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 4th 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.
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
1) What is the adjusted petty cash fund balance on Dec. 31, 2012?
A. P4,347
C. P30,000
B. P10,250
D. P24,097
2) The petty cash shortage on December 31, 2012 is?
A. P0
C. P3,500
B. P5,903
D. P4,347
3) 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
4) 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

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
Less: Overdraft with the Bank of Manila secured by a chattel
mortgage on the inventories
300,000
CASH BALANCE PER LEDGER
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 staff
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 different 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
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 effect 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
Jeff Corp.
Jeff Corp.
Dec.31
Dec. 31
Dec. 31
Jeff Corp.
Jeff Corp.
Taiwan Corp.
Maker
custodian
SLV, Inc.
Mario Lansang,
sales manager
MSU corp.
Ateneo Inc.
Jeff Corp.
Unreimbursed vouchers
Date
Payee
Dec. 23
Mario Lansang, sales manager
28
Central Post Office
29
messengers
29
Byte, Inc.
Amount
P1,200
14,000
1,680
17,800
8,300
27,000
Description
Amount
Advances for trip to Tagaytay City P20,000
Postage stamps
1,620
Transportation
150
Computer Repair
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.
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
Personal check of the sales manager
TOTAL
P120
1,680
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
Deposits
Note payment direct from
customer (interest of 1,200)
Checks cleared during May
Bank service charge
Balance, May 31, 2012
ABX, Inc.’s Cash Account
Balance, May 1, 2012
Deposits during May 2012
Checks written during May 2012
Receipts
P1,120,000
Balance
P350,760
37,200
P1,246,000
1,080
260,880
P354,000
1,240,000
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.
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.
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
1
1
1
4
27
29
Item
Beginning Balance
Deposit
Check No. 179
Check No. 180
Deposit
Check No. 181
checks
deposits
26,167
250
10,673
13,217
The following is from Garay’s Bank statement for April:
11,774
balance
6,150
32,317
32,567
21,898
33,672
20,490
Date
Item
Checks Deposits
Balance
2012, April 1 Beginning Balance
3,950
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
4340
4341
P435,000
P6,000
15,000
1,700
4,675
27,375
P407,625
16,200
P423,825
Add: Deposit in Transit
Balance per books
Date
Payee
Dec. 1
3
7
12
15
16
18
21
22
28
TOTAL
San Beda, Inc
Miriam Corp.
UE Enterprises
PSBA Corp.
Payroll
BU, Inc.
New Era Co.
UST, Inc.
Petty cash fund
Payroll
CHECK REGISTER
December 2012
No.
Vouchers
Payable
4342
P10,000
4343
4,200
4344
3,755
4345
12,000
4346
96,000
4347
6,300
4348
14,200
4349
7,000
4350
10,000
4351
98,000
P261,455
discount
Cash
P500
120
142
P762
P9,500
4,200
3,755
11,880
96,000
6,300
14,058
7,000
10,000
98,000
P260,693
BANK STATEMENT
BANKABLE BANK
PERIOD: November 30, 2012 – December 31, 2012
No: 001-43-44
Date
Description
Check No.
Balance last statement
Dec. 1 Cash deposit
1
Check issued
4329
4
Check issued
4342
4
Check issued
4341
5
Check
6
Check
4343
8
Check
10
Check
4344
15
Encashment
4346
Debit
Credit
P15,000
9,500
4,675
P16,200
4,200
49,000
3,755
96,000
10,000
14,000
Balance
P435,000
451,200
436,200
426,700
422,025
471,025
466,825
480,825
477,070
381,070
22
28
29
Encashment
4350
Encashment
4351
Debit memo – service
charge
29
Credit memo- interest
Deposits in transit at December 31 totaled P49,000.
98,000
271,070
273,070
272,070
1,000
1,550
273,620
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?
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
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
4122
120,650
TOTAL
P546,200
The cash account of Liezel Company shows the following information at April 30, 2012:
CASH
Date
April 1
30
30
item
balance
ref.
debit
CR 6
CP 11
528,900
credit
546,200
balance
95,550
624,450
78,250
Liezel Company received the following bank statement on April 30, 2012.
