Currency P1,650

Petty cash vouchers (P420 + P900

+ P340 + P800 + P1,500) 3,960
Replenishment check 7,200
Employee’s NSF check 1,000
Petty cash accounted 13,810
Petty cash fund per ledger
(custodian’s accountability) 16,000
Petty cash shortage P2,190
Answer: B
2. Currency P1,650
Replenishment check 7,200
Adjusted petty cash balance
P8,850
Answer : D
The auditor for SAMANTHA,
INC. examined the petty cash fund
immediately after the close of
business,
July 31, 2016, the end of the
company’s natural business year.
The petty cash custodian presented
the
following during the count:
Currency P1,650
Petty cash vouchers:
Postage 420
Office supplies expense 900
Transportation expense 340
Computer repairs 800
Advances to office staf 1,500
A check drawn by Samantha,
Inc., payable
 to the petty cash custodian
7,200
Postage stamps 300
An employee’s check, returned
by bank,
marked NSF 1,000
An envelope containing
currency of
P 1,890 for a gift for a retiring
employee 1,890
P16,000
The general ledger shows an
imprest petty cash fund balance of
P16,000
The auditor for SAMANTHA, INC. examined the petty cash fund immediately after the close of business,
July 31, 2016, the end of the company’s natural business year. The petty cash custodian presented the
following during the count:Currency P1,650Petty cash vouchers:Postage 420Office supplies expense
900Transportation expense 340Computer repairs 800Advances to office staf 1,500 A check
drawn by Samantha, Inc., payable to the petty cash custodian 7,200Postage stamps 300 An
employee’s check, returned by bank, marked NSF 1,000 An envelope containing currency of
P 1,890 for a gift for a retiring employee 1,890 P16,000 The general ledger shows an imprest petty
cash fund balance of P16,000

SOLUTION:

1.1 Currency P1,650Petty cash vouchers (P420 + P900 + P340 + P800 + P1,500) 3,960Replenishment
check 7,200Employee’s NSF check 1,000Petty cash accounted 13,810Petty cash fund per ledger
(custodian’s accountability) 16,000Petty cash shortage P2,190Answer: B

1.2. Currency P1,650

Replenishment check 7,200

Adjusted petty cash balance P8,850

Answer : D

2.3 In auditing LAZADA Company, the bank statement, canceled checks and other
memoranda which relates to the company’s bank account for December 2018 were made
available In reconciling the bank balance with that shown on the compaņy's books, you
observed the facts set forth below:

(1) Balance per bank statement, Dec.31, 2018 - P47,174

(2) Balance per books, Dec.31, 2018 - P19,289

(3) Outstanding checks, Dec.31,2018 - 63,000

(4) Receipts of Dec.31, 2018, deposited Jan.2, 2019- P6,260

(5) Service charge for November, per bank memo of

Dec.15, 2018 - P1,000

(6) Proceeds of bank loan, Dec.15, 2018,  discounted for 3 months at 18% per annum, omitted
from company books - P47,750

(7) Deposit of Dec.22, 2018, omitted from bank statement- P 9,170

(8) Check of Milano Company, returned on Dec.21, 2018,

for absence of counter-signature and redeposited with complete signature on Jan. 3,2019, no
entry on the books having been made for the return or redeposit - P77,320

 
(9) Error on bank statement in entering deposit of Dec.18,2018:

Correct amount         P1,600

Entered in statement   160         1,440

(10) Check No.021261 of Yek Company charged by bank in error to company's account -

P13,600

（11) Proceeds of note of Harthur Co., collected by bank, Dec.10,2018, not entered in cash
book (principal amount of  P25,000 plus interest of P1,125, less collection fee)- P25,625

(12) Erroneous debit memo of Dec.28, 2018, to charge company's account with settlement of
bank loan which was paid by check no. 112170 on same date- P5,000

(13) Error on bank statement in entering deposit of Dec.4,2018:

Entered as                P14,200.62

Correct amount         12,400.62      1,800

(14) Deposit of Bunso Co. of Dec.2, 2018, credited in error to this company- P3,500

What is the principal amount of the loan obtained from the bank in December?

SOLUTION:

Proceeds = Principal –Interest

47,750=P - (Px180/0 x 3/12)

47,750=P - 0.045P47/750=0.955 P

P= 47,750 + 0.955

P= P50,000

2.4 What amount of prepaid interest should be shown on the company's December 2018
statement of financial position?

SOLUTION:\

Prepaid interest, Dec.31

(2/250 x 2.5/3)
PI ,875

2.5 The amount of collection fee is

SOLUTION:

2.6 What is the adjusted cash in bank as of December 32, 2018?

SOLUTION:

Check of Yek Company charged inerror to Hector Company13,600Proceeds of note of Harthur

Co.25,625Erroneous debit memo of 12/28/18,charged by bank in settlementof loan paid by check no.
1121705,000Error in entering deposit of 12/04/18(1,800)Deposit of Bunso Co., credited in errorto
Hector Company_________(3,500)

