PROBLEM 1

The “CASH” account of LOL Corporation’s ledger on December 31, 2021, showed the following:
1. The entry to correct/adjust item (F) is:

a. Investment P50,000
Cash P50,000
b. Other Assets P50,000
Cash P50,000
c. Short-term investment P50,000
Cash P50,000
d. No adjustment

2. The entry to correct/adjust item (L) is:

a. Accounts payable P50,000

Cash P50,000
b. Cash P50,000
Other liabilities P50,000
c. Cash P50,000
Accounts payable P50,000
d. No adjustment

3. The entry to correct/adjust item (M) is:

a. Investment P150,000
Cash P150,000
b. Other Assets P150,000
Cash P150,000

c. Short term investment P150,000

Cash P150,000
d. No adjustment

4. LOL Corporation’s cash and cash equivalents balance at December 31, 2021 is

a. Overstated by P1,950,100
b. Overstated by P1,895,100
c. Overstated by P1,845,100
d. Overstated by P1,795,100

5. LOL Corporation’s adjusted cash and cash equivalents balance at December 31, 2021 is

a. P618,800
b. P623,800
c. P673,800
d. P723,800
PROBLEM 2

Mary Jane is the cashier of SMOKEY Corporation. As representative of RGP and Associates, CPAs, you were
assigned to verify her cash on hand in the morning of January 3, 2022. The count began at 9:00 AM. In the course
of your counting, you found currencies in paper bills and coins together with checks, vouchers and other items,
which are mentioned below:

Bills: (2) P500; (8) P100; (12) P50; (5) P20

Coins: P 5.00 11 loose

P 1.00 24 loose
P 0.25 5 rolls and 32 loose (50 pieces to a roll)
P 0.10 10 rolls and 15 loose (50 pieces to a roll)
P 0.05 14 rolls and 20 loose (40 pieces to a roll)

Checks:
Date Maker Payee Amount

12/22/2021 Vivian, Asst. Mgr. Smokey Corp. P 6,000

12/26/2021 Mary Jane, Cashier Smokey Corp. 4,000

IOUs:
Date Maker Amount

12/20/2021 Yap, Janitor P 500

12/22/2021 Felix, Clerk 750
12/24/2021 Abby, Bookkeeper 500

Petty Cash vouchers for replenishment:

Date Payee Accounts Charged Amount

12/16/2021 Thoss, Messenger Advances to employees P 1,000.00

12/17/2021 Maren Co. Supplies 545.00
12/18/2021 Losing Liner Freight In 982.50
12/18/2021 Office House Supplies 300.00
12/20/2021 Joseph, Carpenter Repairs 2,950.00
12/21/2021 Robinson Miscellaneous 554.00

Your investigation also disclosed the following:

1. The balance of petty cash fund per books is P20,000.00

2. Cash sale of January 2, 2022 amounted to P8,650 per sales records, while cash receipts book and bank
deposit slip showed that only P7,650 was deposited in the bank on January 3, 2022.

3. The following employees’ pay envelopes had been opened and the money removed. Each envelope
was marked UNCLAIMED – Emilio, P332.50; Jacinto, P447.50
1. The petty cash shortage of SMOKEY Corporation at December 31, 2021 is:

a. P2,748.50
b. P1,748.50
c. P 968.50
d. P 188.50

2. The adjusted petty cash balance of SMOKEY Corporation at December 31, 2021 is:

a. P10,950
b. P11,950
c. P11,730
d. P12,730

3. The undeposited sales/collection of SMOKEY Corporation at December 31, 2021 is:

a. P8,650
b. P7,650
c. P1,000
d. P -0-
PROBLEM 3

The following information pertains to the cash of CARPS Company:

November 30 December 31

Balance shown on the bank statement P 27,380 P 26,960

Balance shown in the General Ledger before
reconciling the account 25,780 25,000
Outstanding checks 8,630 10,150
Deposits in transit 6,850 12,450

For December

Deposits shown in the bank statement P 55,880

Charges shown on the bank statement 56,300
Cash receipts shown in company’s books 53,980
Cash payments shown in company’s books 54,760

The bank service charge was P180 in November (recorded by the company during December) and P240 in
December (not yet recorded by the company)

Included with the December bank statement was a check for P5,000 that had been received on December 23
from a customer on account. The returned check marked “NSF” by the bank, has not yet been recorded on the
company’s books.

During December the bank collected P7,500 of bond interest for the company and credited the proceeds to the
company’s account. The company earned the interest during the current accounting period but has not yet
recorded it.

During December the company issued a check for P6,960 for equipment. The check, which cleared the bank
during December, was incorrectly recorded by the company for P8,960.
1. The adjusted cash receipts of CARPS Company at December 31 is:

a. P61,480
b. P53,980
c. P50,280
d. P46,480

2. The adjusted cash disbursements of CARPS Company at December 31 is:

a. P63,980
b. P61,980
c. P57,820
d. P54,780

3. In a proof of cash, the NSF check:

a. Should be added in December 31 column since this was returned back by the bank.
b. Should be deducted in the December 31 column since this was returned back by the bank.
c. Should be deducted in the December 31 column since this was returned back and not paid by the
bank, thus not considered as receipts.
d. Should be added in the December 31 column since this was returned back and not paid by the bank,
thus not considered as receipts.

4. The adjusted December 31 cash balance of CARPS Company is:

a. P29,760
b. P29,260
c. P27,260
d. P25,600

5. The adjusted November 30 cash balance of CARPS Company is:

a. P29.160
b. P27,260
c. P26,160
d. P25,600

6. The check issued but was incorrectly recorded as P8,960 should be adjusted by:

a. Accounts payable P2,000

Cash P2,000
b. Equipment P2,000
Cash P2,000
c. Cash P2,000
Accounts payable P2,000
d. Cash P2,000
Equipment P2,000