PROBLEM NO. 1
Shooky Incorporated’s controller Kim Koya is trying to identify how much is the total cash that
should be reported on the company’s Statement of Financial Position as of December 31, 2020.
The following information are available for analysis:
a. Shooky has savings and checking account balances of P1,000,000 and P900,000
respectively in Metro Bank.
b. A P600,000 money market fund account is held at China Bank.
c. A separate fund of P1,500,000 is restricted for the retirement of long-term obligations.
d. P5,000 petty cash fund.
e. An IOU from Kim Tata, an employee, in the amount of P10,000.
f. A bank overdraft of P110,000 happened at one of the banks that Shooky uses to deposit its
cash receipts. Currently, Shooky has no other deposits at this bank.
g. Shooky has two certificates of deposit of P500,000 each. The maturity period of these CDs
is 120 days.
h. Shooky has travel advance for executive travel amounting to P180,000. This is for the first
quarter of 2021 and employee will reimburse the amount through salary reduction.
i. Shooky received a check dated January 12, 2021 in the amount of P125,000.
j. Currency and coins on hand is P5,300.
A. How much cash and cash equivalents should be reported in the balance sheet as of December 31,
2020?
B. What should be the classification (or account title) of the P180,000 travel advance for executive
travel?
PROBLEM NO. 2
Maxon, an auditor found the following items in the cash account of Bright Bird Company at
December 31, 2020.
1. Customers’ check dated December 25, 2020, P25,000.
2. Company’s check (P30,000) dated December 26, 2020 which was drawn in payment for
merchandise purchased on that date but not delivered until January 3, 2021. This check was
deducted in the cash balance.
3. A check worth P196,000 from customer who paid the account net of the 2% discount. The
company records the transaction as credit to Accounts Receivable for the proceeds.
4. Cash in closed bank (Urban Bank), P95,000.
5. Redemption fund, P100,000
6. Sinking fund, P100,000. This will be used on March 1, 2021 to redeem the bonds payable.
7. Metro Bank Checking Account No. 0004568, P210,000.
8. RCBC Checking Account No. 000120994, P115,000.
9. Overdraft in PNB Checking Account No. 000170995, P50,000.
10. Company’s check dated January 3, 2021 in payment of account, P50,000. This was recorded
in the company’s disbursement ledger at December 31, 2020.
11. Overdraft in RCBC Checking Account No. 0030493, P15,000.
12. Postage stamps, P2,000.
13. 90-day Treasury Bills (purchase on November 1, 2020), P100,000
14. Treasury Bills that matures on February 1, 2021, P50,000.
15. Change fund, P10,000.
16. Customers’ certified check, P20,000.
17. Company’s certified check, P50,000. (This was included in the cash disbursement for
December).
What is the adjusting entry for the following?
A. item number 3
B. item number 10
C. item number 16
D. item number 17
E. How much total cash and cash equivalents Bright Bird Company should report in its balance
sheet as of December 31, 2020?
PROBLEM NO. 3
Kim RJ is auditing the P10,000 petty cash fund of Jeon Cooky Company as of December 31, 2020.
He discovered the following:
Cash count date is January 3, 2021 at 5:00PM.
Paper Bills:
Denomination Quantity
P500
10
100
15
50
18
20
15
10
5
Coins:
P180 in P5 pieces
P42 in P1.00 pieces
P23 in P0.25 pieces
IOU’s submitted were:
Dec. 18
Dec. 28
Dec. 30
Cashed checks:
Dec. 28, 2020
Dec. 28, 2020
Dec. 30, 2020
Jan 1, 2021
Justin Seagull
Renoir
J-Dope
P750
125
500
check drawn by the manager
check drawn by an employee
check drawn by a customer
check drawn by an employee
P 1,125
500
350
1,250
The cashier informed RJ that owing to the lack of cash it was necessary for him to open certain
payroll envelopes unclaimed by employees and use the cash found herein. They were as
follows:
Dec. 15
Dec. 30
Dec. 30
Dec. 30
Sejin
Shiyuk
Vante
Mochi
P1,250
1,750
650
1,000
The cashier also informed RJ that all cash sales receipts were passed through his fund and that
cash sales tickets Nos. 2059 to 2061 under dates of Dec. 30, Jan. 3 and Jan. 4 for P350, 500
and P545, respectively, had not yet been turned over to the general cashier.
The petty cash vouchers found in the petty cash box were as follows:
Dec. 30, 2020
Transportation
Dec. 30, 2020
Token gifts to visitors
Dec. 30, 2020
Freight for office supplies purchase
Jan. 1, 2021
Freight for goods purchased
Jan. 2, 2021
Freight for goods sold
P515
650
215
125
575
A. How much is the cash shortage as of December 31, 2020?
B. How much is the adjusted balance of the petty cash fund as of December 31, 2020?
PROBLEM NO. 4
The general ledger of Mang Incorporated showed a balance of P2,215,600 in its cash account on
December 31, 2020. Included in this balance are the following items:
Drawn Against Insufficient Fund (DAIF) checks returned by bank
Savings account
IOUs
Postage stamps
Bank draft
Cash on hand
Cash sinking fund
Customer's checks dated January 2013
Travel advances
Traveler's Checks
P20,000.00
750,000.00
1,200.00
600.00
10,000.00
30,000.00
500,000.00
5,400.00
4,000.00
8,000.00
During the cash count of the petty cash fund as of January 4, 2021, revealed the following
composition of its petty cash fund:
Bills and coins counted
Approved and signed petty cash vouchers
P2,450.00
Dated December 2020
Dated January 1-4, 2021
IOU from Van, an employee
A check drawn by Yoonji, an employee, dated January 15, 2021
3,300.00
800.00
1,400.00
2,000.00
The petty cash fund has an imprest balance of 10,000. The company’s reporting period ends
on December 31, 2020.
What is the correct balance of the petty cash fund?
How much is the cash shortage or overage?
What is the correct balance of cash?
PROBLEM NO. 5
You are auditing the cash account as of December 31, 2020 of NDU University Canteen and
you found out the following information:
Demand deposit account
Time deposit – 30 days
No Sufficient Fund (NSF) check of customer
Money market placement (due June 30, 2021)
Savings deposit in a closed bank
IOU from employee
Pension fund
Petty cash fund
Customer’s check dated January 1, 2021
Customer’s check outstanding for 18 months
Total
P2,000,000
1,000,000
40,000
1,500,000
100,000
20,000
3,000,000
10,000
50,000
40,000
P7,760,000
Additional information follows:
o Check of P200,000 in payment of accounts payable was recorded on December 31, 2020 but
mailed to suppliers on January 5, 2021.
o Check of P100,000 dated January 15, 2021 in payment of accounts payable was recorded and
o mailed on December 31, 2020.
o The company uses the calendar year. The cash receipts journal was held open until January
15, 2021, during which time P400,000 was collected and recorded on December 31, 2020.
How much is the total cash and cash equivalents to be shown on the December 31, 2020
balance sheet?
End of the Test.