Problem 1

On December 31, 2015, Margaux Companys cash and cash equivalents account balance were composed
of the following items:
Cash on hand P 300,000
Petty cash fund 50,000
HSBC current account 2,000,000
BPI current account 950,000
SBC, current account (60,000)
PNB, 60-day time deposit 200,000
The examination of the above mentioned items revealed the following:
The cash on hand account includes a customers check of P60,000 dated January 2, 2016 and a
P45,000 postal money order
The petty cash fund includes unreplenished vouchers for P12,000, employee check of P8,000 dated
January 15, 2016 and a P5,000 company check bearing the name of the petty cash custodian.
Included among the checks drawn by Margaux Company against its HSBC current account and
recorded in December 2015 are:
o Check No. 1001208001 written and dated December 23, 2015 which was delivered to the
payee on January 6, 2016, P130,000
o Check No. 1001255001 written December 28, 2015 and dated January 12, 2016 which was
handed to the payee on December 29, 2015, P270,000
The BPI current was composed of the following items:
Current account No. 2908356 P1,195,000
Current account No. 2908357 (245,000)
The amount to be reported as cash at December 31, 2015 is

Problem 2
1. The following is available for Kiwi Company on August 31:
Ledger balance, August 31, P346,000
Note including interest of P700 collected by the bank and no yet taken u in the books,
P9,500
NSF checks returned with the bank statement, P12,500
Deposit in transit as of August 31, P47,000
Outstanding checks as of August 31, P29,000
Bank service charge for August, P625
Deposit made by Kiwi Companys collector was erroneously credited to Kitty Company by
the bank, P9,200
Check drawn against the account of Key Company was erroneously debited against Kiwi
Companys account by the bank, P16,200
Customers deposits as reflected in the bank statement P7,000 was recorded in the books
as P700
Check to suppliers for P1,350 was recorded in the books as p13,050
The unadjusted cash balance per bank statement on August 31 is
Problem 3
The cash account of Dolly Inc. disclosed a balance of P17,056.48 on October 31. The bank statement as of
October 31 showed a balance of P21,209.45. Upon comparing the bank statement with the cash records,
the following facts were developed.

a. Dollys account was charged on October 26 for a customers uncollectible check amounting to
P1,143.
b. A 2-month, 9%, P3,000 customers note dated August 25, discounted on October 12, was
dishonored October 26 and the bak charged dolly P3,050.83, which included a protest fee of P5.83.
c. A customers check for P725 was entered as P625 by both the depositor and the bank but was later
corrected by the bank.
d. Check no. 661 for P1,242.50 was entered in the cash disbursements journal as P1,224.50 and check
no. 652 for P32.90 was entered as P329.00. the company uses the voucher system.
e. Bank service charges od P39.43 for October were not yet recorded on the books.
f. A bank memo started that M. Sins note for P2,500 and interest of P62.50 had been collected on
October 29, and the bank charged P12.50 (No entry was made on the books when the note was
sent to the bank for collection).
g. Receipts of October 29 for P6,850 were deposited on November 1.

The following checks were outstanding on October 31:

No. 620 ..P1,250.00 No. 671 .P 732.50

No. 621 .. 3,448.23 No. 673 . 187.90
No. 632 .. 2,405.25 No. 675 . 275.72
No. 670 .. 1,775.38 No. 676 . 2,233.15

Prepare the bank reconciliation as of October 31 to show the adjusted cash balance.

Problem 4
Ilang-ilang Company keeps all its cash in a checking account. Presented below are the companys bank
reconciliation prepared at the end of May, the general ledger for cash, and a summary of the companys
bank statement for June:

Ilang-ilang Company
Bank reconciliation
May 31

Balance per bank statement P6,250

Add: Deposit in transit 225
6,475
Deduct: Outstanding checks 418
Correct cash balance P6,057

Balance per books P6,072

Deduct: Bank service charge 15
 Correct cash balance P6,057

Summary of Ilang-ilang Companys

Bank Statement for June
Balance, June 1 P6,250
Deposits shown for June 25,692
Note and interest collected during June 1,575
Checks that cleared during June (25,707)
June service charge (17)
Balance, June 30 7,793

Additional information:

1. During June, iIlang-ilang incorrectly recorded two checks. Check no. 507 ws drawn for P233 but
recorded as P323; check no. 521 was drawn for P180 but recorded as P18. Both checks were issued
in payment of accounts payable and cleared the bank in June.

