Chapter 3 Cash

MULTIPLE CHOICE 1. C 6. B 11. B Problem 1 (a) Audit adjustments Cash Equivalents

Cash Other Non-current Financial Assets Cash Cash Accrued Salaries Expense Other
Non-current Financial Assets Cash Miscellaneous Expenses Advances to Employees Cash
(Petty Cash Fund) Cash Accrued Utilities Expense Accounts Receivable Cash (b) Cash
and Cash Equivalents Savings account with Metrobank Checking account with Metrobank
800,000 + 5,300 Certificates of deposit Payroll fund 1,200,000 + 35,000 Tax fund
Petty cash fund Undeposited collections 85,000 25,000 Correct cash and cash
equivalents 25,000 25,000 900,000 6,800 1,200 8,000 5,300 5,300 3,000,000 3,000,000
3,200,000 3,200,000 35,000 35,000 900,000 2. B 7. C 12. C 3. D 8. C 13. C 4. A 9. C
14. D 5. B 10. D 15. D

P1,500,000 805,300 3,000,000 1,235,000 500,000 12,000 60,000 P7,112,300

Problem 2 (Sta. Monica, Inc.) Expenses Petty Cash Fund Correct balance of petty
cash fund = P20,000 P10,500 = P9,500 10,500 10,500
Chapter 3 Cash
Problem 3 (Victor Company) (a) Correct amount of petty cash fund Currencies and
coins (b) Per count Currencies and coins Paid petty cash vouchers Employees NSF
check Wedding gift contribution (with bills) Total per count Cashiers
accountability: Petty cash fund, per ledger Wedding gift contribution Cash shortage
(b) Audit Adjusting Entries Delivery Expense 250 Office Supplies Expense 160
Employees Medicine 240 Transportation Expense 400 Repairs and Maintenance 400
Receivables from Employees 2,000 Cash Shortage (or Misc. Expenses or Receivables fr
Employees) 150 Petty Cash Fund P 6,400 2,250 1,200 1,500 P11,350 P10,000 1,500
11,500 P 150 P6,400

3,600

Problem 4 (Rainbow Corporation) (a) Total per count Cashiers Accountability Petty
Cash Fund, per ledger Unused postage stamps Unused office supplies Wedding gift
contribution Cash shortage Telephone Expense Water Expense Office Supplies Expense
(3,700 1,200) Postage Expense (2,800 1,800) Prepaid Expenses (1,200 + 1,800)
Receivables from Employees (3,900 + 4,000) Petty Cash Fund Correct amount of petty
cash fund = P35,000 P17,500 = Cash items in the petty cash fund: Bills and Coins
Replenishment check Total P 35,000 P35,000 1,800 1,200 1,000 1,500 1,600 2,500
1,000 3,000 7,900 17,500 P17,500 P 2,500 15,000 P17,500

39,000 P 4,000

(b).

(c)

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Chapter 3 Cash
Problem 5 Bills and Coins (show details of denomination and pieces per
denomination) Checks: Date Maker Amount 12-28-12 Urquiola, employee P 3,000.00 12-
29-12 Sta. Maria, employee 1,500.00 12-31-12 L. Chua, customer 2,500.00 01-02-13 A.
Bobadilla, customer 3,200.00 01-12-13 C. German, employee (check received 12-28-12)
1,500.00 Vouchers Date Voucher No. Particulars Amount 12-13-12 151 Freight out P
500.00 12-28-12 183 Supplies 300.00 12-29-12 184 Freight In 394.20 12-31-12 189
Freight on cabinet 741.10 01-02-13 001 Freight in 244.70 IOUs 12-21-12 S. Dechavez
Unused office supplies Total per count Cashiers accountability: Petty cash fund,
per ledger P15,000.00 Unremitted cash sales Inv. # 118 December 30 P1,000.40 Inv. #
129 December 31 2,500.00 Inv. # 133 January 2 3,200.00 6,700.40 Unused office
supplies 40.00 Cash shortage Audit Adjusting Entries: Receivables from Employees
(1,500.00 + 300.00) Freight out Supplies Expense (100 40) Prepaid Expenses
Furniture and Equipment Freight in Cash Shortage (Receivable from Employees) Petty
Cash Fund Cash in Bank (1,000.40 + 2,500.00) Sales Correct balance of petty cash
fund (P15,000 4,538.20) Composed of the following cash items at December 31, 2009
Bills and coins Checks dated December Petty cash vouchers dated January
(undisbursed as of December 31) Total cash items as of December 31 Unremitted cash
sales as of December 31 ( 1,000.40 + 2,500) Petty cash fund, per audit, December 31
1,800 500 260 40 741.10 394.20 802.90 3,500.40 3,500.40 P10,461.80 P6,717.50
7,000.00 244.70 P13,962.20 (3,500.40) P10,461.80 P6,717.50

