REVPRA-A

Cash and Cash Equivalents

Discussion Problems
A.

Relating to cash items of Kim Corporation, you established the following data as of
December 31, 2007:
Bank credit memo
Bank debit memo
Balance per bank statement
Cash on hand and in bank, per books
Outstanding checks
Cash on hand per count
Check of Kin, Inc. erroneously charged by the bank
Check # 4523 for P1,950 in payment to a supplier was
erroneously recorded as P1,590

B.

P15,000
450
82,200
72,630
12,365
8,625
2,100

________________

1.

How much is the cash shortage or overage as of December

31, 2007. Indicate whether shortage or overage.

________________

2.

What is the adjusted cash balance as of December 31, 2007?

The following information are made available to you:

Outstanding checks, end of the month
Deposits in transit, end of the month
Bank credit memo for note collected
Bank service charges
NSF check returned by bank (recorded by the
depositor in the month following the month
when checks were returned)
Cash per general ledger, end of the month
Cash per bank statement, end of the month
Total receipts per books
Total charges by bank

January 2007
P 65,000
54,500
123,500
3,250
25,000
(92,250)
13,500
837,000
598,000

February 2007
P 43,000
31,200
98,800
4,650
19,000
69,300
156,250
810,850
647,700

________________

3.

What is the adjusted cash balance as of February 28, 2007?

________________

4.

What is the adjusted amount of cash receipts during

February?

________________

5.

What is the adjusted amount of total disbursements during

February?

________________

6.

What is the adjusted cash balance as of January 31, 2007?

REVPRA-A
Cash and Cash Equivalents
D.

You were assigned to account for the Cash account of Dragon Ball, Inc. for the year ended
December 31, 2007. Your cash count of the Petty Cash Fund and undeposited collections as
of that date showed the following:
Currency and coins
Expense vouchers
Employees IOUs
Customers checks in payment of accounts
Total

P 3,595.01
1,920.75
573.50
2,500.00
P 8,589.26

The amount of Petty Cash Fund per general ledger is P6,000. Upon comparing the official
receipts with the bank validated deposit slips, you noted that P3,025.60 was not yet
deposited to the bank.

E.

________________

7.

What is the amount of cash shortage?

________________

8.

What is the amount of Petty Cash Fund to be shown on

December 31, 2007 balance sheet?

Red Corporation records showed the following:

Outstanding checks, November 30
Customers NSF check recorded in December but returned in
November
Service charges made by the bank in November and recorded in
December
Total credits to the cash account in all journals during December
Checks and charges returned by bank in December including a
December service charge of P3,000 and NSF check of
P12,000
________________

F.

9.

P90,000
6,000
2,400
230,400
195,000

What is the amount of outstanding checks as of December 31?

A count of the petty cash fund on January 3, 2008 revealed the following composition:
Bills and coins
Vouchers:
December 2007 dates
January 2008 dates
IOUs (all dated December 2007)
Employees check dated December 27, 2007
Employees check dated January 14, 2008
Unsigned pay envelope payable to an employee (the
envelope has been opened and the money has been
removed)

P 2,300
850
200
420
280
425
500

The balance of petty cash fund per books is P 4,500.

________________

10.

How much is the cash shortage or overage. Indicate whether

shortage or overage.

REVPRA-A
Cash and Cash Equivalents
________________
G.

11.

What is the correct amount of petty cash fund to be shown on

the balance sheet as of December 31, 2007?

The following information were revealed in trying to reconcile the bank statement balance as
of June 30 with the clients records as of the same date:
a. Total credits per June bank statement were P P310,000.
b. Among the bank credits in May was a customers note collected by the bank
for the account of the company which the company recognized in June.
Proceeds was P 30,300.
c. Client books for June showed receipts of P 420,000.
d. Deposits in transit on May 31 were P 15,000.
e. The bank credited the clients account in June for P 50,000 representing loan
approved and granted by the bank. Your client has not recorded this yet.
f. A deposit of P 4,300 was recorded by your client as P 3,400 in December.
The bank recorded the deposit at its correct amount.
________________

H.

12.

How much were deposits in transit as of June 30?