ADJUSTED BALANCESP14,344 P14,344

2.7 The Cash in bank per ledger as of December 31, 2018, should be increased (decreased) by

SOLUTION:

Adjusted Cash in bank balance (see no, 4) P14,344

Cash in bank balance per ledger 19,289

Net credit adjustment—decrease (P 4,945)

3.8 Timber Company provided the following data for the purpose of reconciling the cash
balance per book:

Balance per book, P170,000;

Outstanding checks (including certified check of P20,000) , P100,000;

Deposit in transit, P140,000;

December NSF checks (of which P10,000 had been re-deposited and cleared on Dec. 27),
P30,000;
Erroneous credit to Timber`s account representing proceeds of loan granted to another
company, P60,000;

Proceeds of note collected by bank for Timber, (net of service charge of P4,000), P150,000;

Erroneous bank charge, P8,000;

A check of P5,000 in payment of account was recorded by the company as P500

The correct cash balance to be shown in the company`s December 31, 2020 statement of financial
position is:  295, 500

4. Lipton Company shows the following account balances in their financial records as of
December 31, 2020:

Checking account at Morgan Bank, P(20,000); Checking accountof Land Bank P 500,000;
Payroll account - National Bank, P 100,000 ; Foreign bank account-restricted, P750,000 ;
Postage stamps, P 22,000; Employees’ postdated checks , P 30,000; I.O.U. from president`s
brother , P75,000; Traveler`s check, P50,000; No-sufficient funds check, P18,000; Petty cash
fund (P16,000 in currency and expenses receipts for P84,000), P100,000 and Cashier’s checks
P36,000

What is the correct cash balance to be reported in the balance sheet of Lipton Company on
Dec. 31, 2020?

SOLUTION:

Checking account at Land bank

P 500,000
Payroll account
100,000
Traveler's checks
50,000
Cashier's checks
36,000
Petty cash
16,000
Correct cash balance, December
31, 2014 P 702,000
Checking account at Land bank P 500,000

Payroll account 100,000

Traveler's checks 50,000

Cashier's checks 36,000

Petty cash 16,000

Correct cash balance, December 31, 2014 P 702,000

5. Prince Corp.’s checkbook balance on December 31, 2015, was P5,000. In addition, Prince
held the following items in its safe on that date:

Check payable to Prince Corp., dated January 2, 2016, in payment of a sale made in
December 2015, not included in December 31 checkbook balance - P2,000

Check payable to Prince Corp., deposited December 15 and included in December 31

checkbook balance, but returned bank on December 30 stamped “NSF.” The check was
redeposited on January 2, 2016, and cleared on January 9 - P500

Check drawn on Prince Corp.’s account, payable to a vendor, dated and recorded in Prince’s
books on December 31 but not mailed until January 10, 2016 - P300

 
The proper amount to be shown as Cash on Prince’s balance sheet at December 31, 2015, is

SOLUTION:

7. On December 31, 2020, Everlasting Company has the following composition of its cash and
cash equivalent:

Demand deposit, P1,500,000;

Certificate of deposit-30 days, P500,000;

NSF check of customer, P20,000;

Money market placement (due date; June 30, 2021), P1,000,000;

Savings deposit in closed bank , P50,000;

IOU from an employee, P30,000;

Petty cash fund, P10,000;

Customer`s check dated January 31, 2020. P60,000;

Customer`s check outstanding for 18 months, P30,000

Additional Information:
- Check of P100,000 in payment of accounts payable was recorded on December 31, 2020 but
mailed to creditors on January 15, 2021
- Check of P50,00 dated January 31, 2021 in payment of accounts payable was not recorded
and mailed December 31, 2020
- The company uses the calendar year. The cash receipts journal was held open until January
15, 2021, during which time , P200,000 was collected and recorded on December 31, 2020

How much “cash and cash equivalent” should be shown on the December 31, 2020 balance
sheet?

SOLUTION:

8. The cash account in the current asset section of the balance sheet for Heater Company
showed a balance of P555, 000. It was found to include the following items:
 

Petty cash fund (P1,000 is in the form of paid vouchers), P5,000;

Checking account balance, per bank statement ( A P25,000 check is still outstanding),
P225,000;

Undeposited receipts ( including a post-dated check for P5,000) P120,000;

Currencies and coins awaiting deposit, P55,000;

Bond sinking fund-cash, P100,000;

Check drawn by manager, returned by bank marked NSF, P20,000

What is the correct cash balance for Heater Company`s balance sheet?

SOLUTION:

9. ABC Company had the following account balances at December 31, 2015:

Cash in banks - P2,250,000

Cash on hand - P125,000

Cash legally restricted for additions to planT (expected to be disbursed in 2016) - P1,600,000

Cash in banks includes P600,000 of compensating balances against short-term borrowing

arrangements. The compensating balances are not legally restricted as to withdrawal by
ABC. In the current assets section of ABC’s December 31, 2015 balance sheet, total cash
should be reported at 

SOLUTION: