SAMPLE PROBLEMS ON CASH

Problem 1

The following items are included as cash and cash equivalents in Bet Company as of December 31, 2017

a Cash in Checking Account 250,000

.
b Cash in Money Market Account, acquired 2 months before maturity 450,000
.
c Tresury Bill, purchased December 1,2017; maturing February 28, 2018 1,500,000
.
d Time Deposit purchased November 1, 2017; maturing March 31, 2018 3,500,000
.
e Cash in Bank Current Account 4,000,000
.
f. Cash in Bank Payroll 1,000,000
g Cash on hand, including check payable to the company dated January 30,2018, P 200,000 500,000
.
h Cash in Bank for the construction of building expected to be disbursed in 208 2,000,000
.
i. Check book balance, which includes a check drawn payable to a supplier dated and recorded 3,500,000
December 31, 2017 but mailed only on January 3, 2018, P300,000. Bank statement balance is P
5,000,000
j. Cash in Sinking Fund 2,000,000
k Certificate of Deposit 3,000,000
.
l. Postdated Customer Check 300,000
m Traveler’s Check 150,000
.
n Manager’s Check 250,000
.
o Money Order 300,000
.
p Share Investments, actively traded in the market 1,000,000
.
q One-year Commercial paper purchased 2 months before maturity 500,000
.
r. Cash in bank, including P 500,000 compensating balance against short term borrowing 2,750,000
arrangements, not legally restricted
s Cash in bank statement, with check still outstanding, P 300,000 1,700,000
.
t. Bank deposit closed by Central Bank 900,000
u Voucher paid out of collection, not yet recorded 500,000
.
v IOU by employees, taken out of collection, not yet recorded 300,000
.
w Petty Cash Fund, with paid vouchers totaling P 3,000, not yet replenished. Per Count of bills and 10,000
. coins at year end only amounts to P 6,500.
x Investment in Preferred Shares purchased December 15, 2017, redeemable on February 15, 50,000
. 2018

1. The total amount of cash as of December 31, 2017 is

 a. P 10,206,500 b. P 10,406,500 c. P 14,206,500 d. P 12,906,500

2. The total amount of cash equivalents as of December 31, 2017 is

a. P 5 ,450,000 b. 2,450,000 c. P 5,500,000 d. P 1,500,000

Cash Cash Equ

a. Cash in Checking Account 250,000 Cash
b. Cash in Money Market Account 450,000
c. Tresury Bill, purchased December 1,2017; 1,500,000 3 months
maturing February 28, 2018,
d. Time Deposit purchased November 1, 2017; Short Term
maturing March 31, 2018 Investment
e. Cash in Bank Current Account 4,000,000
f. Cash in Bank Payroll 1,000,000 current liability

g. Cash on hand, including check payable to the 300,000

company dated January 30, 2018 P 200,000
h. Cash in Bank for the construction of building Non Current
expected to be disbursed in 208 Investment
since it is an
acquisition of
asset and not
as payment of
current
liabilities
i. Check book balance, which includes a check 3,800,000
drawn payable to a supplier dated and recorded
December 31, 2017 but mailed only on January 3,
2018, P300,000. Bank statement balance is P
5,000,000
j. Cash in Sinking Fund Non Current
Invetment-
payment for
non-current
liability
k. Certificate of Deposit 3,000,000 Cash
Equivalent
l. Postdated Customer Check Accounts
Receivable
m. Traveler’s Check 150,000 Cash
n. Manager’s Check 250,000 Cash
o. Money Order 300,000 Cash
p. Share Investments, actively traded in the market Not to be
qualified- no
maturity date-
Trading
q. One-year Commercial paper purchased 2 months 500,000 Cash
before maturity Equivalent
r. Cash in bank, including P 500,000 compensating 2,750,000 Cash = P
balance against short term borrowing 2,750,000
arrangements, not legally restricted If legally
restricted, not
included in
cash
 categorized
either current
or long term
depending on
the related loan
s. Cash in bank statement, with check still 1,400,000
outstanding, P 300,000
t. Bank deposit closed by Central Bank Non current
asset
u. Voucher paid out of collection, not yet recorded Expenses
v. IOU by employees, taken out of collection, not yet Advances
recorded
w. Petty Cash Fund, with paid vouchers totaling P 6,500
3,000, not yet replenished. Per Count of bills and
coins at year end only amounts to P 6,500.
x. Investment in Preferred Shares 50,000
TOTAL 14,206,500 5,500,000

