1st Quiz – Intermediate Accounting One

1. The following items are found in the cash account of Ivie Company at December 31, 2018. 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. (16 points)

a. Customers’ check dated December 25, 2018, P25,000.

b. Company’s check (P30,000) dated December 26, 2018 which was drawn in payment for merchandise
purchased on that date but not delivered until January 3, 2019. This check was deducted in the cash
balance.
c. 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.
d. Cash in closed bank (Urban Bank), P95,000.
e. Redemption fund, P100,000
f. Sinking fund, P100,000. This will be used on March 1, 2019 to redeem the bonds payable.
g. Metro Bank Checking Account No. 0004568, P210,000.
h. RCBC Checking Account No. 0002347, P115,000.
i. Overdraft in PNB Checking Account No. 00011256, P50,000.
j. Company’s check dated January 3, 2019 in payment of account, P50,000. This was recorded in the
company’s disbursement ledger at December 31, 2018.
k. Overdraft in RCBC Checking Account No. 0056791, P15,000.
l. Postage stamps, P2,000.
m. 180-day Treasury Bills (purchased on November 1, 2018) due on February 1, 2019, P100,000
n. 90-day Treasury Bills, P50,000.
o. Change fund, P10,000.
p. Customers’ certified check, P20,000.
q. Company’s certified check, P50,000. (This was included in the cash disbursement for December).
Requirement : Identify items that needs adjustment and Prepare the necessary Adjusting Entries.

a. No adjusting entry
b. Cash in Bank 30,000
Accounts Payable 30,000
c. Sales discount 4,000
Accounts Receivable 4,000
d. Cash in Closed Bank/Investment/Receivable from closed bank 95,000
Cash in Bank 95,000
e. Redemption Fund/Investment 100,000
Cash in Bank 100,000
f. Sinking Fund/Short-term investment 100,000
Cash in Bank 100,000
g. No AJE
h. No AJE
i. Cash in Bank 50,000
Bank Overdraft 50,000
j. Cash in Bank 50,000
Accounts Payable 50,000
k. No AJE (may be offset with RCBC checking account No. 0002347)
l. Postage Stamps/Supplies2,000
Cash 2,000
m. No AJE (part of cash under cash equivalents)
n. No AJE (part of cash under cash equivalents)
o. No AJE
p. No AJE
 q. No AJE
2. Trap Company provided the following transactions: (10 points)

2019
Nov. 2 The entity established a petty cash fund of P10,000.

30 An examination of the cash fund disclosed:

Currency and coin 3,000

Memoranda showing expenditures for:
Postage 2,000
Supplies 5,000

A check was drawn to replenish the fund and to increase its amount to P20,000.

Dec. 31 The fund was not replenished.

Currency and coin 11,000

Memoranda showing expenditures for:
Postage 3,000
Supplies 4,000
Employee postdated check 2,000

2020
Jan. 2 Encashed the employee’s check. The proceeds were retained in the fund.

31 A check was drawn to replenish the fund.

Currency and coin 1,000

Postage Stamps 500

Memoranda showing expenditures since November 30, 2019 for:

Postage 5,000
Supplies 6,000
Payment of account 7,000

Required: Prepare journal entries to record the transactions under fluctuating fund and imprest fund
system
Imprest Fund System Fluctuating Fund System
11/02 – Petty Cash Fund 10,000 11/02 – Petty Cash Fund 10,000
Cash in Bank 10,000 Cash in Bank 10,000
11/30 – Postage 2,000 11/30 – Postage 2,000
Supplies 5,000 Supplies 5,000
Petty Cash Fund 10,000 Petty Cash Fund 10,000
Cash in Bank 17,000 Cash in Bank 17,000
12/31 – Postage 3,000 12/31 – Postage 3,000
Supplies 4,000 Supplies 4,000
Receivable from Employee 2,000 Receivable from Employee 2,000
Petty Cash Fund 9,000 Petty Cash Fund 9,000
01/01 – Cash in Bank 9,000 01/01 – No Entry
Postage 3,000
Supplies 4,000
Receivable from Employee 2,000
 01/02 – No Entry 01/02 – Petty Cash Fund 2,000
Receivable from Employee 2,000
01/31 – Postage 5,000 12/31 – Postage 2,000
Supplies 6,000 Supplies 2,000
Accounts Payable 7,000 Accounts Payable 7,000
Cash Short or Over 1,000 Petty Cash Fund 7,000
Cash in Bank 19,000 Cash Short or Over 1,000
Cash in Bank 19,000
*Postage stamps are not Cash

3. Boon Company provided the following information:

Balance per book, June 30 3,000,000

Receipts per book for June 6,300,000
Disbursements per book for June 5,500,000

Balance per bank, June 30 2,860,000

Bank receipts for June 7,040,000
Bank disbursements for June 5,980,000

June collection of P200,000 recorded by entity as 20,000

June check in payment of account payable for

P600,000 recorded by entity as 60,000

Deposit of Boom Company erroneously credited

By bank to Boon Company 200,000

June check of Boom Company erroneously

Charged by bank to Boon Company 400,000

NSF Check returned and deposited the following month:

May 100,000
June 50,000

Note collected by bank for Boon Company:

May 200,000
June 300,000

Deposit in Transit:
May 31 600,000
June 30 480,000

Outstanding Checks:
May 31 100,000
June 30 650,000

NSF check returned by bank on June 13

but was immediately deposited without entry 140,000

Required: Prepare a proof of cash for the month of June (44 points)
 Boon Company
Proof of Cash
For the month of June
Book 05/31 Receipts Disbursements 06/30
Unadjusted Balance 2,200,000 6,300,000 5,500,000 3,000,000
Note collected by Bank:
May 200,000 (200,000)
June 300,000 (300,000)
NSF Checks:
May (100,000) (100,000)
June 50,000 (50,000)
Book Errors:
Collection of 200,000 180,000 180,000
recorded as 20,000
Payment of 600,000 540,000 (540,000)
recorded as 60,000
Adjusted Balance 2,300,000 6,580,000 5,990,000 2,890,000

Bank 05/31 Receipts Disbursements 06/30

Unadjusted Balance 1,800,000 7,040,000 5,980,000 2,860,000
Deposit in Transit:
May 600,000 (600,000)
June 480,000 480,000
Outstanding Checks:
May (100,000) (100,000)
June 650,000 (650,000)
Bank Errors:
Erroneous Credit (200,000) (200,000)
Erroneous Debit (400,000) 400,000
NSF check returned by (140,000) (140,000)
bank but was
immediately deposited
Adjusted Balance 2,300,000 6,580,000 5,990,000 2,890,000