Audit of Cash & Cash Equivalents

Problem 1
The “CASH” account of SUDO Corporation’s ledger on December 31, 2016 showed the
following:

a. Petty cash fund (including P7,500 unreplenished

voucher of which P2,400 is dated January 3, 2017) P 15,000
b. Redemption Fund Account – PNB 500,000
c. Traveler’s check 100,000
d. Money order 10,000
e. Treasury bill, purchased December 1, 2016 (due on Feb. 1, 2017) 50,000
f. Time deposit due on March 31, 2017 50,000
g. 180-day Treasury bill, due March 15, 2017 120,000
h. Note receivable in the possession of a collecting agency 20,000
i. PNB – Checking Account #211-009-091 325,900
j. Cash on hand, including customer postdated check of P15,000 23,000
k. Savings deposit, earmarked for acquisition of equipment 210,000
l. A check payable to San Ignacio Incorporated, dated January 5, 2017,
that was included in the December 31 PNB Checking Account
#211-009-091 50,000
m. Bond Sinking Fund (used to finance the maturing long-term obligation
on March 31, 2017) 150,000
n. Overdraft in PNB Checking Account #211-099-085 ( 50,000)
o. Check #801 in payment to Accounts Payable, dated Dec. 31, 2016
not mailed until January 5, 2017 20,000
p. Advances to Officers/Employees for Seminars (no liquidation is
required) 80,000
q. Money market placement (due June 30, 2017) 600,000
r. Listed stock held as temporary investment 100,000
s. Check #789 in payment to Suppliers, dated January 5, 2017 and
recorded December 31, 2016. 35,000
t. Customers’ certified checks 10,000
u. Pension Fund 150,000
TOTAL 2,568,900

Questions
1. The entry to correct/adjust item F is:
a. Investment 50,000
Cash 50,000
b. Other assets 50,000
Cash 50,000
c. Short-term investment 50,000
Cash 50,000
d. No adjustment

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

a. Accounts payable 50,000
Cash 50,000
b. Cash 50,000
Other liabilities 50,000
c. Cash 50,000
Accounts payable 50,000

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 d. No adjustment

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

a. Investment 150,000
Cash 150,000
b. Other assets 150,000
Cash 150,000
c. Short-tem investment 150,000
Cash 150,000
d. No adjustment

4. SUDO CORPORATION’S cash and cash equivalents balance at December 31, 2016 is
over/under by:

5. SUDO CORPORATION’S adjusted cash and cash equivalents balance at December 31,
2016 is:

Problem 2
The following items are found in the cash account of TABAC Company at December 31,
2016. The company’s controller asks your opinion whether the items listed below should be
considered as part of cash account and come up with adjusting entry to adjust the cash
account.

1. Customers’ check dated December 25, 2016, P25,000.

2. Company’s check (P30,000) dated December 26, 2016 which was drawn in payment for
merchandise purchased on that date but not delivered until January 3, 2017. This check
was deducted in the cash balance.
3. A check worth P196,000 from customer who paid the account net of the 2% discount.
The company records the transaction as credit to Accounts Receivable for the proceeds.
4. Cash in closed bank (Urban Bank), P95,000.
5. Redemption fund, P100,000
6. Sinking fund, P100,000. This will be used on March 1, 2017 to redeem the bonds
payable.
7. Metro Bank Checking Account No. 0004568, P210,000.
8. RCBC Checking Account No. 0002347, P115,000.
9. Overdraft in PNB Checking Account No. 00011256, P50,000.
10. Company’s check dated January 3, 2017 in payment of account, P50,000. This was
recorded in the company’s disbursement ledger at December 31, 2016.
11. Overdraft in RCBC Checking Account No. 0056791, P15,000.
12. Postage stamps, P2,000.
13. 90-day Treasury Bills (purchase on November 1, 2016), P100,000
14. Treasury Bills that matures on February 1, 2017, P50,000.
15. Change fund, P10,000.
16. Customers’ certified check, P20,000.
17. Company’s certified check, P50,000. (This was included in the cash disbursement for
December).