2. During June the bank erroneously charged a P210 check of Ilong-ilong Company to Ilang-ilang
Companys account.

3. Of the P1,575 note and interest collected by the bank suring June, P75 represents interest, all of
which Ilang-ilang earned during the current year. The company has not yet recorded the collection.

Required:
1. Prepare a June 30 bank reconciliation.
2. Prepare journal entries to bring Ilang-ilang Companys accounting records up to date.
3. What amount should Ilang-ilang report as cash on the balance sheet dated June 30?

Problem 5
Mila Lim is the cashier of the Plaridel Glass Company. As representative of the Reyes, Tan and Associates,
CPAS, you were assigned to verify her cash on hand in the morning of January 4, 2012. You began to count
at 9:00 AM in the presence of Miss Lim. 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 fifties, 9 twenties, 13 tens

Coins
P5.00 5 loose
1.00 74 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 16 rolls and 9 loose (40 pieces to a roll)

Checks
 Maker Date Payee Amount
Jose Cruz, Asst. Manager 12/23/11 Plaridel Glass Co. P60.00
Mila Lim, Cashier 12/26/11 Plaridel Glass Co. 40.00

IOUs
A. David, janitor 12/20/11 P35.00
R. Tirao, clerk 12/22/11 25.00
Pedro Munar, bookkeeper 12/24/11 15.00

Petty cash Vouchers for replenishment

Payee Date Account charged Amount
L. Bilbao, messenger 12/16/11 Advances to employees P10.00
Rosario & Co. 12/17/11 Supplies 14.50
Victory liner 12/18/11 Freight in 18.25
Bureau of posts (stamps) 12/18/11 Supplies 30.00
A. Vallo, carpenter 12/20/11 Repairs 45.00
B. Tello 12/21/11 Miscellaneous exp. 15.40

Your investigation also disclosed the following:

1. The balance of petty cash fund per books is P900
2. Cash sales of January 2, 2012 amounted to P865 per sales records, while Cash Receipts Book and
Deposit Slip showed that only P765 was deposited in the bank on January 3, 2012.
3. The following employees pay envelopes had been opened and the money removed. Each envelope
was marked unclaimed.
N. Roy P33.25
G. Gloria 24.75

Required:
1. Prepare the necessary adjusting journal entries.
2. What is the total amount of petty cash fund to be accounted for?
3. What is the correct total amount of fund per count?
4. Compute for the cash shortage.

Problem 6
In your year-end audit of J.P. Rizal Corporation, the cashier showed a cash accountability of P12,000 as at
December 31, 2013. Selected transactions of the corporation for 2012, in summary form, follows:

Accounts written off P 5,000

Depreciation of fixed assets 30,000
Disbursements for cost and expenses 750,000
Income tax accrued 10,000
Payment of bank loan 40,000
Subscriptions receivable 300,000
Subscribed share capital 900,000
Proceeds from short term bank loan 100,000
Purchased of fixed assets 450,000
 Sales (80% collected in 2012) 700,000

Compute for the Cashiers correct cash accountability at December 31, 2012.

Problem 7
The Silver Companys internal control over its cash transactions is very weak. Actually, the companys cash
position at December 31, 2012 were as follows:

The cash book showed a balance of P15,000, which included cash on hand. A credit of P150 on the banks
records did not appear on the companys books. The bank statement shoed a balance of P12,300; and the
outstanding checks were: 0100 P120; 0201 P100; 0300 P230; 1501 P110; 1510 P140 and 1515
P150.

