Chapter 3

Cash
MULTIPLE CHOICE
1. C
6. B
11. B

2. B
7. C
12. C

3. D
8. C
13. C

4. A
9. C
14. D

5. B
10. D
15. D

Problem 1
(a)

Audit adjustments
Cash Equivalents
Cash

3,000,000

Other Non-current Financial Assets

Cash

3,200,000

Cash

3,000,000
3,200,000
35,000

Accrued Salaries Expense

Other Non-current Financial Assets
Cash

35,000
900,000

Miscellaneous Expenses
Advances to Employees
Cash (Petty Cash Fund)

6,800
1,200

Cash

5,300

8,000

Accrued Utilities Expense

Accounts Receivable
Cash
(b)

900,000

5,300
25,000
25,000

Cash and Cash Equivalents

Savings account with Metrobank
Checking account with Metrobank 800,000 + 5,300
Certificates of deposit
Payroll fund
1,200,000 + 35,000
Tax fund
Petty cash fund
Undeposited collections 85,000 25,000
Correct cash and cash equivalents

P1,500,000
805,300
3,000,000
1,235,000
500,000
12,000
60,000
P7,112,300

Problem 2 (Sta. Monica, Inc.)

Expenses

10,500
Petty Cash Fund

Correct balance of petty cash fund = P20,000 P10,500 = P9,500

10,500

Chapter 3
Cash
Problem 3 (Victor Company)
(a) Correct amount of petty cash fund
Currencies and coins

P6,400

(b) Per count

Currencies and coins
Paid petty cash vouchers
Employees NSF check
Wedding gift contribution (with bills)
Total per count
Cashiers accountability:
Petty cash fund, per ledger
Wedding gift contribution
Cash shortage

P 6,400
2,250
1,200
1,500
P11,350
P10,000
1,500

11,500
P 150

(b) Audit Adjusting Entries

Delivery Expense
250
Office Supplies Expense
160
Employees Medicine
240
Transportation Expense
400
Repairs and Maintenance
400
Receivables from Employees
2,000
Cash Shortage (or Misc. Expenses or Receivables fr Employees)
150
Petty Cash Fund

3,600

Problem 4 (Rainbow Corporation)

(a)

(b).

(c)

Total per count

Cashiers Accountability
Petty Cash Fund, per ledger
Unused postage stamps
Unused office supplies
Wedding gift contribution
Cash shortage

P 35,000
P35,000
1,800
1,200
1,000

Telephone Expense
Water Expense
Office Supplies Expense (3,700 1,200)
Postage Expense (2,800 1,800)
Prepaid Expenses (1,200 + 1,800)
Receivables from Employees (3,900 + 4,000)
Petty Cash Fund

39,000
P 4,000

1,500
1,600
2,500
1,000
3,000
7,900
17,500

Correct amount of petty cash fund = P35,000 P17,500 =

Cash items in the petty cash fund:
Bills and Coins
Replenishment check
Total

P17,500
P 2,500
15,000
P17,500

26

Chapter 3
Cash
Problem 5
Bills and Coins (show details of denomination and pieces per denomination)
Checks:
Date
Maker
Amount
12-28-12
Urquiola, employee P
3,000.00
12-29-12
Sta. Maria, employee
1,500.00
12-31-12
L. Chua, customer
2,500.00
01-02-13
A. Bobadilla, customer
3,200.00
01-12-13
C. German, employee
(check received 12-28-12)
1,500.00
Vouchers
Date
Voucher No.
Particulars
Amount
12-13-12
151
Freight out
P 500.00
12-28-12
183
Supplies
300.00
12-29-12
184
Freight In
394.20
12-31-12
189
Freight on cabinet
741.10
01-02-13
001
Freight in
244.70
IOUs
12-21-12
S. Dechavez
Unused office supplies
Total per count
Cashiers accountability:
Petty cash fund, per ledger
P15,000.00
Unremitted cash sales
Inv. # 118
December 30
P1,000.40
Inv. # 129
December 31
2,500.00
Inv. # 133
January 2
3,200.00
6,700.40
Unused office supplies
40.00
Cash shortage

P6,717.50

11,700.00

2,180.00
300.00
40.00
P20,937.50

21,740.40
P 802.90

Audit Adjusting Entries:

Receivables from Employees (1,500.00 + 300.00)
Freight out
Supplies Expense (100 40)
Prepaid Expenses
Furniture and Equipment
Freight in
Cash Shortage (Receivable from Employees)
Petty Cash Fund

1,800
500
260
40
741.10
394.20
802.90

Cash in Bank (1,000.40 + 2,500.00)

Sales

4,538.20

3,500.40
3,500.40

Correct balance of petty cash fund (P15,000 4,538.20)

P10,461.80

Composed of the following cash items at December 31, 2009

Bills and coins
Checks dated December
Petty cash vouchers dated January (undisbursed as
of December 31)
Total cash items as of December 31
Unremitted cash sales as of December 31
( 1,000.40 + 2,500)
Petty cash fund, per audit, December 31

27

P6,717.50
7,000.00
244.70
P13,962.20
(3,500.40)
P10,461.80

Chapter 3
Cash

Problem 6 (Da King Company)

Bills and coins
500 x 1
100 x 8
50 x 3
10 x 4
5x2
1x3
Checks:
12/29/12
M. Roxas, employee
12/30/12
J. Madrigal Company
01/02/13
J. Estrada Junk Shop
01/15/13
F. Chavez, employee (received 12/27/12)
Paid petty cash vouchers:
12/16/12
Vo. No. 145 Freight on goods bought
12/26/12
164 Postage
12/29/12
165 Transportation of messenger
01/02/13
166 Repairs, completed Dec. 29, 2012
IOU
Ed Gil, employee
Postage stamps 10 pcs x P12
Total per count
Cashiers accountability
Petty cash fund
Unremitted collections
12/30/12 Refund for merchandise returned
P 1,500
01/06/13 Sale of junk and scrap materials
2,450
Unused postage stamps
Cash shortage
Adjusting entries
Receivable from Employees (1,800 + 1,200 + shortage of 1,247)
Freight in/Cost of Goods Sold
Transportation Expense
Postage Expense (200 120)
Prepaid Expenses
Petty Cash Fund

500
800
150
40
10
3

P 1,503

P2,000
1.500
2,450
1,800

7,750

P500
200
50
1,500

2,250
1,200
120
P 12,823

P10,000
3,950
120

14,070
P1,247

4,247
500
50
80
120
4,997

Repairs and Maintenance

Accrued Expenses

1,500

Cash in Bank
Purchase Returns and Allowances /Cost of Goods Sold

1,500

1,500
1,500

Correct Petty Cash Fund = P10,000 P4,997 =

Cash items as of December 31:
Bills and coins
Checks dated December
Petty cash voucher dated January 2013
Cash refund for purchase returns
Correct petty cash fund balance

P5,003
P1,503
3,500
1,500
(1,500)
P5,003

28

Chapter 3
Cash
Problem 7 (Cisco Systems, Inc.)
(1)
Bank reconciliation:
Per bank
P 1,463,212
(140,000)
59,500

Unadjusted balances
Outstanding checks
Undeposited receipts
Error in recording check issued for rental payment
Bank charge for payment of loan and interest
Bank service charges
Deposit of another company
Customers DAIF check
Adjusted balances

Per books
P1,352,312*

1,800
(45,000)
(1,400)
(87,500)
P1,295,212

(12,500)
P1,295,212

(2) Adjusting entry:

Notes Payable Bank
Interest Expense
Bank Service Charges
Accounts Receivable
Rent Expense
Cash in Bank

40,000
5,000
1,400
12,500
1,800
57,100

(3) Cash and cash equivalents:

Petty cash fund
Cash in bank
Treasury bills maturing in 2 months
Total cash and cash equivalents

20,000
1,295,212
500,000
P1,815,212

Problem 8 (Sunshine Corporation)

1.

Per Bank
P 424,000
(113,000)
48,000

Unadjusted Balances
Outstanding checks
Undeposited collections
Customers note collected by bank
Bank service charge
Adjusted balances
Cash shortage
Cash balance, December 31, per audit
2.

P359,000
P359,000

Understated book balance 456,000 465,000

Overstated bank balance 424,000 454,400
Omitted outstanding checks
183
198
Understated outstanding checks
52,000 25000
9,000 900
25,000 15,000
Overstated undeposited collections
Omission of bank credit memo
Total cash shortage

Per Books
P465,000
19,000
(1,500)
P482,500
(123,500)
P359,000
P 9,000
30,400
4,500
12,500
27,000
8,100
10,000
3,000
19,000
P123,500

29

Chapter 3
Cash

3.

Undeposited collections, December 31

Collections, January 1 15
Total amount available for deposit
Amount deposited, per deposit slips
Undeposited collections, January 15
Cash on hand, January 15
Additional cash shortage in January

.4.

Adjusting Entries
Bank Charges
Receivable from Employees (or Loss)
Cash
Notes Receivable

P 48,000
199,000
P247,000
(110,000)
P137,000
(52,000)
P 85,000

1,500
123,500
106,000
19,000

Problem 9 (Pamela Manufacturing Company)

Unadjusted bank balance
Outstanding checks
November 30
December 31
Deposits in transit
November 30
December 31
Check of Pamplona Company
Adjusted Balances

Balance per books

Error in recording check no. 359
Bank service charge
November
December
NSF check returned in November
Interest charged by the bank
Adjusted Balances

Nov. 30
876,750

Receipts
9,153,760

Disbursements.
8,526,550

Dec. 31
1,503,960

(254,720)
335,610

(335,610)
209,180
5,830
1,383,360

(254,720)
164,220

(164,220)
209,180

786,250

9,198,720

(5,830)
8,601,610

Nov. 30
821,950
2,700

Receipts
9,198,720

Disbursements
8,613,010

9,198,720

(3,500)
2,250
(34,900)
24,750
8,601,610

(3,500)
(34,900)
786,250

Audit adjusting entries:

Cash in Bank
Office Furniture

2,700

Bank Service Charge

Cash in Bank

2,250

Interest Expense
Cash in Bank

24,750

2,700
2,250

30

24,750

Dec. 31
1,407,660
2,700
(2,250)
(24,750)
1,383,360

Chapter 3
Cash
Problem 10 (Golden Bells Company)
Unadjusted bank balance
Deposits in transit
November 30
December 31
Outstanding checks
November 30
December 31
Erroneous bank charges
November 30
December 31
Erroneous bank credit
November 30
December 31
Adjusted balances

Unadjusted book balances (squeezed)

NSF checks returned by bank
November 30
December 31
Bank service charges
November
December
Note collected by bank
November
December
Adjusted balances

Nov. 30
2,500,000

Receipts
2,300,000

58,000

(58,000)
47,000

Disbursements
1,700,000

47,000

(97,000)
25,000

Dec. 31
3,100,000

(97,000)
46,000

(46,000)

(37,000)

37,000

(25,000)

(45,000)

(45,000)

2,441,000

(50,000)
2,214,000

1,567,000

(50,000)
3,088,000

Nov. 30
2,390,000

Receipts
2,206,000

Disbursements
1,549,000

Dec. 31
3,047,000

(15,000)
25,000

(25,000)

(10,000)
18,000

(18,000)

1,567,000

84,000
3,088,000

(15,000)
(10,000)
76,000
2,441,000

(76,000)
84,000
2,214,000

Accounts Receivable
Cash in Bank

25,000

Bank Service Charges / Miscellaneous Expenses

Cash in Bank

18,000

Cash in Bank
Notes Receivable

84,000

25,000
18,000
84,000

31

Chapter 3
Cash
Problem 11 (Starr Company)
Unadjusted bank balance
Deposits in transit
April 30
May 31 (squeezed)
Outstanding checks
April 30
May 31
Adjusted balances

Unadjusted book balances (squeezed)

DAIF checks returned by bank
April 30
May 31
Bank service charges
April
May
Check issued by the treasurer to himself
Proceeds of loan granted by bank
May
Adjusted balances

Apr. 30
470,360
29,360

May 1-31
Receipts
Disb.
883,200
1,320,600
(29,360)
40,560

40,560

(144,800)
354,920

894,400

Apr. 30
363,040

May 1-31
Receipts
654,400

(144,800)
133,600
1,309,400

(133,600)
(60,080)

Disb.
621,240*

May 31
396,200

(8,000)

(8,000)

(120)

(120)
280
696,000

(280)
(696,000)

1,309,400

240,000
(60,080)

354,920

240,000
894,400

*621,240 = 613,120 + 8,000 + 120

(a)

1.
2.
3.
4.