11,700.00

2,180.00 300.00 40.00 P20,937.50

21,740.40 P 802.90

4,538.20

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Chapter 3 Cash

Problem 6 (Da King Company) Bills and coins 500 x 1 100 x 8 50 x 3 10 x 4 5x2 1x3
Checks: 12/29/12 M. Roxas, employee 12/30/12 J. Madrigal Company 01/02/13 J.
Estrada Junk Shop 01/15/13 F. Chavez, employee (received 12/27/12) Paid petty cash
vouchers: 12/16/12 Vo. No. 145 Freight on goods bought 12/26/12 164 Postage
12/29/12 165 Transportation of messenger 01/02/13 166 Repairs, completed Dec. 29,
2012 IOU Ed Gil, employee Postage stamps 10 pcs x P12 Total per count Cashiers
accountability Petty cash fund Unremitted collections 12/30/12 Refund for
merchandise returned P 1,500 01/06/13 Sale of junk and scrap materials 2,450 Unused
postage stamps Cash shortage Adjusting entries Receivable from Employees (1,800 +
1,200 + shortage of 1,247) Freight in/Cost of Goods Sold Transportation Expense
Postage Expense (200 120) Prepaid Expenses Petty Cash Fund Repairs and
Maintenance Accrued Expenses Cash in Bank Purchase Returns and Allowances /Cost of
Goods Sold Correct Petty Cash Fund = P10,000 P4,997 = Cash items as of December
31: Bills and coins Checks dated December Petty cash voucher dated January 2013
Cash refund for purchase returns Correct petty cash fund balance P 500 800 150 40
10 3

P 1,503

P2,000 1.500 2,450 1,800 P500 200 50 1,500

7,750

2,250 1,200 120 P 12,823

P10,000 3,950 120

14,070 P1,247

4,247 500 50 80 120 4,997 1,500 1,500 1,500 P5,003 P1,503 3,500 1,500 (1,500)
P5,003 1,500

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Chapter 3 Cash
Problem 7 (Cisco Systems, Inc.) (1) Bank reconciliation: Unadjusted balances
Outstanding checks Undeposited receipts Error in recording check issued for rental
payment Bank charge for payment of loan and interest Bank service charges Deposit
of another company Customers DAIF check Adjusted balances (2) Adjusting entry:
Notes Payable Bank Interest Expense Bank Service Charges Accounts Receivable Rent
Expense Cash in Bank (3) Cash and cash equivalents: Petty cash fund Cash in bank
Treasury bills maturing in 2 months Total cash and cash equivalents Problem 8
(Sunshine Corporation) 1. Unadjusted Balances Outstanding checks Undeposited
collections Customers note collected by bank Bank service charge Adjusted balances
Cash shortage Cash balance, December 31, per audit 2. Understated book balance
456,000 465,000 Overstated bank balance 424,000 454,400 Omitted outstanding
checks 183 198 Understated outstanding checks 52,000 25000 9,000 900 25,000
15,000 Overstated undeposited collections Omission of bank credit memo Total cash
shortage Per Bank P 424,000 (113,000) 48,000 P359,000 P359,000 Per Books P465,000
19,000 (1,500) P482,500 (123,500) P359,000 P 9,000 30,400 4,500 12,500 27,000 8,100
10,000 3,000 19,000 P123,500 40,000 5,000 1,400 12,500 1,800 57,100 P 20,000
1,295,212 500,000 P1,815,212 Per bank P 1,463,212 (140,000) 59,500 Per books
P1,352,312*

1,800 (45,000) (1,400) (87,500) P1,295,212 (12,500) P1,295,212

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Chapter 3 Cash

3.

Undeposited collections, December 31 Collections, January 1 15 Total amount

available for deposit Amount deposited, per deposit slips Undeposited collections,
January 15 Cash on hand, January 15 Additional cash shortage in January Adjusting
Entries Bank Charges Receivable from Employees (or Loss) Cash Notes Receivable

P 48,000 199,000 P247,000 (110,000) P137,000 (52,000) P 85,000

.4.

1,500 123,500 106,000 19,000

Problem 9 (Pamela Manufacturing Company) Unadjusted bank balance Outstanding checks

November 30 December 31 Deposits in transit November 30 December 31 Check of
Pamplona Company Adjusted Balances Nov. 30 876,750 (254,720) 164,220 786,250 Nov.
30 821,950 2,700 (3,500) (34,900) 786,250 9,198,720 (164,220) 209,180 9,198,720
Receipts 9,198,720 (5,830) 8,601,610 Disbursements 8,613,010 (3,500) 2,250 (34,900)
24,750 8,601,610 Receipts 9,153,760 Disbursements. 8,526,550 (254,720) 335,610 Dec.
31 1,503,960 (335,610) 209,180 5,830 1,383,360 Dec. 31 1,407,660 2,700 (2,250)
(24,750) 1,383,360

Balance per books Error in recording check no. 359 Bank service charge November
December NSF check returned in November Interest charged by the bank Adjusted
Balances

Audit adjusting entries: Cash in Bank Office Furniture Bank Service Charge Cash in
Bank Interest Expense Cash in Bank 2,700 2,250 2,250 24,750 24,750 2,700

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Chapter 3 Cash
Problem 10 (Golden Bells Company) Unadjusted bank balance Deposits in transit
November 30 December 31 Outstanding checks November 30 December 31 Erroneous bank
charges November 30 December 31 Erroneous bank credit November 30 December 31
Adjusted balances Nov. 30 2,500,000 58,000 (97,000) 25,000 (45,000) 2,441,000 Nov.
30 2,390,000 (15,000) (10,000) 76,000 2,441,000 (76,000) 84,000 2,214,000 (50,000)
2,214,000 Receipts 2,206,000 (25,000) (37,000) (45,000) 1,567,000 Disbursements
1,549,000 (15,000) 25,000 (10,000) 18,000 (50,000) 3,088,000 Dec. 31 3,047,000
(25,000) (18,000) 84,000 3,088,000 37,000 Receipts 2,300,000 (58,000) 47,000
(97,000) 46,000 Disbursements 1,700,000 Dec. 31 3,100,000 47,000 (46,000)

Unadjusted book balances (squeezed) NSF checks returned by bank November 30

December 31 Bank service charges November December Note collected by bank November
December Adjusted balances

1,567,000

Accounts Receivable Cash in Bank Bank Service Charges / Miscellaneous Expenses Cash
in Bank Cash in Bank Notes Receivable

25,000 25,000 18,000 18,000 84,000 84,000

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Chapter 3 Cash
Problem 11 (Starr Company) Unadjusted bank balance Deposits in transit April 30 May
31 (squeezed) Outstanding checks April 30 May 31 Adjusted balances Apr. 30 470,360
29,360 (144,800) 354,920 894,400 May 1-31 Receipts 654,400 May 1-31 Receipts Disb.
883,200 1,320,600 (29,360) 40,560 (144,800) 133,600 1,309,400 May 31 32,960 40,560
(133,600) (60,080)

Unadjusted book balances (squeezed) DAIF checks returned by bank April 30 May 31
Bank service charges April May Check issued by the treasurer to himself Proceeds of
loan granted by bank May Adjusted balances *621,240 = 613,120 + 8,000 + 120 (a) 1.
2. 3. 4. P363,040 P40,560 P696,000 P(60,080)

Apr. 30 363,040 (8,000) (120)

