PROBLEM NO. 1
EZ Company reports the following information as of the end of the year:
 Share investment securities of P1,500,000. These securities are ordinary share
investment in companies that are traded in the Philippine Stock Exchange. As a result, the
shares are very actively traded in the market.
 Debt investment securities of P3,000,000. These securities are government bonds broken
down as follows: P1,200,000 in treasury bills, P800,000 in treasury bonds and P1,000,000
in treasury notes.
 Cash of P800,000 in the form of coins, currency, savings account and checking account.
 Money market placements in the form of banker’s acceptances, commercial paper and
negotiable certificate of deposits with a total value of P2,500,000.
At the end of the year, the “cash and cash equivalents” should be:
a. P3,500,000
c. P6,100,000
b. P4,500,000
d. P6,400,000
PROBLEM NO. 2
EZ Company’s checkbook balance on December 31, 2020, was P8,000,000. In addition, EZ held
the following items in its safe on December 31:
 Check amounting to P2,000,000 payable to BBB, a supplier, dated January 2, 2021, not
included in December 31 checkbook balance.
 Check amounting to P400,000 payable to EZ, deposited December 20, and included in
December 31, checkbook balance, but returned by bank on December 30, stamped
“DAIF”. The check was redeposited January 2, 2021 and cleared January 7.
 Post dated checks on hand amounting to P150,000.
 Check amounting to P1,000,000 drawn on EZ account, payable to vendor, dated and
recorded on December 31, but not mailed until January 15, 2021.
The proper amount to be shown as cash on EZ’s statement of financial position at December 31,
2020 should be:
a. P7,600,000
c. P8,600,000
b. P8,000,000
d. P9,750,000
PROBLEM NO. 3
On December 31, 2020, the cash account of EZ Company showed the following details:
Undeposited Collections
60,000
Cash in Bank – PCIB checking account
70,000
Undeposited DAUD check received from customer, dated December 1
15,000
Cash in Bank – PNB fund for payroll
150,000
Cash in Bank – PCIB savings deposit
100,000
Cash in Bank – PCIB (overdraft)
(50,000)
Cash in Bank – PCIB (money market instrument, 90 days)
2,000,000
Cash in foreign bank (restricted)
100,000
Receivable from Officers
10,000
Sinking Fund Cash (to be disbursed on April 1, 2021)
450,000
Preference Shares (to be redeemed on January 10, 2021)
120,000
On December 31, 2020, the “cash and cash equivalents” should be:
a. P2,810,000
c. P2,660,000
b. P2,780,000
d. P780,000
PROBLEM NO. 4
You examined the petty cash fund of the VICTOR Company immediately after the close of
business on August 31, 2021, the end of the company’s fiscal year. Your audit showed the
following fund composition:
Currencies
2,900
Coins
400
Petty Cash Vouchers:
Gasoline payments for delivery vehicle
250
Office Supplies
160
Medicines for Employees
240
Transportation
Office Equipment Repairs
Loans to Employees
A check drawn by the company payable to the order of the
Petty Cash Custodian, representing her salary
An employee’s check returned by the bank because of
Insufficient fund
A piece of paper with names of several employees
Together with a contribution for a wedding gift for
An employee. Attached to the sheet of paper is a currency of
400
400
800
3,800
1,200
500
The petty cash general ledger has an imprest balance of P10,000.
Based on the above data:
1. Determine the amount of petty cash fund that should be shown on the statement of
financial position as of August 31, 2021.