The cashier removed all of the cash on hand in excess of P3,000 and then prepared the following
reconciliation:

Balance per books, Dec. 31, 2012 P15,000

Add: Outstanding checks:
No. 1501 P110
1510 140
1515 150 300
P15,300
Deduct cash on hand 3,000
Balance per bank, Dec 31, 2012 P12,300
Deduct unrecorded credit 150
True cash, Dec 31, 2012 P12,150

Required:
1. Compute for the cash shortage if any
2. Compute for cashiers accountability
3. Compute for the adjusted cash in bank balance in the balance sheet

Problem 8
On January 10, 2013, you started the audit of the financial records of the De Leon Company for the year
ended December 31, 2012. From your investigation, you discovered the following:

1. The bookkeeper acts also as the cashier. Her December 31, 2012 year-end cash reconciliation
contained the following items:
Cash per ledger, 12-31-12 P61,400
Cash per bank, 12-31-12 64,850
Checks outstanding 5,220
Vendoro Co. check charged by bank in error 12-20-12; corrected 150
by bank on 1-5-13
Cash in transit, credited by bank on 1-2-13 720
 2. The cash account balances per ledger as of 12-31-12 were: Cash P61,400, petty cash P150.

3. The count of the cash on hand at the close of business on January 10, 2013, including the petty
cash, was as follows:
Currency and coin P385
Expense vouchers 20
Employees IOUs dated 1-5-13 25
Customers checks in payment of acct 290
P750
4. From January 2, 2013 to January 10, 2013, the date of your cash count, total cash receipts
appearing in the cash records were P8,600. According to the bank statement for the period January
2 to January 10, 2013, total deposits were P7,600.

5. On July 5, 2012, cash of P400 was received on account from a customer; the Allowance for doubtful
account was charged and Accounts receivable was credited.

6. On December 5, 2012, cash of P300 was received on account from a customer, inventory was
charged and Accounts receivable was credited.

7. Cash of P730 received during 2012 was not recorded.

8. Checks received from customers from January 2, 2013 to January 10, 2013, totaling P420, were not
recorded but deposited in the bank.

9. On July 1, 2012, the bank refunded interest of P20 because a note of the De Leon Company was
paid before maturity. No entry had been made for the refund.

10. In the cashiers petty cash, there were receipts for collections from customers on January 9, 2013,
totaling P850; these were unrecorded and undeposited.

11. In the outstanding checks, there is one for P50 made payable to a trade creditor; investigation
shows that this check had been returned on June 14, 2013 and a new check was issued in its place;
the original check for P50 was made in error as to amount.

Required:
1. Compute the correct bank balance as of December 31, 2012.
2. Compute the cash shortage as of December 31, 2012.
3. Compute the cash shortage for the period January 1 to January 10, 2013.
Problem 9
From the following information, prepare a four-column reconciliation of receipts, disbursements and
balances for Panay Company, using the form where the bank and book balances are brought to a corrected
cash balance:

Aug. 31 Sept 30
1. Balance per bank P14,010 P19,630
2. Balance per books 11,190 18,945
3. Deposit in transit 2,740 3,110
4. Outstanding checks 4,260 3,870
5. Bank collections not in books 1,200 1,600
6. Bank charges not in books 950 640
7. Of the checks outstanding in September 30, one check for P700 was certified at the request of the
payee.
8. Deposits for September, per bank statement, P281,070.
9. September disbursements, per cash journal, P273,885.
10. NSF check from customer was charged by the bank on September 28, and has not been redeposited,
P800.
11. NSF check in August and recorded in September, P1,050.
12. NSF check returned and recorded in September, 900.
13. Check of Pasay Company charged by bank in error, P2,010.
14. Receipt on September paid out in cash for travel expenses, P750.
15. Error in recording customers check, September 20; P165 instead of P465.
16. Error in disbursement journal for September, P3,250 instead of P325.

Also prepare adjusting journal entries for the accounts of Panay Company at September 30.