,000 d. P47,664 2. What is the cash shortage on June 30? a. P336 c. P200 b. P0 d. P536 PROBLEM 34 You started the audit of the financial statements of ARCHIE, INC. on January 15, 2013, for the year ended December 31, 2012. The general ledger shows cash account balance P247,200 as at December 31, 2012. The following items are included in December 31, 2012, reconciliation prepared by the cashier: Cash per records, December 31, 2012 P247,200 Cash per bank statement, December 264,095 31, 2012 Outstanding checks 25,325 Check of Tsikoy Co., charged by bank in error on December 28, 2012: corrected by bank on January 2, 2013 750 Deposit in transit 3,500 From January 2, 2013 to January 15, 2013, the date of your cash count, total cash receipts appearing in the cash records amounted to P53,500. During the same period, the bank had credited total deposits of P47,965. The following cash and cash items were on hand at the close of business on January 15, 2013: Currency P1,425 Customer’s checks 1,950 Expense vouchers 375 P3,750

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet Your further investigation revealed the following: a. Cash received on account from customers: DATE AMOUNT ENTRY MADE 07/05/1 P4,000 Allowance for bad debts Accounts receivable 2 12/10/1 3,000 Inventory Accounts receivable 2

4,00 0 3,00 0

4,000 3,000

12/15/1 3,500 Not recorded 2 b. Unrecorded but deposited checks received from customers from January 2, 2013 to January 15, 2013 totaled P2,000. c. The cashier presented receipts for collections from customers on January 10, 2013 totaling P4,500: these were recorded and undeposited. 1. What adjusting entries would you provide for item (a) through (c)? 2. What is the total cash shortage as of December 31, 2012? a. P21,180 c. P14,680 b. P16,180 c. P4,180 3. What is the total cash shortage as of January 15, 2013? a. P26,465 c. P27,965 b. P18,430 d. P24,930 PROBLEM 35 The LEINOR COMPANY does not have adequate controls over its cash transactions. During an audit, you found the following data concerning its cash position at December 31, 2012. 1. On the company’s record the cash balance is P173,500. 2. A credit of P2,500 for a note collected by the bank does not appear on the company’s records. 3. The bank statement balance is P135,000. 4. Outstanding checks are as follows: NUMBER 1428 1431 1445 1446 The cashier made the following reconciliation: Balance per bank statement Deduct: Outstanding checks: No. 1431 No. 1445 No. 1446 Add: Undeposited collections (per count) Collected note Cash per books, December 31, 2012

AMOUNT P5,200 3,600 4,080 3,460 P135,000 P3,600 4,080 3,460 P46,140 2,500

10,140 P124,860 48,640 P173,500

1. What is the total shortage? a. P11,200 c. P5,000 b. P8,700 d. P6,000 2. How did the cashier attempt to conceal the shortage? PROBLEM 36 The following table summarizes the cash receipts and disbursements of LOI COMPANY for the last six months of 2012: MONTH RECEIPTS DISBURSEMEN

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet July August September October November December

P102,000 70,000 120,000 172,000 260,000 280,000 P964,000

TS P60,000 110,000 68,000 92,000 122,000 180,000 P668,000

Additional information: 1. Bank balance, July 1, 2012 2. Bank balance, December 31, 2012 3. Outstanding checks, December 31, 2012 (No checks were outstanding on July) 4. Undeposited receipts, December 31, 2012 (included in the December receipts) 5. Bank deposits, July 1 through December 31 What is the total shortage? a. P0 b. P76,000