Questions

1. The entry to correct/adjust item number 3 is:

a. Accounts receivable 4,000
Sales discounts 4,000
b. Sales discounts 4,000

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 Accounts receivable 4,000
c. Accounts receivable 4,000
Sales 4,000
d. No adjustments

2. The entry to correct/adjust item number 10 is:

a. Accounts payable 50,000
Cash 50,000
b. Other liabilities 50,000
Cash 50,000
c. Cash 50,000
Accounts payable 50,000
d. No adjustment

3. The entry to correct/adjust item number 17 is:

a. Accounts payable 50,000
Cash 50,000
b. Cash 50,000
Accounts receivable 50,000
c. Cash 50,000
Accounts payable 50,000
d. No adjustments

4. The entry to correct/adjust item number 16 is:

a. Accounts receivable 20,000
Cash 20,000
b. Cash 20,000
Accounts payable 20,000
c. Cash 20,000
Accounts receivable 20,000
d. No adjustments

5. TABAC COMPANY’S adjusted cash and cash equivalents balance at December 31, 2016
is:

Problem 3
Your audit of the December 31, 2016, financial statements of MAGIC Corporation reveals
the following:

1. Current account at PBCom P (35,000)

2. Current account at PNB 65,000
3. Treasury bills (acquired 3 months before maturity) 200,000
4. Treasury bills (maturity date is 12/31/17) 500,000
5. Payroll account 175,000
6. Foreign bank account - restricted (translated using the
12/31/16 exchange rate) 900,000
7. Postage stamps 600
8. Employees’ checks marked “DAIF” 10,000
9. IOU from the vice-president 50,000
10. Credit memo from a supplier for a purchase returns 25,000
11. Traveler’s check 60,000
12. Money order 10,000
13. Company’s check dated 12/30/16 but not mailed at year-end 30,000

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14. Petty cash fund (P4,000 in currency and expense receipts for
(P6,000) 10,000

Questions

1. The entry to adjust the employees’ checks marked “DAIF” is:

a. Accounts receivable 10,000
Cash 10,000
b. Cash 10,000
Accounts receivable 10,000
c. Employees’ advances 10,000
Cash 10,000
d. Cash 10,000
Employees’ advances 10,000

2. MAGIC CORPORATION’S adjusted cash and cash equivalents balance at December 31,
2016 is:

Problem 4
The controller of VARIANT Company is attempting to determine the amount of cash to be
reported on its December 31, 2016 balance sheet. The following information is provided:

a. Commercial savings account of P1,000,000 and a commercial checking account balance

of P900,000 are held at Phil. Banking Corporation.
b. Money market fund account held at Allied Bank, P600,000
c. Travel advance of P180,000 for executive travel for the first quarter of next year
(employee to reimburse through salary reduction)
d. A separate fund in the amount of P1,500,000 is restricted for the retirement of long-
term debt.
e. Petty cash fund, P5,000
f. An IOU from David Santos, a company officer, in the amount of P10,000.
g. A bank overdraft of P110,000 has occurred at one of the banks the company uses to
deposit its cash receipts. At the present time, the company has no other deposits at this
bank.
h. The company has two certificates of deposit, each totaling P500,000. These certificates
of deposit have a maturity of 120 days.
i. VARIANT Company has received a check that is dated January 12, 2017 in the amount
of P125,000.
j. Currency and coins on hand amounted to P5,300.
Questions

1. VARIANT COMPANY’S adjusted cash and cash equivalents balance at December 31, 2016
is:

2. The travel advance of P180,000 for executive travel should be classified as:
a. Accounts receivable c. Prepaid expenses
b. Travel expenses d. Advances to employees