2. Determent the amount of cash shortage or overage.
3. Prepare the necessary audit adjusting entries.
PROBLEM NO. 5
You are examining the accounts of RR beauty salon. Your count of the imprest cash fund, made
at 9:00 am, on January 2, 2022, in the presence of Joey petty cashier, revealed:
Coins
Quantity
32
40
Denomination
P1
P0.25
Bills
Quantity
4
3
10
15
Denomination
P500
P100
P20
P10
Checks:
Date
December 27
December 30
December 30
Payee
Cash
Joey
Joey
Maker
AA, Beautician
BB, Hairdresser
CC, customer
Unused Stamps:
Various Denomination
Amount
P5,000
P6,100
P6,500
P80
Vouchers:
Date
December 15
December 16
December 17
December 28
January 2
January 2
Nature of Disbursement
Transportation
Office Supplies
Xerox Fees
Postage
Newspaper
Freight Charges
Amount
P65
P70
P80
P150
P10
P50
IOUs:
Date
December 20
December 23
Maker
DD, employee
EE, salesman
Amount
P50
P100
The balance of the Petty Cash Account, December 31, 2021 was P5,000.
Sales invoices (for cash sales, all in cash, no checks)
Invoices
#2007
December 30
P4,000
#2008
December 31
P5,100
#2009
January 2
P3,050
Required:
Compute the amount of cash shortage.
PROBLEM NO. 6
You have gathered the following data in the preparation of bank reconciliation on December 31,
2020 for HARWOOD company:
a. Balance per bank statement, P1,000,000.
b. Balance per book, P350,000.
c. Bank service charge, P5,000.
d. Outstanding checks, P300,000.
e. Deposit in transit, P237,500.
f. Proceeds of bank loan, December 1 not recorded on HARWOOD company’s books,
P470,000.
g. Customer’s check charged back by bank for lack of counter signature, P25,000.
h. Check of PLYWOOD company charge by the bank against HARWOOD account, P75,000.
i. Customer’s note collected by bank in favor of HARWOOD company.
Face Amount
200,000
Interest
20,000
Total
220,000
Less: Service Charge
2,500
217,500
j. Deposit of P50,000 incorrectly recorded by bank as, P5,000.
k. Erroneous debit memo of December 28, to charge HARWOOD account with settlement
of bank loan, P100,000.
l. Deposit of PARE company credited to HARWOOD account, P150,000.
Required:
a. Prepare bank reconciliation as of December 31, 2020.
b. Prepare adjusting journal entries.
PROBLEM NO. 7
Data regarding the cash in bank for the current year of Basic Company follow:
Jan. 31
Feb. 28
Cash per ledger
200,000
290,000
Cash receipts for February
300,000
Unadjusted bank statement
237,500
319,800
Bank disbursements
207,700
Credit memo for note collected
80,000
60,000
Bank service charge
7,500
4,200
Deposit in Transit
50,000
40,000
Outstanding Checks
15,000
14,000
Compute for the adjusted balance of the following:
a. Cash in bank, January 31.
b. Cash receipts
c. Cash disbursements
d. Cash in bank, February 28
PROBLEM NO. 8
Data regarding the cash in bank for the current year of AA company follow:
Jan. 31
Cash per ledger
200,000
Feb. 28
290,000
Cash receipts for February
Unadjusted bank statement
Bank disbursements
Overstatement of cash receipts per book
Overstatement of cash disbursements per books
Erroneous bank credit
Erroneous bank charge
199,070
4,000
270
6,000
3,200
300,000
282,400
220,600
3,000
900
4,000
9,500
Compute for the adjusted balance of the following:
a. Cash in bank, January 31
b. Cash receipts
c. Cash disbursements
d. Cash in bank, February 28
PROBLEM NO. 9
The following data are available for the Cash in Bank of ABC company for February of the current
year:
a. Deposit made by the company this February, P220,000.
b. Deposit in transit, January 31, P200,000.
c. Customer’s check representing receipts in January amounting to P21,000 was
erroneously recorded by the company as P12,000.
d. Checks of the company in January amounting to P2,000 was erroneously recorded by the
company as P20,000.
e. Deposit acknowledge by the bank in February, P150,000.
f. Erroneous bank charge in January 31, P13,000.
g. Erroneous bank credit in February 28, P14,000.
h. Customer’s note collected, January 31, P10,000.
i. Customer’s note collected, February 28, P12,000.