Disb. 621,240* (8,000) (120) 280 696,000

May 31 396,200

(280) (696,000) 240,000 (60,080)

354,920

240,000 894,400

1,309,400

(b)

Adjusting entries: Bank Service Charges Cash in Bank Loss from Theft/Receivable
from Officers Cash in Bank Cash in Bank Notes Payable Bank 280 280 696,000
696,000 240,000 240,000

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Chapter 3 Cash
Problem 12 (Rocky Mountain High) Unadjusted bank balance Deposits in transit
November 30 December 31 (102,000 12,000) Payment from collections Outstanding
checks November 30 December 31 = 62,000 + 105,000 + 30,000 + 40,000 Adjusted
balances Nov. 30 P888,800 148,900 Receipts P555,500 (148,900) 90,000 12,000
Disbursements P666,600 Dec. 6

90,000 12,000 (116,200)

(116,200) 921,500 Nov. 30 921,500 921,500 508,600 Receipts 508,600 508,600

237,000 799,400 Disbursements 571,400 228,000 799,400

(237,000) 630,700 Dec. 6 858,700 (228,000) 630,700

Unadjusted book balances (squeezed) Bank charges in December (200,000 + 28,000)

Adjusted balances Answers: (a) P148,900 (b) P116,200 (c) P921,500 (d) P630,700
Problem 13 1. 2. 3. 4. 5. A,D C, G. B, F E, H J, N 6. M, P 7. I, L 8. K, O 9. D, H
10. B, F

11. 12. 13. 14. 15.

D, F A, D F, G D, F J, N

16. I, L 17. Not a reconciling item 18. J, N 19. L, N 20. N, O

Problem 14 (Contronics Company) Petty Cash Fund P 15,000 (6,000) P9,000 Purchasing
Fund P 35,000 (20,000) P15,000 Cash in Bank P134,500 58,000 192,500 Total P184,500
(26,000) 58,000 P216,500

Balances, per ledger Disbursed in 2012 Bank credit memo Balances per audit
Adjusting entries Gasoline Expense Miscellaneous Expenses Transportation Expense
Petty Cash Fund Purchases or Inventory Purchasing Fund Cash in Bank Notes
Receivable

4,500 500 1,000 6,000 20,000 58,000 58,000 20,000

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Chapter 3 Cash
Problem 15 (Fortune Company) (a) Audit Adjustments Sales Cash Cash Utilities
Payable Accounts Receivable Cash Accounts Receivable Cash No entry, dividend fund
is part of cash. Accounts Receivable Cash Cash Shortage/ Receivable from Employees
Cash No entry, payroll fund is part of cash. Cash Shortage / Receivable from
Employees Miscellaneous Expenses Cash Cash Miscellaneous Income (b) Correct amount
of cash Cash balance, per ledger Cash sales of 2013 Unreleased check for utilities
Postdated checks received Customers NSF checks Stale check Shortage in the change
fund 2012 vouchers in petty cash fund Cash shortage in the petty cash fund
Unrecorded deposits (sale of scrap) Cash balance, per audit P1,640,000 (285,200)
19,300 (57,800) (32,500) (3,500) (550) (5,500) (300) 13,500 1,287,450 300 5,500
5,800 13,500 13,500 3,500 3,500 550 550 57,800 57,800 32,500 32,500

285,200 19,300

285,200 19,300

Supply the Answers Note to the Teacher: Please supply the petty cash imprest
balance of another figure for variation in your other classes.) Summary of Answers:
1. 2. 308.40 4,606.60

P50,000

in problem B. (You may supply

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Chapter 3 Cash
3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24.
5,000 shortage 35,000 800 5,700 400 5,300 53,800 838,600 157,950 780,650 or 761,650
(NSF checks may be treated as deduction from receipts) 625,700 or 606,700 (NSF
checks may be treated as deduction from receipts) 3,000 92,000 145,600 71,950
1,828,212 imprest system deposit of collections intact to the bank segregation of
duties of custodial function and bookkeeping function 125,250 194,550 255,700
55,000 SUPPORTING COMPUTATIONS A. 1. Total per count Cashiers accountability Petty
cash fund Postage stamps Other collections Cash shortage Correct petty cash fund =
1,156.60 + 3,450 Total per count Cashiers accountability Petty cash fund Check
payable to Meralco Birthday gift contribution Unused postage Cash shortage Correct
petty cash fund = P17,000 + P18,000 Total per count Cashiers accountability Petty
cash fund Undeposited collections Cash shortage Bills and coins Customers checks
Undeposited collections Petty cash fund, per audit P 10,761.60 P 10,500 220 350