Problem 5
Present journal entries to record the following transactions in the books of DINOMIST
Corporation, which uses a calendar year as accounting period. Assume that the company is
using the imprest method in accounting for petty cash fund:

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a. A petty cash fund was set up on November 1, 2016 in the amount of P2,400.

b. On November 29, 2016, a check was issued to replenish the fund, the composition of
which was as follows:
Currency – bills and coins 166
Vouchers showing expenditures for:
Office supplies 270
Charges from purchased of supplies 124
Repairs and maintenance 350
Wages paid to casual employees 950
Charges from purchased of goods to be sold 400

c. On December 18, 2016, the fund was replenished and correspondingly increased to
P3,000; its composition included the following:
Currency – bills and coins 158
Vouchers showing expenditures for:
Store supplies 304
Accounts payable 914
Charges from purchased of goods to be sold 242
Miscellaneous expenses 782

d. An examination on December 31, 2016, disclosed the following composition of the fund,
although it was not replenished on this date:
Currency – bills and coins 958
Check of office manager, dated January 5, 2017 1,000
Vouchers showing expenditures for:
Office supplies 126
Miscellaneous expenses 90
Accounts payable 800

e. On January 5, 2017, the check of office manager was cashed and the proceeds were
added to the petty cash fund.

f. On January 6, 2017, replenished disbursement from December 18, 2016 to January 5,

2017.

Questions
1. The entry to record the November 29 replenishment of petty cash fund is:
a. Operating expenses 1,694
Freight-in 400
Cash short/over 140
Cash 2,234
b. Operating expenses 2,234
Petty cash fun d 2,234
c. Operating expenses 1,694
Freight-in 400
Cash short/(over) 140
Petty cash fund 2,234
d. No entry since the company is using an impress fund system.

2. The adjusted Petty Cash Fund balance of DINOMIST CORPORATION at December 31,
2016 is:

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3. The entry to record the December 31, 2016 adjustment of petty cash fund is:
a. Operating expenses 216
Accounts payable 800
Cash short/over 26
Petty cash fund 1,042
b. Operating expenses 216
Accounts payable 800
Cash short/over 26
Cash 1,042
c. Operating expenses 216
Accounts payable 800
Advances – employees 1,000
Cash short/(over) 26
Petty cash fund 2,042
d. No entry since there is no replenishment yet.

4. The entry to record the January 6, 2014 replenishment of petty cash fund is:
a. Operating expenses 216
Accounts payable 800
Cash short/over 26
Petty cash fund 1,042
b. Operating expenses 216
Accounts payable 800
Cash short/over 26
Cash 1,042
c. Operating expenses 216
Accounts payable 800
Advances – employees 1,000
Cash short/(over) 26
Cash 2,042
d. No entry since the account has been adjusted on December 31.

Problem 6
Your audit of the petty cash (P10,000) of QUANTAL Company as of December 31, 2016
revealed the following: (cash count date is January 3, 2017 at 5:00 pm)

Bills: 10 - P500 bill 15 - P100 bill 18 - P50 15 - P20 5 - P10

Coins: P180 in P5 pieces; P42 in P1.00 pieces; P23 in P0.25 pieces.
IOU’s submitted were:
Dec. 18 Nap R. - P 750
Dec. 28 Ruel R. 125
Dec. 30 Sonny S. 500
Cashed checks:
Dec. 28, 2016 check drawn by the manager P 1,125
Dec. 28, 2016 check drawn by an employee 500
Dec. 30, 2016 check drawn by a customer 350
Jan 1, 2017 check drawn by an employee 1,250

The cashier informed you that owing to the lack of cash it was necessary for him to open
certain payroll envelopes unclaimed by employees and use the cash found herein. They
were as follows:
Dec. 15, 2016 - Ed A. P 1,250
Dec. 30, 2016 - Andoy 1,750

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 Dec. 30, 2016 - Macky 650
Dec. 30, 2016 - Paz 1,000

The cashier also informed you that all cash sales receipts were passed through his fund
and that cash sales tickets Nos. 2059 to 2061 under dates of Dec. 30, Jan. 3 and Jan. 4
for P350, 500 and P545, respectively, had not yet been turned over to the general
cashier.

