Problem 1

Cash and Cash Equivalents

In connection with your audit of the financial statements of ONOR COMPANY for the year ended
December 31, 2018, you gathered the following information.

1. The company maintains its current account with Tsunami Bank.

The bank statement on December 31, 2018, showed a balance of P638,340.

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 December 28, 2018. No entry was made for the return of this check. The customer
replaced the check on January 15, 2019.

A check for P5,720 was cleared by the bank as P7,520. The bank made the correction on January 2, 2019.

A check for P3,500 representing payment of an employee advance was received and deposited on
December 27, 2018, but was not recorded until January 3, 2019.

Postdated checks totalling P67,300 were included in the deposits in transit. These represent collections
of current accounts receivable from customers. The checks were actually deposited on January 5, 2019.

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 December 2018.

Interest earned on the bank balance for the 4th quarter of 2018, amounting to P1,950 was not recorded.

Bank service charges totalling P1,260 were not recorded.

Deposit in transit and outstanding checks at December 31, 2018, totalled P136,250 and P276,380,
respectively.

2. Various expenses from the company's imprest petty cash fund dated December 2018, totalled P16,250,
while those dated January 2019, amounted to P5,903. Another disbursement from the fund dated
December 2018 was a cash advance to an employee amounting to P3,500. A replenishment of the petty
cash fund was made on January 8, 2019.

3. The company's trial balance on December 31, 2018, includes the

following accounts:
 Cash in bank - Tsunami Bank P748,320
320 Cash in bank - Earthquake Bank
(restricted

account for plant expansion, expected to

be disbursed in 2019) 700,000
Petty cash fund 30,000
Time deposit, placed December 20, 2018,

and due March 20, 2019 1,000,000

Money market placement - Prudential Bank 4,000,000

1. What is the adjusted petty cash fund balance on December 31 2018?

A. P4,347 C. P30,000
B. P10,250 D. P24,097

2. The petty cash shortage on December 31, 2018, is

A. P 0 C. P3,500
B. P5,903 D. P4,347

3. What is the adjusted Cash in bank--Tsunami Bank balance on December 31, 2018?
A. P500,010 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. Accounts receivable for P89,800. C. Accounts payable for P228,200.
B. Accounts receivable for P86,300. D. Interest expense for P1,950.

5. The December 31, 2018, statement of financial position should show “Cash and cash equivalents" at
A. P6,142,960 C. P4,442,960
B. P5,439,360 D. P5,442,960
Problem 2

Bank Reconciliation; Computation of Cash Balance

Presented below are a series of unrelated situations. Answer the question at the end of each situation.

1.The accountant of NARCISA CO. provided the following data in reconciling the April 30 cash in
Balance per bank, April 30 P130,350
Balance per books 85,000
Bank service charge 2,000
Deposits in transit 49,000
Outstanding checks 17,650
Note collected by bank including P11,200 136,000
interest (Narcisa Co. not yet informed)

Check drawn by XYZ Co. erroneously 54,600

charged by bank to Narcisa's account

A transposition error was made in recording a sale and deposit 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 CORPORATIONS’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 on March 31 P184,000
Deposits 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's correct cash balance at March 31?

3.The following information pertains to a checking account of a company at June 30, 2018.
Balance per bank statement P200,000
Interest earned for the second quarter 500
Outstanding checks 15,000
Customers' checks returned for insufficient 5,000
funds
Deposit in transit 25,000

What is the cash balance per books at June 30, 2018?

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 P15,000 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 P175,000 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 adjusted cash balance on 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 the 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, 2018, EMILIA CORP. received its bank statement for the month ending June 30. The statement
showed a P209,500 balance while the 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 totalled P3,000,

3. A paid check for P24,300 was entered incorrectly in the cashpayments journal as P34,200.

What is the total outstanding checks at June 30, 2018?

Problem 3

Bank Reconciliation: Unadjusted to Adjusted Balances Format

1.What is the total book receipts 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, 2018?

A. P275,132 C. P291,332
B. P226,132 D. P274,370

3.What is the total outstanding checks on December 31, 2018?

A. P68,313 C. P46,938
B. P39,238 D. P40,938
4. What is the adjusted cash balance on November 30, 2018?
A. P446,375 C. P423,825
B. P417,825 D. P435,000

5. What is the adjusted cash balance on December 31, 2018:

A. P281,682 C. P226,682
B. P275,682 D. P274,920