The Patrick Company had a weak internal control structure over its cash transactions. Facts
about its cash position at November 30, 2007 were as follows:
The cash books showed a balance of P1,890,162, which included undeposited receipts. A
credit of P10,000 on the banks records did not appear on the books of the company. The
balance per bank statement was P1,555,000. Outstanding checks were No. 62 for P11,625,
No. 183 for P15,000, No. 284 for P25,325, No. 8621 for P19,071, No. 8623 for P20,680, and
No. 8632 for P14,528.
The cashier stole all undeposited receipts in excess of P379,441 and prepared the following
reconciliation:

Balance per books, November 30, 2007

Add: outstanding checks
8621
8622
8632

P1,890,162

Less: undeposited receipts

Balance per bank, November 30, 2007
Deduct: unrecorded credit

True cash, November 30, 2007

P19,071
20,680
14,528 44,279
P 1,934,441
379,441

P 1,555,000


10,000

P 1,545,000

________________

13.

How much did the cashier steal?

________________

14

What is the correct amount of cash to be shown on the

balance sheet on November 30, 2007?

REVPRA-A
Cash and Cash Equivalents
I.

The accountant of Maharlika Company prepared the following bank reconciliation for
December 31, 2007:

Balance per bank statement

Add: deposit in transit
Note collected by bank
Total


Less: outstanding checks
Balance per ledger

P350,000
175,250
15,000
P540,250
246,750
P293,500

In the course of your examination, you noted the following information:

a.
b.
c.

d.

At December 31, 2007, the bank statement and the general ledger showed balances of
P350,000 and P293,500, respectively.
The cut-off bank statement showed a bank charge on January 2, 2008 for P25,000
representing a correction of an erroneous bank credit.
Included in the list of outstanding checks were the following:
- a check payable to a supplier dated December 29, 2007, in the amount of P15,000
released on January 5, 2008.
- a check representing advance payment to a supplier in the amount of P37,200, the
date of which is January 4, 2008 and released in December 2007
On December 31, 2007, the company received and recorded a customers check dated
January 2008 amounting to P50,000.
________________

15.

What is the correct amount of deposit in transit on December

31, 2007?

________________

16.

What is the correct amount of outstanding checks as of

December 31, 2007?

________________

17.

What is the correct cash balance December 31, 2007?

________________

18.

How much was the cash shortage?

J.

The Cash account in the ledger of FORTUNE COMPANY on December 31, 2005 had a
balance of P1,745,700. An examination of the account however disclosed the following:

1. The sales book was left open up to January 10, 2006 and cash sales totaling P18,200 were
considered as cash sales in 2005.
2. Checks of P9,300 in payment of utilities were prepared before December 31, 2005 and
recorded in the books on the same date, but mailed or delivered only on January 5, 2006.
3. Checks with January, 2006 dates totaling P 17,800 are being held by the cashier and were
included as part of cash on December 31, 2005. The companys experience shows that
postdated checks are eventually realized.
4. Customers check for P 11,500 deposited with the bank on December 15, 2005 was returned
on December 18, 2005. The return was not recorded in the books.

REVPRA-A
Cash and Cash Equivalents
5. The cash account includes P 230,000 set aside for payment of dividends.
6. The cash account includes a check received from a customer in May, 2005 for P3,500, which
the company failed to deposit. Verification from the customer reveals that the amount will
eventually be realized.
7. The cash account includes change fund amounting to P 5000. When the fund was counted,
only P 4,450 was found.
8. The cash account includes P400,000 fund for payroll.
9. The cash account includes petty cash fund amounting to P 20,000. The fund was last
replenished on December 24, 2005. When the fund was counted on January 3, 2006, the
following were found:
Bills and coins
Vouchers with December, 2005 dates
Vouchers with January, 2006 dates

P 13,000
5,500
1,300

10. An examination of the companys sales invoice revealed that P3,500 check was received on
December 30, 2005 from sale of scrap materials. The amount cannot be traced from the
cash receipts book but was verified to have been deposited to the bank.
________________

19.

________________

20.

How much is to be presented as Cash and Cash Equivalents at

December 31, 2005?
How much is the shortage, if any, at December 31, 2005?