The petty cash vouchers found in the petty cash box were as follows:
Dec. 30, 2016 Transportation P515
Dec. 30, 2016 Token gifts to visitors 650
Dec. 30, 2016 Freight for office supplies purchase 215
Jan. 1, 2017 Freight for mdse. purchased 125
Jan. 2, 2017 Freight for mdse. sold 575
Questions

1. QUANTAL COMPANY’S cash shortage at December 31, 2016 is:

2. The adjusted petty cash balance of QUANTAL COMPANY at December 31, 2016 is:

3. The entry to adjust the unclaimed payroll at December 31, 2016 is:
a. Petty Cash Fund c. Cash
Salaries expense Accrued salaries
b. Salaries expense d. Accrued salaries
Petty cash fund Cash

4. The cashed check dated January 1, 2017

a. Should be adjusted since it was dated January 1, 2017, hence a postdated check.
b. Should be adjusted since it was received December 31, 2016 but the check is dated
January 1, 2017, hence a postdated check.
c. Should not be adjusted since the check is dated January 1, 2017.
d. Should not be adjusted since the check was received December 31, 2017.

5. The Cash account (excluding PCF) of QUANTAL COMPANY is understated at December

31, 2016 by:

Problem 7
You are making an audit of the QLIPHORT Corporation for the past calendar year. The
balance of the Petty Cash account at December 31, 2016 was P1,300. Your count of the
imprest cash count made at 8:30 am on January 3, 2017, in the presence of the petty cash
custodian, revealed:

Currency and coins 571.38

Checks:
Date Maker Bank
12/28/16 Macky, vice-president PNB 360.00
12/29/16 Andy, employee DBP 60.00
12/31/16 Bobot, customer RCBC 153.80
01/02/17 Neil, customer PNB 121.36
01/10/17 Jeff, employee PNB 60.00
(check received Dec. 29)

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 (These checks were all considered good when deposited after dates shown on the
checks. The first four checks were actually deposited Jan. 3; the last check was
deposited Jan. 11; all five checks proved to be good.)

Vouchers:
Dec. 11 #261 Richard, shipping clerk – temporary advance for the use of the
receiving department. Your count of Mr. Richard’s fund revealed:
currency – P28.80; merchandise freight bills, P31.20. P 60.00
Dec. 28 # 301 Postage 12.00
Dec. 29 # 302 Freight bill on merchandise purchases 47.30
Dec. 31 # 305 Freight bill on office supplies 88.93
Jan. 2 # 500 Freight bill on merchandise purchases 29.36

IOU Dec. 21 Mabel, employee 36.00

Sales Invoices (for cash sales, collections handled by the petty cashier):
Invoice # 315 Dec. 30 P 120.00
328 Dec. 31 153.80
334 Jan. 2 121.36
(As a general rule, the petty cashier endeavored to turn over the proceeds of
cash sales to the general cashier on the 10th, 20th and last days of each month.
Proceeds on these sales were recorded and deposited by the general cashier.)

Postage Stamps:
Three one-peso stamps. The petty cashier handled postage stamps. These
stamps represent the unused stamps purchased on Voucher # 301.