Problem 2 - Bank reconciliation

1. Jane Co. is preparing its September 30, 2017 bank reconciliation. Relevant information is shown below:
Balance per books 1,480
Balance per bank statement 2,800
Collection on note by bank (including ₱250 interest) 2,500
NSF check returned by bank 500
Bank service charges for December 70
Deposits in transit 2,200
Outstanding checks (including certified checks of ₱100) 1,000

 A ₱600 loan amortization of Jane Co. was erroneously debited by the bank to Tarzan Co.’s account.
 A ₱650 collection of accounts receivable was erroneously recorded in the books as ₱560. The actual
amount deposited to the bank is ₱650.

3. The compound entry to reconcile the accounts includes a

a. net debit to cash for ₱2,020 b. net credit to cash for ₱700
b. credit to notes receivable for ₱2,500 d. net debit to accounts receivable for ₱590

PER BANK PER BOOK

UNADJUSTED 2,800 UNADJUSTED 1,480
DEPOSIT IN TRANSIT 2,200 COLLECTION OF NOTES 2,500
OUTSTANDING CHECKS (900) NSF (500)
ERROR (600) BANK SERVICE CHARGE (70)
ERROR ( 650-560) 90
ADJUSTED BALANCE 3,500 ADJUSTED BALANCE 3,500

Problem 3 - Computation of DIT and OC

The next three items are based on the following information:
Taken from the records of Girly Co. are the following:

Balance per books, October 31 4,440

Total Credits per books, November 8,320
Balance per books, November 30 2,400
Balance per bank statement, October 31 5,520
Balance per bank statement, November 30 4,560
 Total Debits per bank statement, November 2,800
Loan proceeds directly credited to Girly’s account in October 1,200
Collection of receivable directly credited to Girly’s
account in November – not yet recorded in the books 600
NSF checks returned in October 900
NSF checks returned in November - not yet recorded in the 300
books
Check received from a customer amounting to ₱1,800
was recorded in the books in October as 180
Overstatement in book debit in October 800
Overstatement in book credit in November 300
Understatement in bank debit in October 290
Overstatement in bank credit in October 370
Deposit amounting to ₱1,050 was recorded by
the bank in November as 150

Deposits in transit – October 31 4,500

Outstanding checks – October 31 3,800
OCTOBER RECEIPTS DISBURSEMENTS NOVEMBER

PER BOOK 4,440 6,280 8,320 2,400

1,200 (1,200)
600 600
(900) (900)
300 (300)
1,620 (1,620)
(800) (800)
(300) 300
ADJUSTED BAL 5,560 4,060 6,620 3,000

PER BANK 5,520 1,840 2,800 4,560

(290) (290)
(370) (370)
900 900
DIT- OCTOBER 4,500 (4,500)
DIT-NOVEMBER 5,820 5,820
OC-OCTOBER (3,800) (3,800)
OC- NOVEMBER 8,280 (8,280)

ADJUSTED BAL 5,560 4,060 6,620 3,000

4. How much is the deposits in transit at November 30?

a. 5,820 b. 6,190 c. 5,340 d. 6,920

5. How much is the outstanding checks at November 30?

a. 7,620 b. 8,680 c. 9,120 d. 8,280

6. How much is the adjusted balance of cash at November 30?

a. 3,000 b. 3,300 c. 2,400 d. 3,580

Problem 4
Your client, Golden Bells Company, presented you with the following data:

Bank balances
November 30 P1,500,00
December 31 2,100,000
Bank receipts in December 2,300,000
Deposits in transit
November 30 58,000
December 31 47,000
Outstanding checks
November 30 97,000
December 31 46,000
NSF checks returned by bank (recorded by client in
the month following the return)
November 30 15,000
December 31 25,000
Bank service charges (recorded by client in the month
following the month the charge)
November 10,000
December 18,000
Note collected by bank (recorded by the client in the
following month)
November 76,000
December 84,000
Erroneous bank charges (corrected by the bank in the
following month)
November 30 25,000
December 31 37,000
Erroneous bank credits (corrected by the bank in the
following month)
November 45,000
December 50,000

Prepare a proof of cash for the month of December using the adjusted balances method and answer the
following:
7. The adjusted balance of cash in bank at November 30, 2017 is
a. P 1,441,000 b. P 1,486,000 c. P 1,461,000 d. 1,538,000

8. The Adjusted balance of December Receipts is

a. P 2,264,000 b. P 2,214,000 c. P 2,289,000 d. P 2,242,000

9. The adjusted balance of December Disbursements is

a. P 1,612,000 b. P 1,649,000 c. P 1,567,000 d. P 1,521,000

10. The adjusted balance of cash in bank at December 31, 2017 is

a. 2,138,000 b. P 2,101,000 c. P 2,147,000 d. P 2,088,000

Problem 4 – Answer Golden Bells Company

Nov. 30 Receipts Disb. Dec. 31

Unadjusted bank balance 1,500,000 2,300,000 1,700,000 2,100,000
Deposits in transit
November 30 58,000 (58,000)
December 31 47,000 47,000
 Outstanding checks
November 30 (97,000) (97,000)
December 31 46,000 (46,000)
Erroneous bank charges
November 30 25,000 (25,000)
December 31 (37,000) 37,000
Erroneous bank credit
November 30 (45,000) (45,000)
December 31 (50,000) (50,000)
Adjusted balances 1,441,000 2,214,000 1,567,000 2,088,000

Nov. 30 Receipts Disb. Dec. 31

Unadjusted book balances (squeezed) 1,390,000 2,206,000 1,549,000 2,047,000
NSF checks returned by bank
November 30 (15,000) (15,000)
December 31 25,000 (25,000)
Bank service charges
November (10,000) (10,000)
December 18,000 (18,000)
Note collected by bank
November 76,000 (76,000)
December 84,000 84,000
Adjusted balances 1,441,000 2,214,000 1,567,000 2,088,000

Problem 5

In auditing the books of Sta. Monica, Inc. for 2017, you find that a petty cash fund of P25,000 is maintained on
the imprest basis, but the company has failed to replenish the fund on December 31. Replenishment was
made and recorded on January 15, 2018 when a check for P18,500 was drawn to petty cash for expenses
paid. Your analysis discloses that P12,500 had been spent out of petty cash in 2017.
11. The amount reflected as Petty Cash Fund at the balance Sheet date in 2017 is
a. P 25,000 b. P 12,500 c. P 18,500 d. P 0

12. As per adjustment made at balance sheet date, Petty Cash account should be
a. Credited by P 18,500 b. Credited by P 12,500
c. Debited by P 6,000 c. No Adjusting entry be made

Expenses 12,500
Petty Cash Fund 12,500

Correct balance of petty cash fund = P25,000 – P12,500 = P12,500

Problem 6

You examined the petty cash fund of the Victor Company immediately after the close of business on August
31, 2017, the end of the company’s fiscal year. Your audit showed the following fund composition:

Currencies P2,900
Coins 400
Petty cash vouchers:
Gasoline payments for delivery vehicle 250
Office supplies 160
Medicines for employees 240
 Transportation 400
Office equipment repairs 400
Loans to employees 800
A check drawn by the company payable to
the order of the petty cash custodian,
representing her salary 3,800
An employee’s check returned by the bank
because of insufficient funds 1,200
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 500