Required: Compute for the following:
1. Deposit in transit in February 28
2. Unadjusted book receipts in February
3. Unadjusted bank receipts in February
PROBLEM NO. 10
The following data are available for the Cash in Bank of ABC company for February of the current
year:
a. Checks issued by the company this February, P250,000.
b. Outstanding checks, January 31 P52,000.
c. Customer’s check representing receipts in January amounting to P12,000 was
erroneously recorded by the company as P21,000.
d. Checks of the company in January amounting to P20,000 was erroneously recorded by
the company as P2,000.
e. Checks paid by the bank in February, P130,000.
f. Erroneous bank credit in January 31, P10,000
g. Erroneous bank charge in February 28, P12,000.
h. Bank service charge, January 31, P2,000.
i. Bank service charge, February, P3,000.
Required: Compute for the following:
1. Outstanding checks in February 28
2. Unadjusted book disbursements in February
3. Unadjusted bank disbursement in February
PROBLEM NO. 11
Reconciliation of JAZZ company’s bank account at May 31 of the current year is:
Balance per bank statement
2,600,000
Deposits outstanding
300,000
Bank service charge
10,000
Erroneous bank charge
40,000
Outstanding checks
Erroneous bank credit
CM for collection of notes
Balance per book
(100,000)
(60,000)
(600,000)
2,190,000
June data are as follows:
Checks recorded
Correction of erroneous bank credit in May
Deposits recorded
Correction of erroneous bank charge
Service charge recorded
CM for collection by bank
NSF checks returned with June 30 statement
(will be redeposited)
Bank
2,200,000
60,0000
1,600,000
40,000
50,000
550,000
Book
2,500,000
1,800,000
600,000
100,000
-
1. How much is the outstanding check on June 30?
a. 400,0000
c. 190,000
b. 510,000
d. 340,000
2. How much is the total deposit in transit on June 30?
a. 510,000
c. 100,000
b. 500,000
d. 90,000
3. How much is the total adjusted cash receipts in June?
a. 2,350,000
c. 2,190,000
b. 2,400,000
d. 2,030,000
4. How much is the total adjusted cash disbursement in June?
a. 2,650,000
c. 2,500,000
b. 2,410,000
d. 2,350,000
5. How much is the total adjusted cash balance as of June 30?
a. 2,480,000
c. 2,370,000
b. 2,280,000
d. 2,490,000
PROBLEM NO. 12
Your audit senior instructed you to prepare a four-column proof of cash receipts and
disbursements for the month of December 2021.
The bank reconciliation prepared by ASHLEY Company at November 30 is reproduced below:
Unadjusted bank balance
193,600
Add: Deposit in Transit
36,000
Total
229,600
Less: Outstanding checks:
No.
276
4,800
282
14,400
284
9,600
285
3,200
32,000
Adjusted bank balance
197,600
Unadjusted book balance
Add: CM – note collected
Total
Less: DM bank charges
Adjusted book balance
117,280
80,640
197,920
320
197,600
The December bank statement, which has a beginning balance of P193,600, is reproduced below:
May Bank
Account Name: ASHLEY Company
Date
Debits
Credits
December 01
36,000
December 02
December 04
December 06
December 08
December 10
December 11
December 16
December 18
December 21
December 30
December 31
Totals
14,400
48,000
80,000
96,000
800,000
80,000
CM83
DM97
112,000
40,000
72,000
8,000
262,400
DM97 – customer’s DAIF check
DM98 – service charges
128,000
144,800
160,000
128,000
1,684,800
DM98
CM84
CM83 – note collected by the bank
CM84 – account collected by the bank
The company’s cash receipts and cash disbursements journals for the month of December 2021
are provided below:
Cash Receipts Journal
Date
OR No.
Amount
Dec. 01
415
80,000
05
416
96,000
10
417
112,000
17
418
128,000
20
419
144,000
30
420
160,000
31
421
177,600
Total
881,600
Cash Disbursement Journal
Date
Check no.