Questions
1. The petty cash fund shortage at December 31, 2016 is:

2. The adjusted petty cash fund balance of QLIPHORT CORPORATION at December 31,
2016 is:

3. QLIPHORT CORPORATION’S operating expenses found in the petty cash fund at

December 31, 2016 is:

4. The Cash account (excluding PCF) of QLIPHORT CORPORATION is understated at

December 31, 2016 by:

Problem 8
In connection with your audit of the financial statements of ABYSS Corporation for the year
ended December 31, 2016, you conducted a surprise count of the company’s petty cash and
undeposited collections at 9:10 am on January 3, 2017. You count disclosed the following:

Bills and counts

Bills Coins
P100.00 5 pieces P1.00 205 pieces
50.00 40 pieces 0.50 162 pieces
20.00 35 pieces 0.25 32 pieces
10.00 27 pieces

Postage stamps (unused) - P365

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Checks
Date Payee Maker Amount
Dec. 30 Cash Custodian P 1,200
Dec. 30 ABYSS Corp. Karren, Inc. 14,000
Dec. 31 ABYSS Corp. Sheryl, sales manager 1,680
Dec. 31 ABYSS Corp. Victor Corp. 17,800
Dec. 31 ABYSS Corp. Ma. Karen, Inc. 8,300
Dec. 31 Merry Corp. ABYSS Corp. 27,000
(not endorsed)

Unreimbursed vouchers
Date Payee Description Amount
Dec. 23 Sheryl, sales mgr. Advance for trip P 7,000
Dec. 28 Post Office Postage stamps 1,620
Dec. 29 Messengers Transportation 150
Dec. 29 Ace, Inc. Computer repair 800

Other items found inside the cash box:

1. Unclaimed pay envelope of Jade. Indicated on the pay slip is his net salary of P7,500.
Your inquiry revealed that Jade’s salary is mingled with the petty cash fund.

2. The sales manager’s liquidation report for this Baguio Trip.

Cash Advance received on Dec. 23 P 7,000
Less: Hotel accomodation, meals, etc. P 4,500
Bus fare for two 400
Cash given to Carlo, salesman 300 5,200
Balance P 1,800
Accounted for as follows:
Cash returned by Carlo to the sales manager P 120
Personal check of the sales manager 1,680
Total P 1,800

Additional information:

1. The custodian is not authorized to cash checks.

2. The last official receipt included in the deposit on December 30 is No. 4351 and the last
official receipt issued for the current year is No. 4355. The following official receipts are
all dated December 31, 2016.

OR No. Amount Form of Payment

4352 P 13,600 Cash
4353 17,800 Check
4354 3,600 Cash
4355 8,300 Check

3. The petty cash balance per general ledger is P10,000. The last replenishment of the
fund was made on December 22, 2016.

Questions

1. ABYSS CORPORATION’S cash shortage/overage at December 31, 2016 is short/over by:

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2. The adjusted petty cash balance of ABYSS CORPORATION at December 31, 2016 is:

3. The undeposited sales/collection of ABYSS CORPORATION at December 31, 2016 is:

Problem 9
Reese is the cashier of ARCHFIEND Corporation. As representative of the Bienvenido and
Associates, CPAs, you were assigned to verify her cash on hand in the morning of January
3, 2017. You began to count at 9:00 AM in the presence of Reese. 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

1.00 24 loose
0.25 5 rolls and 32 loose (50 pieces to a roll)
0.10 10 rolls and 15 loose (50 pieces to a roll)
0.05 14 rolls and 20 loose (40 pieces to a roll)
Checks:
Date Maker Payee Amount
12/22/16 Vivian, Asst. Mgr ARCHFIEND Corp. P 6,000
12/26/16 Reese, cashier ARCHFIEND Corp. 4,000

IOUs:
Date Maker Amount
12/20/16 Yap, Janitor P 500
12/22/16 Felix, clerk 750
12/24/16 Ablay, bookkeeper 500

PETTY CASH VOUCHERS FOR REPLENISHMENT

Date Payee Accounts Charged Amount
12/06/16 Wagan, messenger Advances to employees P1,000.00
12/17/16 Maren and Co. Supplies 545.00
12/18/16 Eeman Liner Freight in 982.50
12/18/16 Posts Office Supplies 300.00
12/20/16 Alejandre, carpenter Repairs 2,950.00
12/21/16 Violan Miscellaneous expense 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, 2017 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, 2017

3. The following employees’ pay envelopes had been opened and the money removed.
Each envelope was marked “Unclaimed” - Ernesto, P332.50; Secinando, P447.50.

