PROOF OF CASH
Problem 1: Louisiana Company had the following bank reconciliation on June 30, 2023:
Balance per bank statement, June 30
Deposit transit
Total
Outstanding checks
Balance per book, June 30
3,000,000
400,000
3,400,000
(900,000)
2,500,000
The bank statement for the month of July showed the following:
Deposits (including P200,000 note collected for Louisiana)
Disbursements (including P140,000 NSF check
and P10,000 service charge)
9,000,000
7,000,000
All reconciling items on June 30 cleared through the bank in July. The deposit in transit
amounted to P1,000,000 and the outstanding checks totaled P600,000 on July 31.
1.
2.
3.
4.
What is the correct amount of cash in bank to be reported on July 31, 2023?
What is the cash in bank balance per ledger on July 31, 2023?
What is the amount of cash receipts per ledger for July?
What is the amount of cash disbursements per ledger for July?
Problem 2: You obtained the following information on the current account of Eat Bulaga
Company during your examination of its financial statements for the year ended
December 31, 2024.
The bank statement on November 30, 2024, showed a balance of P450,000. Among the
bank credits in November was customer’s note for P35,000 collected for the account of
the company which the company recognized in December among its receipts.
Included in the bank debits were the cost of checkbooks amounting to P2,000 and a
P20,000 check which was charged by the bank in error against Eat Bulaga Company
account. Also, in November you ascertained that there were deposits in transit amounting
to P200,000 and outstanding checks totaling P150,000.
The bank statement for the month of December showed total credits of P550,000 and
total charges of P330,000. The company’s books for December showed total debits of
P890,000, total credits of P520,000 and a balance of P857,000. Bank debit memos for
December were: No. 121 for service charges, P3,000 and No. 122 on a customer’s
returned check marked “Refer to Drawer” for P11,700. The bank collected a note on
behalf of Eat Bulaga amounting to P80,000.
On December 31, 2024, the company placed with the bank a customer’s promissory note
with a face value of P150,000 for collection. The company treated this note as part of its
receipts although the bank was able to collect the note only in January 2020.
A check for P24,500 was recorded in the company cash payments books in December
as P54,200. Also, a collection of accounts receivable amounting to P50,000 was recorded
as P5,000.
5. What is the adjusted cash in bank balance as of December 31, 2023?
6. What is the amount of total deposits in transit as of December 31, 2023?
END OF EXAMINATION
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