Dec. 01
286
03
287
10
288
14
289
20
290
23
291
26
292
28
293
31
294
Total
Amount
32,000
48,000
64,000
40,000
56,000
72,000
80,000
88,000
96,000
608,000
The company’s cash in bank ledger appears below:
Cash in Bank
Balance
12/01/2021
12/10/2021
12/31/2021
GJ
GJ (CM83)
CRJ
117,280
80,640
800,000
881,600
12/31/2021
CDJ
P608,000
Questions:
Based on the application of the necessary audit procedures and appreciation of the above data,
you are to provide answers to the following:
1. How much is the outstanding checks as of December 31, 2021?
a. 416,000 b. 465,600
c. 433,600
d. 448,000
2. How much is the adjusted book receipts for December 31, 2021?
a. 1,970.400
b. 1,543,200
c. 1.826,400
d. 1,809,600
3. How much is the adjusted book disbursements for December 31, 2021?
a. 695,680
b. 696,000
c. 664,000
d. 678,400
4. How much is the adjusted cash balances as of December 31, 2021?
a. 1,328,000
b. 1,377,600
c. 1,360,000
d. 1,345,600
PROBLEM NO. 13
Data regarding the cash is bank for the current year of Initiate Retreat Company follow:
Jan. 31
Feb.28
Cash per ledger
200,000
290,000
Cash receipts for February
300,000
Unadjusted bank statements
199,070
282,400
Bank disbursements
220,600
NSF check recorded as reduction of cash receipts:
a. Returned in January recorded in February, P1,800.
b. Returned in February recorded in February, P10,400.
c. Returned in February recorded in March, P8,600.
Checks of the company issued in January was mutilated and returned
by the payee. A replacement check was issued. Both checks were
entered in the check register but no entry was made to cancel the
mutilated check, P700.
The company issued a stop payment order to the bank in February for
check issued in February which was not received by the payee. A new
check was written and recorded in the check register in February. The
old check was written-off by a journal entry also in February, P1,200.
Paid out of collection in February, P12,100.
Compute for the adjusted balance of the following:
a. Cash in bank, January 31.
b. Cash receipts
c. Cash disbursements
d. Cash in bank, February 28.
PROBLEM NO. 14
In connection with your examination, the Found Company presented to you the following
information regarding its cash in bank account for the month of June, 2020:
a. Balances per bank statements: May 31, P1,250,000, and June 30, P1,350,000.
b. Balances of cash in bank account in company’s books: May 31, P1,251,000, and June 30,
P1,051,000.
c. Total changes in the bank statement during June were P1,300,000.
d. Undeposited receipts were: May 31, P200,000 and June 30, P153,000.
e. Outstanding checks were: May 31, P150,000.
f. Erroneous bank credits were: May 31, P45,000 and June 30, P17,000.
g. Erroneous bank charges were: May 31, P20,000 and June 30, P30,000.
h. Collection by bank not recorded by Company were P125,000 in May and P150,000 in
June.
i. NSF not entered in company’s books were: May 31, P110,000 and June 30, P75,000.
j. Customer’s check deposited in May amounting to P21,000 was erroneously entered in the
books as P12,000. Assume this was corrected in June.
Questions:
1. How much were the cash disbursements per books in June?
a. 1,491,000
b. 1,365,500
c. 1,565,000
2. How much are the outstanding checks at the end of June?
a. 330,000
b. 381,000
c. 390,000
3. How much is the adjusted cash balance as of May 30, 2020?
d. 1,500,000
d. 110,000
a. 1,266,000
b. 1,257,000
c. 1,275,000
d. 1,291,000
4. How much is the adjusted book disbursements for June 2020?
a. 1,381,000
b. 1,315,000
c. 1,465,000
d. 1,456,000
5. How much is the adjusted cash balances as of June 30, 2022?
a. 1,135,000
b. 1,126,000
c. 1,346,000
d. 1,276,000
6. Which of the following adjusting entry would be made by the company at the end of June?
a. Bank Service Charge
75,000
Cash in Bank
75,000
Accounts Receivable
150,000
b. Cash in Bank
50,000
Accounts Receivable
75,000
Cash in Bank
125,000
c. Cash in Bank
84,000
Accounts Receivable
84,000
d. Cash in Bank
75,000
Accounts Receivable
75,000
PROBLEM NO. 15
You are engaged to audit the books of JACINTO enterprises. From the records of the company,
you gathered the following information:
JACINTO started the operation on October 2, 2021 with JACINTO investing P300,000 cash.