Questions

1. The petty cash shortage of ARCHFIEND CORPORATION at December 31, 2016 is:

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2. The adjusted petty cash balance of ARCHFIEND CORPORATION at December 31, 2016
is:

3. The undeposited sales/collection of ARCHFIEND CORPORATION at December 31, 2016

is:

Problem 10
In your year-end audit of Stardust Corp., the cashier showed a cash accountability of
P1,100,000 as at December 31, 2016. The following transactions were extracted in the
books of the company, in summary form:

Accounts receivable, beginning P 275,000

Accounts receivable, end 385,000
Sales (80% on credit) 1,850,000
Accounts written-off 25,000
Recovery of accounts written-off, included in the collection
of account receivable 15,000
Depreciation of fixed assets 150,000
Inventory, end 185,000
Inventory, beg 203,000
Cost of sales 960,000
Income tax accrued 18,500
Payment of bank loan 200,000
Subscription receivable 250,000
Subscribed capital stock 950,000
Purchases of fixed assets 320,000
Proceeds from short-term bank loan 300,000
Accounts payable, end 425,000
Accounts payable, beg. 200,000

Questions

1. The correct cashier’s accountability at December 31, 2016 is:

2. STARDUST CORPORATION’S cash account at December31, 2016 is over/under by:

Problem 11
The following data are gathered from the cash books and bank statement received from
Davao Bank by Pendulum Company:

The cash in bank ledger account shows a debit balance of P290,438.50 as of May 31.

The bank statement shows a credit balance of P318,560 as of May 31.

An examination of the checks encashed by the bank shows that the following checks are not
presented for payment:
No. 187, P3,608; No. 189, P15,499; No. 191, P4,400;
No. 192, P1,545.50, No. 193, P23,001

A certified check for P24,750 payable to creditor, was encashed by the bank during May.

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The bank statement shows a deduction of P10,802 for check No. 184. The check was
actually made out at P10,208.

A check deposited on May 27 for P34,100 was returned by the bank on May 28 marked
Refer to Maker.

A non-interest bearing note for P44,000 was collected by the bank for the account
Pendulum Company. Collection fee deducted by the bank is P330.

A deposit for P20,900 was recorded in the books twice.

Check No. 179 for P26,400 was erroneously recorded in the books as P46,200.

Interest on an outstanding loan payable, deducted by the bank on May 31, P1,320.
Collections on May 31 to be deposited on June 1, P26,488.
Questions

1. PENDULUM COMPANY’S adjusted cash balance at May 31, 2016 is:

2. The recorded cash of PENDULUM COMPANY at May 31 is under/over by:

Problem 12
The following data pertaining to the cash transactions and bank account of Firewall
Company for May 2016 are available to you:

Cash balance, per accounting records, May 31, 2016 P 51,582

Cash balance, per bank statement, May 31, 2016 95,874
Bank service charge for May 327
Debit memo for the cost of printed checks delivered by the bank;
the charge has not been recorded in the accounting records 375
Outstanding checks, May 31, 2016 20,184
Deposit of May 30 not recorded by bank until June 1 14,610
Proceeds of bank loan on May 30, not recorded in the accounting
records, net of interest of P900 17,100
Proceeds from a customer’s promissory note; principal amount P24,000,
collected by the bank, taken up in the books with interest 24,300
Check No. 1086 issued to a supplier entered in the accounting records
as P6,300 but deducted in the bank statement at an erroneous amount
of 3,600
Stolen check lacking an authorized signature, deducted from Firewall’s
account by the bank in error 2,400

Customer’s checks returned by the bank marked NSF, indicating that the
customer’s balance was not adequate to cover the checks; no entry has
been made in the accounting records to record the returned check 2,280

Questions

1. The adjusted cash in bank balance of FIREWALL COMPANY at May 31, 2016 is:

2. The cash in bank balance of FIREWALL COMPANY at May 31, 2016 is under/over by:

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Problem 13
In connection with an audit, you are given the following bank reconciliation.