11,070 P308.40 P4,606.60 P 53,500

2. B. 3.

P 50,000 3,500 4,500 500

58,500 P 5,000 P35,000 P19,700

4. C. 5.

P 15,000.00 5,500.00

20,500 P 800 P6,400 4,800 (5,500) P5,700

6.

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Chapter 3 Cash
D. 7. Total per count (exclude the unsigned pay envelope with no contents)
Cashiers accountability Petty cash fund P15,000 Unreleased payroll 5,000 Cash
shortage Bills and coins Vouchers with January 2013 dates Employees check dated
December 2012 Total cash items as of December 31 Unreleased payroll Correct petty
cash balance on December 31 P 19,600 20,000 P 400 P7,300 200 2,800 P10,300 (5,000)
P5,300

8.

E. 9. Unadjusted balances Bank credit memo Bank debit memo Outstanding checks Check
of Kin Error in recording check Cash on hand Balances before cash shortage Cash
shortage Cash balance, per audit

Bank P850,000 (120,400) 21,000

Books P750,500 150,000 (4,500) (3,600)

88,000 P838,600 P838,600

10.

P892,400 ( 53,800) P838,600

F. Unadjusted balances per bank Outstanding checks January 31 February 28 Deposits

in transit January 31 February 28 Adjusted balances Unadjusted balances, per books
Bank credit memo January February Bank service charges January February NSF checks
returned by bank January February Adjusted balances

January 31 13,500 (65,000) 54,500 3,000 January 31 (92,250) 123,500 (3,250)

(25,000) 3,000

Receipts 790,450

Disbursements 647,700 (65,000) 43,000

Feb. 28 156,250 (43,000) 44,700 157,950 Feb. 28 82,800 98,800

(54,500) 44,700 780,650 Receipts 805,350 (123,500) 98,800

625,700 Disbursements 630,300

(3,250) 4,650 (25,000) 19,000 625,700

(4,650) (19,000) 157,950

780,650

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Chapter 3 Cash
G. 15. Unadjusted disbursements Outstanding checks, November 30 Customers NSF
checks November December Bank service charges November December Balances before
outstanding checks, December 31 Outstanding checks, December 31 H. 16. Unadjusted
receipts in June Collections made directly by bank in May Deposits in transit, May
31 Loans granted by bank in June Error in recording deposit Balances before
deposits in transit, June 30 Deposits in transit, June 30 I. Unadjusted balances
Credit memo for collections by bank Outstanding checks Undeposited receipts
Balances before shortage Amount stolen Actual cash existing December Disbursements
Per bank Per books P195,000 P190,400 (90,000) (6,000) 12,000 (2,400) 3,000 P197,000
105,000 P92,000

P105,000

June Receipts Per bank Per books P310,000 420,000 (30,300) (15,000) 50,000 900
P295,000 P440,600 295,000 P145,600 Per bank 1,555,000 (106,229) 379,441 P1,828,212
P1,828,212 Per books 1,890,162 10,000 P1,900,162 (71,950) P1,828,212

17. 18.

19. and 20. J. 22.

Features of internal control missing: Imprest system and segregation of duties Per
bank P350,000 (25,000) (194,550) Per books P293,500 15,000 37,200 (50,000) 125,250
P255,700 P255,700 15,000 P310,700 (55,000) P255,700

21. 24. 23.

Unadjusted balances Erroneous bank credit Outstanding checks (246,750 15,000

37,200) Unreleased checks Postdated checks issued and recorded as disbursements
Customers postdated check Deposits in transit (175,250 50,000) Note collected by
bank Balances before cash shortage Cash shortage Actual cash existing

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