Monthly bank reconciliation statements have not been prepared; however, bank statements for
October, November, and December were made available to you. The bank statement in
December 2021 showed an ending balance of P261,000.
Examination of the paid checks disclosed that checks totaling P9,000 were issued by the
company in December 2021, and were presented for payment only in January 2022. Cash count
of the cashier’s accountability amounted to P17,000. You were told by the cashier that P10,000
of these, in checks, were cash sales on December 29, 2021, deposited on January 3, 2022. The
balances, in currency and coins, represents petty cash fund.
Additional data:
1. Account receivable subsidiary ledgers had a total balance of P140,000 at December 31,
2021.
2. Supplier’s unpaid invoices for merchandise totaled P120,000.
3. The bank statement in October showed a bank credit for P196,000, dated October 2,
2021. Inquiry from the cashier disclosed that the amount represents proceeds of a 90-day,
discounted bank note. P160,000 of this loan was paid by checks in December 2021.
4. Merchandise inventory at December 31, 2021 amounted to P60,000.
5. Operating expenses paid during the period totaled P360,000; while merchandise
purchases amounted to P500,000.
6. The gross profit rate is 120% of cost.
Questions:
1. What is the adjusted balance per bank as of December 31, 2021?
a. 271,000
b. 260,000
c. 262,000
2. Total payment for merchandise purchased in 2021 is:
a. 360,000
b. 380,000
c. 500,000
3. How much is the costs of goods sold in 2021?
a. 380,000
b. 500,000
c. 440,000
4. Total sales in 2021 should be:
a. 440,000
b. 528,000
c. 968,000
5. Total book receipts in 2021 amounted to:
a. 1,324,000
b. 1,024,000
c. 1,288,000
6. Total book disbursements in 2021 amounted to:
a. 520,000
b. 1,020,000
c. 740,000
7. The amount of cash shortage as of December 31, 2021 is:
a. 162,000
b. 155,000
c. 118,000
d. 268,000
d. 620,000
d. 560,000
d. 744,000
d. 884,000
d. 900,000
d. 0
PROBLEM NO. 16
The following data pertain to the cash account of NEW WORLD company:
1. The balance of cash in bank account in the general ledger were P198,000 on September
30 and P210,000 on October 31.
2. Balance per bank statement: P200,000 on September 30 and P235,000 on October 31.
3. Total deposits and credits per bank statement during October were P195,000.
4. Deposit in transit were P18,000 at September 30.
5. Outstanding checks totaled P30,000 on October 31.
6. Bank service charges not entered in the company’s books amounted to P3,000 on
September 30 and P5,000 on October 31.
7. NSF checks returned by the bank, recorded as reduction of cash receipts.
a. Returned by bank in September but recorded in October P4,000
b. Returned by bank in October and recorded also in October P6,000.
8. Erroneous bank credit amounted to P10,000 on September 30 and P5,000 on October
31.
9. A check payable to supplier in September was recorded by the company as P13,000 when
the correct amount is P31,000.
10. Total cash receipts for October per company’s records were P187,000.
11. Credit memo for note collected: September 30 – P20,000; October 31 – P25,000.
Questions:
Compute for the adjusted balance of the following:
1. Deposit in Transit October 31
a. 15,000
c. 30,000
b. 5,000
d. 18,000
2. Outstanding checks September 30
a. 21,000
c. 15,000
b. 19,000
d. 35,000
3. Cash receipts, October 31
a. 197,000
c. 207,000
b. 202,000
d. 192,000
4. Cash Disbursement, October 31
a. 161,000
c. 153,000
b. 165,000
d. 159,000
5. Cash in bank, October 31
a. 205,000
c. 230,000
b. 240,000
d. 235,000