Bank statement for April 2012
Beginning balance
P95,550
Deposits and other
credits:
P16,300 EFT
April 1
4
208,700
9
20,350
12
27,950
17
109,350
22
68,400 BC
23
92,700
543,750
Checks and other Debits:
April 7
P44,550
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
(335,300)
Ending balance
P304,000
Explanation: EFT - - ELECTRONIC FUND TRANSFER
US - - unauthorized signature
BC - - bank collection
SC - - 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 of deposits in transit on April 30?
A. P53,000
C. P45,150
B. P69,850
D. P115,000
2. What is the amount of outstanding checks on April 30?
A. P241,000
C. P286,150
B. P337,500
D. P310,500
3. What is the amount of bank reconciliation on April?
A. P543,750
C. P459,050
B. P527,450
D. P528,900
4. What is the amount of bank disbursements in April?
A. P290,150
C. P289,150
B. P335,300
D. P316,150
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 1 Beg. Balance
P89,300
5
Deposit
P65,000 154,300
7
Check no. 14344
P32,500
120,800
11
Check no. 14345
14,000
106,800
26
Deposit
49,000 155,800
29
Check no. 14346
8,600
147,200
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
2012, Dec. 1
Beg. Balance
1
deposit
P5,550
4
Check no. 14344
P32,500
5
Deposit
56,000
14
Check no. 14345
14,000
15
Loan proceeds
500,000
20
NSF check
7,600
29
Service charge
1,000
31
Interest
3,600
Balance
P95,750
101,300
68,800
124,800
110,800
610,800
603,200
602,200
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
December 31, 2012
Balance per ledger, December 31, 2012
Add:
Collections received on the last day of December
And charged to “Cash in Bank” on books but
P34,350
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
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 difference
Balance per bank (checked to confirmation)
LIST OF OUTSTANDING CHECKS
December 31, 2012
Check No.
14344
14358
14367
14399
14401
14407
5,325
4,000
1,000
P46,675
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 difference” 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:
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
(7) Deposit of 12/22/12, omitted from bank
Statement
(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
(9) Error on bank statement in entering deposit of
12/18/12;
Correct amount
P1,600
Entered in statement
160
(10) Check No. 021261 of Yek Company,
Charged by bank im error to
Company’s account
(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)
(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
(13) Error on bank statement in entering
Deposit of 12/4/12:
Entered as
P14,200.62
Correct Amount
12,400.62
(14) Deposit of Bunso Co. 12/02/12,
Credited in error to this company
47,750
9,170
77,320
1,440
13,600
25,625
5,000
1,800
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:
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
254,560
(218,110)
P82,560
Bank Statement
P 57,530
250,560
(236,150)
(870)
(61,000)
(3,110)
P 6,960
Information in General Ledger and Bank Statement
Balance per bank
Deposits in transit
Outstanding checks
Balance per books
P57,530
6,000
17,420
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 different 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 cutoff bank statement.
5. The auditor would perform the following procedures to verify the unrecorded check of P10,600, except
a. Obtain cutoff 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.
PROBLEM 22
The cash account of VELASCO COMPANY shows the following activities:
Date
Debit
Credit
Nov. 30
Balance
Dec. 2
November bank charges
P50
4
November bank credit for
notes receivable collected
P10,000
15
NSF check
1,300
20
Loan proceeds
48,500
21
December bank charges
60
31
Cash receipts book
707,300
31
Cash disbursements book
408,000
Balance
P115,000
114,950
124,950
123,650
172,150
172,090
879,390
471,390
CASH BOOKS
Date
Dec. 1
2
RECEIPTS
OR No.
110-120
121-136
Amount
P11,000
21,300
PAYMENTS
Check No.
Amount
801
P 2,000
802
3,000
3
4
5
8
9
10
11
12
15
16
17
18
19
22
23
23
23
26
28
28
29
29
29
Totals
137-150
151-165
166-190
191-210
211-232
233-250
251-275
276-300
301-309
310-350
351-390
391-420
421-480
481-500
501-525
526-555
556-611
612-630
-
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
20,000
56,000
39,000
66,000
88,000
77,000
21,000
30,000
55,000
8,000
19,000
9,000
17,000
21,000
32,000
74,000
5,000
38,000
P707,300
803
804
805
806
807
808
809
810
811
812
813
814
816
817
818
819
820
821
822
823
824
825
826
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
P353,030
1,000
3,000
12,000
19,000
26,000
30,000
61,000
7,000
8,000
16,000
20,000
22,000
36,000
11,000
50,000
7,000
4,000
3,000
12,000
13,000
29,000
2,000
11,000
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
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 staff.