The petty cash general ledger account has an imprest balance of P10,000.
Based on the above data,

13. The amount of petty cash fund that should be shown on the balance sheet as of August 31, 2017 is
a. P 3,300 b. P 3,800 c. P 7,100 d. P 10,000

14. The amount of cash shortage or overage is

a. P 1,050 over b. P 1,050 under c. P 550 over d. P 550 under

15. The necessary audit adjusting entries at fiscal year ending includes
a. DR., Various Expenses, P1,050 b. DR., Receivable from Employees, P 2,000
c. CR., Petty Cash Fund, P 3,450 d. DR., Cash Short and Over, P 550

Problem 6- ANSWER

1. Correct amount of petty cash fund

Currencies and coins P7,100

2. Per count
Currencies and coins P 7,100
Paid petty cash vouchers 2,250
Employee’s NSF check 1,200
Wedding gift contribution 500
Total per count P11,050
Cashier’s accountability:
Petty cash fund, per ledger P10,000
Wedding gift contribution 500 10,500
Cash overage P 550

3. Delivery Expense 250

Office Supplies Expense 160
Employees Medicine 240
Transportation Expense 400
Repairs and Maintenance 400
Receivables from Employees 2,000
Cash Overage (or Misc. Expenses or Receivables) 550
Petty Cash Fund 2,900

Problem 7
You counted the petty cash fund balance of Rainbow Corporation at 9:00 o’ clock in the morning of January 2,
2018, and you obtained the following details:

Bills and coins P2,50

0
Paid vouchers (all dated December 2017) for
Telephone 1,500

Water 1,600

Office supplies 3,700

Postage stamps 2,800

IOU’s signed by employees 3,900

Envelope containing contributions for a wedding gift to
a co-employee 1,000

Company check for fund replenishment 15,000

Unused postage stamps 1,800
Unused office supplies 1,200

You ascertained that Rainbow Corporation established a petty cash fund for P35,000.

16. The amount of the petty cash fund shortage(ovearage) as at January 2, 2018 is
a. P 4,000 over b. P 4,000 short c. P 3,000 over d. P 3,000 short

17. The adjusting journal entries as at December 31, 2017 includes a total debits of
a. P 9,600 Expensesb. P 5,600 Expenses c. P 7,900 Assets d. P 10,900 Assets

18. The correct amount of petty cash fund to be shown in the balance sheet as of December 31, 2017 is
a. P 17,500 b. P 21,500 c. P 29,400 d. P 24,500

Problem 7 Answer
1. Total per count P 35,000
Cashier’s Accountability
Petty Cash Fund, per ledger P35,000
Unused postage stamps 1,800
Unused office supplies 1,200
Wedding gift contribution 1,000 39,000
Cash shortage P 4,000

2. Telephone Expense 1,500

Water Expense 1,600
Office Supplies Expense (3,700 – 1,200) 2,500
Postage Expense (2,800 – 1,800) 1,000
Prepaid Expenses (1,200 + 1,800) 3,000
Receivables from Employees (3,900 + 4,000) 7,900
Petty Cash Fund 17,500

3. Correct amount of petty cash fund = P35,000 – P17,500 = P17,500

Cash items in the petty cash fund:

Bills and Coins P 2,500
Replenishment check 15,000
Total P17,500
Problem 8

The cash account of Noble Company shows the following:

Date Particulars Debit Credit Balance

October 30 Balance 345,000
November 2 October Bank Charges 150 344,850
November 4 October Bank Credit Memo for notes 30,000 374,850
collected
November 15 NSF Checks 3,900 370,950
November 20 Loan Proceeds 145,500 516,450
November 21 November bank charges 180 516,270
November 30 Cash Receipts book 2,121,90 2,638,170
0
November 30 Cash Disbursements book 1,224,000 1,414,170