BANK RECONCILIATION
December 31, 2016
Balance per ledger, 12/31/13 P 34,349.72
Add: Collections received on the last day of
December and charged to “Cash in Bank”
on books but not deposited 5,324.50
Debit memo for customer’s checks returned
unpaid (check is on hand but no entry has been
made on the books) 4,000.00
Debit memo for bank service charge for December 1,000.00
P 46,674.22
Deduct:
Outstanding checks P 18,625
(see details below)
Credit memo for proceeds of a note receivable
which had been left at the bank for collection
but which has not been recorded as collected 8,000
Check for an account payable entered on books
as P12,625 but drawn and paid by bank as
16,225 3,600 32,225.00
Computed balance P 14,449.22
Unlocated difference 36,601.00
Balance per bank (check to confirmation) P 51,050.22

LIST OF OUTSTANDING CHECKS

December 31, 2016
Check No. Amount
14344 P 5,820
14358 1,295
14367 3,543
14399 2,001
14401 4,892
14407 5,074
P 18,625

Questions:

1. The adjusted cash balance at December 31, 2016 is:

2. A check for an account payable entered on books as P12,625 but drawn and paid by
bank as 16,225
a. Should not be included in the reconciliation since the bank already gave the money
to the payee.
b. Should not be included in the reconciliation since bank’s record is always followed.
c. Should be included as deduction in the book reconciliation since this is considered as
book error, thus a reconciling item.
d. Should be included as addition in the book reconciliation since this is considered as
book error, thus a reconciling item.

3. The outstanding checks at December 31, 2016 is:

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4. The cash balance of the company per record at December 31, 2016 is over/under by:

Problem 14
The cash books of Pendulum Corporation show the following entries during the month of
June 2016.
Cash Receipts Journal Check Register
Date Amount Date Check No. Amount
June 1Balance 762,000 June2 801 15,625
4Deposit 113,000 3 802 7,526
4Deposit 811,000 5 803 229,205
7Deposit 152,200 7 804 169,555
10 Deposit 11,300 8 805 74,936
10 Deposit 12,700 10 806 274,600
11 Deposit 73,000 11 807 34,842
17 Deposit 110,075 13 808 250,000
18 Deposit 3,725 14 809 1,070,000
18 Deposit 65,000 17 810 167,300
19 Deposit 26,463 19 811 3,130
20 Deposit 133,037 21 812 82,730
27 Deposit 273,628 23 813 127,200
30 Deposit 92,400 25 814 93,080
30 815 720

The bank statement for the month of June 2016 shows:

Checks No. Deposits Date Amount

Balance May 31 798,000
924,000 June 5 1,722,000
800 36,000 6 1,686,000
804 169,555 7 1,516,445
805 74,936 217,200 8 1,658,709
801 16,525
803 229,205 9 1,412,979
807 34,842 97,000 12 1,475,137
924 75,000
200 40,400 CM 13 1,440,337
(collection charge)
809 1,070,000 14 370,337
808 250,000 15 120,337
198,000 CM 16 318,337
810 167,300 113,800 19 264,837
812 82,730 159,500 21 341,607
806 274,600 24 67,007
273,628 28 340,635
811 3,130
DM 300 30 337,205

Upon investigation, the following are discovered:

CM - Represents a 60-day, 6% note for P40,000 collected by the bank for the account of
Pendulum Company.
CM - Represents a 60-day, 6% own note for P200,000 discounted by Pendulum Corporation
with the bank and not yet recorded in the books.

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DM - Represents bank service charge for the month.
Check No. 924 represents a check signed by Graciele Company.
Collection charge – represents collection fee charged by the bank.