P200,000 524,000 42,000 24,000 914,000

c. P30,000 d. P66,000

PROBLEM 38 JAM COMPANY’S unadjusted trial balance at December 31, 2012, included the following accounts: DEBIT CREDIT Cash P 69,200 Accounts receivable 102,650 Merchandise 947,160 inventory Accounts payable P789,715 Accrued expenses 13,21 4 Jam Co.’s year-end is December 31. At the end of 2012, it held its cash book open so that its statement of financial position would show a more favorable financial condition. Your audit revealed the following items: 1. The December cash book included January cash receipts of {65,460, of which P36,010 represents cash sales and P29,450 represents collections from customers, net of 5% cash discounts. 2. The December check register included payments of accounts to suppliers of P37,240 on which discounts of P1,240 were taken. 3. The merchandise inventory account balance was determined by physical count on December 31, 2012. 1. What are Jam’s working capital and current ration at December 31, 2012, based on balances per company books? WORKING CAPITAL a. P316,081 b. P316,081 c. P329,295 d. P329,295

CURRENT RATIO 1.42 1.39 1.42 1.39

2. What are Jam’s correct working capital and current ratio at December 31, 2012? WORKING CAPITAL CURRENT RATIO a. P244,381 1.29 b. P278,831 0.33 c. P330,835 1.40 d. P280,381 1.33

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet

PROBLEM 39 FE COMPANY, organized on March 1, 2012, has a very poor internal control system. The company’s cashier is also its accountant. After 9 months of operations, the company’s manager suspects that the cashier-accountant has been misappropriating company collections. You have been engaged to audit the company’s accounts to determine the extent of fraud, if any. You started the audit on November 15. On that date, the cash on hand per your surprise count was P5,140. Also on that date, the bank confirmed that the balance of the company’s current account was P26,328.Your examination of the records reveals that a check for P1,852 was outstanding on November 15. The company’s mark up is 40% of sales. Further examination of the company’s records reveals the following balances at November 15, 2012: Ordinary share capital P300,000 Share premium 20,000 Real property purchased for cash 200,000 Mortgage payable 80,000 Furniture and fixtures (of the acquisition cost, P6,000 remains unpaid as of Nov. 15) 29,000 Notes payable-bank 32,000 Accounts payable-trade 46,281 Expenses paid (excluding purchases) 60,756 Merchandise inventory at cost 93,920 Accounts receivable-trade 85,380 Total sales P340,000 1. How much was paid for inventory purchases? a. P157,716 c. P183,636 b. P293,716 d. P251,636 2. How much was collected from customers? a. P118,620 c. P50,620 b. P254,620 d. P340,000 3. How much is the cashier’s accountability at November 15, 2012? a. P131,228 c. P145,228 b. P83,228 d. P151,228 4. What is the adjusted bank balance as of November 15, 2012? a. P31,468 c. P29,616 b. P26,328 d. P23,040 5. The cash shortage as of November 15, 2012 totaled a. P121,612 c. P127,612 b. P101,612 d. P206,992 PROBLEM 40 Your client, a successful small business, has never given much attention to a sound internal control. In its employ is Alex Coopit, the company’s cashier-bookkeeper. Alex handles cash receipts, makes small disbursements from cash receipts, maintains accounting records, and prepares the monthly bank reconciliation. The bank statement for the month ended March 31, 2012, show a cash balance of P590,000. The following checks are outstanding on March 31: No. 7163 P 8,623 No. 7284 7,320 No. 7285 10,612 No. 8722 6,322 No. 8724 12,280 No. 8733 6,200 The company’s general ledger shows a cash balance of P696,499 on March 31, 2012.

Cordillera Career Development College COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION Buyagan, Poblacion, La Trinidad, Benguet Realizing that being the cashier-accountant of the company he can easily misappropriate collections and conceal it, Alex removed all the cash on hand in excess of P127,301, and then prepared the following reconciliation in an efort to conceal this theft. BANK RECONCILIATION Balance per accounting records P696,499 Add: Outstanding checks No. 8722 P 6,322 No. 8724 12,280 No. 8733 6,200 20,802 Total 717,301 Deduct: Cash on hand 127,301 Balance per bank statement, March P590,000 31 1. How much was taken by the cashier-accountant? a. P30,555 c. P4,000 b. P157,856 d. P26,555 2. What is the amount of cash that should be on hand at November 15, 2012? a. P127,301 c. P157,856 b. P131,301 d. P30,555