(b)

Adjusting entries:

May 31
32,960

P363,040
P40,560
P696,000
P(60,080)

Bank Service Charges

Cash in Bank

280
280

Loss from Theft/Receivable from Officers

Cash in Bank

696,000
696,000

Cash in Bank
Notes Payable Bank

240,000

32

240,000

Chapter 3
Cash
Problem 12 (Rocky Mountain High)
Unadjusted bank balance
Deposits in transit
November 30
December 31 (102,000 12,000)
Payment from collections
Outstanding checks
November 30
December 31 = 62,000 + 105,000 + 30,000 +
40,000
Adjusted balances

Unadjusted book balances (squeezed)

Bank charges in December (200,000 + 28,000)
Adjusted balances

Nov. 30
P888,800

Receipts
P555,500

Disbursements
P666,600

148,900

(148,900)
90,000
12,000

12,000

(116,200)

Dec. 6

90,000
(116,200)

921,500

508,600

Nov. 30
921,500

Receipts
508,600

921,500

508,600

237,000
799,400

(237,000)
630,700

Disbursements
571,400
228,000
799,400

Dec. 6
858,700
(228,000)
630,700

Answers:
(a) P148,900
(b) P116,200
(c) P921,500
(d) P630,700
Problem 13
1.
2.
3.
4.
5.

A,D
C, G.
B, F
E, H
J, N

6. M, P
7. I, L
8. K, O
9. D, H
10. B, F

11.
12.
13.
14.
15.

D, F
A, D
F, G
D, F
J, N

16. I, L
17. Not a reconciling item
18. J, N
19. L, N
20. N, O

Problem 14 (Contronics Company)

Balances, per ledger

Disbursed in 2012
Bank credit memo
Balances per audit

Petty Cash
Fund
P 15,000
(6,000)

Purchasing
Fund
P 35,000
(20,000)

P9,000

P15,000

Adjusting entries
Gasoline Expense
Miscellaneous Expenses
Transportation Expense
Petty Cash Fund

Cash in Bank
P134,500
58,000
192,500

Total
P184,500
(26,000)
58,000
P216,500

4,500
500
1,000
6,000

Purchases or Inventory
Purchasing Fund

20,000

Cash in Bank
Notes Receivable

58,000

20,000
58,000

33

Chapter 3
Cash
Problem 15 (Fortune Company)
(a) Audit Adjustments
Sales
Cash

285,200

Cash

285,200

19,300
Utilities Payable

19,300

Accounts Receivable
Cash

57,800

Accounts Receivable
Cash

32,500

57,800
32,500

No entry, dividend fund is part of cash.

Accounts Receivable
Cash

3,500
3,500

Cash Shortage/ Receivable from Employees

Cash

550
550

No entry, payroll fund is part of cash.

Cash Shortage / Receivable from Employees
Miscellaneous Expenses
Cash

300
5,500
5,800

Cash

13,500
Miscellaneous Income

13,500

(b) Correct amount of cash

Cash balance, per ledger
Cash sales of 2013
Unreleased check for utilities
Postdated checks received
Customers NSF checks
Stale check
Shortage in the change fund
2012 vouchers in petty cash fund
Cash shortage in the petty cash fund
Unrecorded deposits (sale of scrap)
Cash balance, per audit

P1,640,000
(285,200)
19,300
(57,800)
(32,500)
(3,500)
(550)
(5,500)
(300)
13,500
1,287,450

Supply the Answers

Note to the Teacher: Please supply the petty cash imprest balance of
another figure for variation in your other classes.)
Summary of Answers:
1.
2.

308.40
4,606.60

34

P50,000

in problem B. (You may supply

Chapter 3
Cash
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.

5,000 shortage
35,000
800
5,700
400
5,300
53,800
838,600
157,950
780,650 or 761,650 (NSF checks may be treated as deduction from receipts)
625,700 or 606,700 (NSF checks may be treated as deduction from receipts)
3,000
92,000
145,600
71,950
1,828,212
imprest system deposit of collections intact to the bank
segregation of duties of custodial function and bookkeeping function
125,250
194,550
255,700
55,000
SUPPORTING COMPUTATIONS

A.

B.

1.

2.

Correct petty cash fund = 1,156.60 + 3,450

3.

Total per count

Cashiers accountability
Petty cash fund
Check payable to Meralco
Birthday gift contribution
Unused postage
Cash shortage

4.
C.

Total per count

Cashiers accountability
Petty cash fund
Postage stamps
Other collections
Cash shortage

5.

6.

P 10,761.60
P 10,500
220
350

11,070
P308.40
P4,606.60
P 53,500

P 50,000
3,500
4,500
500

Correct petty cash fund = P17,000 + P18,000

58,500
P 5,000
P35,000

Total per count

Cashiers accountability
Petty cash fund
Undeposited collections
Cash shortage

P19,700
P 15,000.00
5,500.00

Bills and coins

Customers checks
Undeposited collections
Petty cash fund, per audit

20,500
P 800
P6,400
4,800
(5,500)
P5,700

35

Chapter 3
Cash
D.

7.

Total per count (exclude the unsigned pay envelope with no contents)
Cashiers accountability
Petty cash fund
P15,000
Unreleased payroll
5,000
Cash shortage

P 19,600

8.

Bills and coins

Vouchers with January 2013 dates
Employees check dated December 2012
Total cash items as of December 31
Unreleased payroll
Correct petty cash balance on December 31

P7,300
200
2,800
P10,300
(5,000)
P5,300

9.

Unadjusted balances
Bank credit memo
Bank debit memo
Outstanding checks
Check of Kin
Error in recording check
Cash on hand
Balances before cash shortage
Cash shortage
Cash balance, per audit

E.

10.

F.
Unadjusted balances per bank
Outstanding checks
January 31
February 28
Deposits in transit
January 31
February 28
Adjusted balances
Unadjusted balances, per books
Bank credit memo
January
February
Bank service charges
January
February
NSF checks returned by bank
January
February
Adjusted balances

20,000
P 400

Bank
P850,000

Books
P750,500
150,000
(4,500)

(120,400)
21,000
(3,600)
88,000
P838,600
P838,600

January 31
13,500

Receipts
790,450

(65,000)
54,500
3,000
January 31
(92,250)
123,500

(54,500)
44,700
780,650
Receipts
805,350

(25,000)
3,000

36

Disbursements
647,700

Feb. 28
156,250

(65,000)
43,000

(43,000)

625,700
Disbursements
630,300

44,700
157,950
Feb. 28
82,800

(123,500)
98,800

(3,250)

780,650

P892,400
( 53,800)
P838,600

98,800
(3,250)
4,650

(4,650)

(25,000)
19,000
625,700

(19,000)
157,950

Chapter 3
Cash
G.

December Disbursements
Per bank
Per books
P195,000
P190,400
(90,000)

15. Unadjusted disbursements

Outstanding checks, November 30
Customers NSF checks
November
December
Bank service charges
November
December
Balances before outstanding checks, December 31

(6,000)
12,000

P105,000

Outstanding checks, December 31

H.
16.

June Receipts
Per bank
Per books
P310,000
420,000
(30,300)
(15,000)
50,000
900
P295,000
P440,600
295,000
P145,600

Unadjusted receipts in June

Collections made directly by bank in May
Deposits in transit, May 31
Loans granted by bank in June
Error in recording deposit
Balances before deposits in transit, June 30
Deposits in transit, June 30

I.

17.
18.

Per bank
1,555,000

Unadjusted balances
Credit memo for collections by bank
Outstanding checks
Undeposited receipts
Balances before shortage
Amount stolen
Actual cash existing

19. and 20.

(106,229)
379,441
P1,828,212
P1,828,212

21.
24.
23.

Per books
1,890,162
10,000
P1,900,162
(71,950)
P1,828,212

Features of internal control missing: Imprest system and segregation of duties

J.
22.

(2,400)
3,000
P197,000
105,000
P92,000

Unadjusted balances
Erroneous bank credit
Outstanding checks (246,750 15,000 37,200)
Unreleased checks
Postdated checks issued and recorded as disbursements
Customers postdated check
Deposits in transit (175,250 50,000)
Note collected by bank
Balances before cash shortage
Cash shortage
Actual cash existing

37

Per bank
P350,000
(25,000)
(194,550)

Per books
P293,500
15,000
37,200
(50,000)

125,250
P255,700
P255,700

15,000
P310,700
(55,000)
P255,700