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
Deposit on May 31 not
Recorded on books until
June
P570,800
P70,000
2,000
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
June 1
8,000
June 8
2,000
June 11
14,000
June 13
1,000 DM
June 16
4,000
June 21
12,000
June 27
18,000
June 29
1,000 EC
June 30
200 SV
June 30
3,000 DM
SV- Service Charges
Deposits
10,000
20,000
1,000
56,000
1,000 EC
DM-Debit Memo
EC- Error Corrected
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.
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.
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 cutoff 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
Number
Date of
Amount of
Comments
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 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?
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
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 by bank
179,537.50
202,250.00
*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?
a.P301,462.50
c. P322,087.50
b. P302,662.50
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
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 off by a journal entry also in December.
780
12. Bank service charge, Nov. 30, 2012
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
2. Cancelled checks and debit memos per bank statement
3. Cash receipts per cash book
4. Checks written per cash book
1. What is the total book receipts in December?
a. P172,880
b. P245,120
2. What is the total book disbursements in December?
a. P211,900
b. P216,200
3. What is the adjusted cash balance on November 30?
a. P89,000
b. P87,560
4. What is the adjusted cash balance on December 31?
a. P120,600
b. P94,840
5. What is the adjusted book receipts in December?
a. P253,780
b. P236,460
6. What is the adjusted bank disbursements in December?
a. P215,940
b. P220,740
P249,100
218,340
172,880
211,900
c. P253,780
d. P181,540
c. P211,180
d. P216,920
c. P71,160
d. P96,160
c. P137,080
d. P155,040
c. P244,420
d. P270,180
c. P248,440
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
Accounts payable
Cash in bank, less checks outstanding
P442,550
207,300
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
Share capital
Retained earnings
Total liabilities and shareholders’ equity
P114,720
500,000
127,290
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?
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.:
CASH RECEIPTS BOOK
June 1-30, 2012
Date
Accounts
Cash
Receivable
Sales
June 1
Cash Sales
P800
10
BA
P3,200
15
BO
6,000
20
BE
4,800
20
Cash Sales
2,400
25
BU
10,800
26
BO
4,000
26
BE
12,000
30
BO
3,600
30
BA
800
P45,200
P3,200
Sales
Discount
P64
120
96
216
240
3,600
P936
Net Cash
P800
3,136
5,880
4,664
2,400
10,504
4,000
11,680
800
P47,464
The following are the company’s accounts receivable subsidiary ledgers. All the debits represent sales. The
credit terms are 2%-10 days, net 30 days.
BA
BO
June 3
3,200
June 10
3,200
June 2
6,000
June 15
6,000
4
4,800
30
800
9
4,000
26
,000
15
3,600
30
3,600
BU
BE
June 2
6,000
June 25 10,800
June 15
4,800
June 20
4,800
10 4,800
16
12,000
26
12,000
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 31, 2012
264,095
Outstanding checks
25,325
Check of Tsikoy Co., charged by bank in error
on December 28, 2012: corrected by bank on
January 2, 2013
Deposit in transit
750
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
Your further investigation revealed the following:
a. Cash received on account from customers:
DATE
AMOUNT
ENTRY MADE
07/05/12
P4,000 Allowance for bad debts
Accounts receivable
12/10/12
3,000 Inventory
Accounts receivable
12/15/12
3,500 Not recorded
4,000
3,000
4,000
3,000
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
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?
10,140
P124,860
48,640
P173,500
PROBLEM 36
The following table summarizes the cash receipts and disbursements of LOI COMPANY for the last six months of
2012:
MONTH
RECEIPTS DISBURSEMENTS
July
P102,000
P60,000
August
70,000
110,000
September
120,000
68,000
October
172,000
92,000
November
260,000
122,000
December
280,000
180,000
P964,000
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 inventory
947,160
Accounts payable
P789,715
Accrued expenses
13,214
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
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.
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
effort to conceal this theft.
BANK RECONCILIATION
Balance per accounting records
P696,499
Add: Outstanding checks
No. 8722
No. 8724
No. 8733
Total
Deduct: Cash on hand
Balance per bank statement, March 31
P 6,322
12,280
6,200
20,802
717,301
127,301
P590,000
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