Questions

1. The unadjusted cash ledger balance of PENDULUM CORPORATION at June 30, 2016 is:

2. The unadjusted cash bank balance of PENDULUM CORPORATION at June 30, 2016 is:

3. The deposit in transit of PENDULUM CORPORATION at June 30, 2016 is:

4. The outstanding checks of PENDULUM CORPORATION at June 30, 2016 is:

5. The adjusted cash balance of PENDULUM CORPORATION at June 30, 2016 is:

6. The error made in check number 801 is known as:

a. Transposition error c. Transplacement error
b. Balance sheet error d. None of the choices.

7. In the discounting of P200,000 note, the company should credit

a. Notes receivable discounting c. Notes payable
b. Notes Receivable d. Notes discounting

Problem 15
The bank portion of the bank reconciliation for Link Company at October 31, 2016 was as
follows:
Link Company
Bank Reconciliation
October 31, 2016
Cash Balance per Bank P 12,367.90
Add: Deposit in transit 1,530.20
P 13,898.10
Less: Outstanding checks

Check Number Check Amount

2451 P 1,260.40
2470 720.10
2471 844.50
2472 426.80
2474 1,050.00 4,301.80

Adjusted cash balance per bank P 9,596.30

The adjusted cash balance per bank agreed with the cash balance per books at October 31.

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The November bank statement showed the following checks and deposits.

Bank Statement
Checks Deposits
Date Number Amount Date Amount
11-1 2470 720.10 11-1 1,530.20
11-2 2471 844.50 11-4 1,211.60
11-5 2474 1,050.00 11-8 990.10
11-4 2475 1,640.70 11-13 2,575.00
11-8 2476 2,830.00 11-18 1,472.70
11-10 2477 600.00 11-21 2,945.00
11-15 2479 1,750.00 11-25 2,567.30
11-18 2480 1,330.00 11-28 1,650.00
11-27 2481 695.40 11-30 1,186.00
11-30 2483 575.50 Total 16,127.90
11-29 2486 900.00
Total 12,936.20
The cash records per books for November showed the following:

Cash Receipts
Cash Payments Journal Journal____
Date Number Amount Date Number Amount Date Amount
11-1 2475 1,640.70 11-20 2483 575.50 11-3 1,211.60
11-2 2476 2,830.00 11-22 2484 829.50 11-7 990.10
11-2 2477 600.00 11-23 2485 974.80 11-12 2,575.00
11-4 2478 538.20 11-24 2486 900.00 11-17 1,472.70
11-8 2479 1,570.00 11-29 2487 398.00 11-20 2,954.00
11-10 2480 1,330.00 11-30 2488 800.00 11-24 2,567.30
11-15 2481 695.40 Total 14,294.10 11-27 1,650.00
11-18 2482 612.00 11-29 1,186.00
11-30 1,225.00
Total 15,831.70

The bank statement contained two bank memoranda:

1. A credit of P2,105.00 for the collection of a P2,000 note for Link Company plus interest
of P120 and less a collection fee of P15. Link company has not accrued any interest on
the note.

2. A debit for the printing of additional company checks, P50.

At November 30, the cash balance per books was P11,123.90, and the cash balance per the
bank statement was P17,604.60. The bank did not make any errors, but Link Company
made two errors.

Note: The correction of any errors pertaining to recording checks should be made to
Accounts Payable. The correction of any errors relating to recording cash receipts should be
made to Accounts Receivable

Questions

1. The unadjusted cash ledger balance of LINK COMPANY at November 30, 2016 is:

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2. The unadjusted bank balance of LINK COMPANY at November 30, 2016 is:

3. The outstanding checks of LINK COMPANY at November 30, 2016 is:

4. The deposit in transit of LINK COMPANY at November 30, 2016 is:

5. The adjusted book balance of LINK COMPANY at November 30, 2016 is:

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