CASH RECEIPTS AND CASH DISBURSEMENTS BOOKS

DATE RECEIPTS DISBURSEMENTS

NOVEMBER OR NO. AMOUNT CHECK AMOUNT
NO.
1 110-120 33,000 801 6,000
2 121-136 63,900 802 9,000
3 137-150 60,000 803 3,000
4 151-165 168,000 804 9,000
5 166-190 117,000 805 36,000
8 191-210 198,000 806 57,000
9 211-232 264,000 807 78,000
10 233-250 231,000 808 90,000
11 251-275 63,000 809 183,000
12 276-300 90,000 810 21,000
15 301-309 165,000 811 24,000
16 310-350 24,000 812 48,000
17 351-390 57,000 813 60,000
18 391-420 27,000 814 66,000
19 421-480 51,000 816 108,000
22 481-500 63,000 817 33,000
23 501-525 96,000 818 150,000
23 819 21,000
23 820 12,000
26 526-555 222,000 821 9,000
28 556-611 15,000 822 36,000
28 823 39,000
29 612-630 114,000 824 87,000
29 825 6,000
29 826 33,000
TOTAL 2,121,900 1,224,000
BANK STATEMENT

NOV. CHECK NO. DEBITS CREDITS

1 792 7,500 25,500
 2 802 9,000 33,000
3 - 63,900
4 804 9,000 60,000
5 ERROR 243,000 243,000
CORRECTED
8 805 36,000 285,000
9 CM 16 - 36,000
10 799 21,150 462,000
11 DM 57 - NSF 3,900 231,000
12 808 90,000 63,000
15 803 3,000 -
16 809 183,000 255,000
17 DM 61-SC 180 24,000
18 813 60,000 57,000
19 CM 20 - 145,500
22 815 18,000 -
23 816 108,000 141,000
23 811 24,000 -
23 801 6,000 -
26 814 66,000 96,000
28 818 150,000 222,000
28 DM 112-SC 360 -
29 821 9,000 15,000
29 CM 36 - 36,000
29 820 12,000 -
TOTAL 1,059,090 2,493,900
a. CM 20 – Loan Proceeds, net of P 450 interest charges for 90 days
b. CM 16 – Correction for erroneous October bank charge
c. CM 36 – Customers’ note collected by bank in November
d. Bank balance on November 30 is P 1,776,810

19. Outstanding checks at November 30 is

a. P 441,000 b. P 459,000 c. P 477,000 d. P 487,650

20. Adjusted book balance at October 31 is
a. P 345,000 b. P 374,850 c. P 375,000 d. P 410,850
21. Adjusted bank receipts for the month of November is
a. P 2,291,400 b. P 2,297,400 c. P 2,303,400 d. P 2,321,400
22. Adjusted book disbursements for the month of November is
a. 1,210,440 b. P 1,228,440 c. P 1,246,440 d. P 1,246,620
23. Adjusted bank balance November 30
a. P 1,431,810 b. P 1,449,810 c. P 1,674,810 d. P 1,776,810

Answer – Problem 8

October Receipt Disbursement November

Unadjusted book balances 345,000 2,297,400 1,228,230 1,414,170
Bank Service Charge – October (150) (150)
Bank Service Charge – November 360 (360)
Notes Collected – October 30,000 (30,000)
Notes Collected – November 36,000 36,000
Unrecorded Disbursements (815) 18,000 (18,000)
ADJUSTED BOOK BALANCE 374,850 2,303,400 1,246,440 1,431,810

Unadjusted bank balances 342,000 2,493,900 1,059,090 1,776,810

Outstanding Checks – October (28,650) (28,650)
Outstanding Checks – November 459,000 (459,000)
In transit – October 25,500 (25,500)
In Transit – November 114,000 114,000
Error Corrected (243,000) (243,000)
Erroneous bank charge 36,000 (36,000)
ADJUSTED BOOK BALANCE 374,850 2,303,400 1,246,440 1,431,810