SAMPLE PROBLEMS:

PROBLEM NO. 1

The cash account in the ledger of Pedro Company had a balance of P 422,400 at December 31,
2018. An examination of the account, however, disclosed the following:

 The sales book was left open up to January 5, 2019, and cash sales totaling P 60,000
were considered as sales in December.
 Checks of P 37,200 in payment of liabilities were prepared before December 31, 2018,
recorded in the books, but not mailed or delivered to payees.
 Post-dated checks totaling P 31,200 are being held by the Cashier as part of Cash. The
company’s experience shows that post-dated checks are eventually realized.
 Customer’s check for p 6,000 deposited with but returned by Bank, “NSF” on December
27,2018
 The cash account includes P 160,000 earmarked for the purchase of personal
computers which will be soon delivered.

QUESTION :

The cash balance to be shown in the statement of financial position at December 31, 2018
should be?

ANSWER :

Unadjusted Cash Balance P 422,400

Add: (deduct) adjustments:
January receipts recorded as December receipts ( 60,000 )
Undelivered Check 37,200
Postdated Checks received ( 31,200)
NSF check ( 6,000 )
Cash earmarked for personal computers ( 160,000 )
Adjusted cash balance P 202,400

PROBLEM NO. 2
The following data pertain to GalawGalaw Corp at December 31, 2017:

Current account at Metrobank P 1,000,000

Current account at Allied Bank (100,000)
Payroll account 250,000
Foreign bank account (in equivalent pesos) 750,000
Savings deposit in a closed bank 100,000
Postage stamps 1,000
Employee’s post dated check 4,000
IOU from employees 10,000
Credit memo from a vendor for a purchase return 50,000
Traveler’s check 30,000
Money order 20,000
Petty cash fund (P6, 000 in currency and expense
receipts for P6, 000) 12,000
Pension fund 1,000,000
DAIF check of customer 15,000
Customer’s check dated 1/1/18 90,000
Time deposit – 30 days 200,000
Money market placement (due 6/30/18) 500,000
Treasury bills, due 3/31/16 (purchased 12/31/17) 200,000
Treasury bills, due 1/31/16 (purchased 2/1/17) 300,000
REQUIRED:
Determine the cash and cash equivalents to be reported on the entity’s December 31, 2017
statement of financial position.

Answer:
Current account at Metrobank 1,000,000
Payroll account 250,000
Foreign bank account (in equivalent pesos) 750,000
Traveler’s check 30,000
Money order 20,000
Petty cash fund 6,000
Time deposit – 30 days 200,000
Treasury bills, due 3/3/18 (purchased12/31/17) 200,000
Cash and cash equivalents – Dec. 31, 2017 2,456,000

PROBLEM NO. 3

You are conducting an audit of the Hapitna Company for the year ended December 31, 2015.
The internal control procedures surrounding cash transactions were not adequate. The
bookkeeper-cashier handles cash receipts, maintains accounting records, and prepares the
monthly bank reconciliations.

The bookkeeper-cashier prepared the following reconciliation at the end of the year:

Balance per bank statement P 350,000

Add: Deposit in transit P 175,250
Note collected by bank 15,000 190,250
Total
540,250
Less outstanding checks 246,750
Balance per general ledger P 293,500

In the process of your audit, you gathered the following:

• At December 31, 2015, the bank statement and general ledger showed balances of P
350,000 and P293,000, respectively.
• The cut-off bank statement showed a bank charge on January 2, 2016 for P 30,000
representing correction of an erroneous bank credit.
• Included in the list of outstanding checks were the following:
a. A check payable to a supplier, dated December 29, 2015, in the amount of P 20,100 ,
released on January 5, 2016.
b. A check representing advance payment to a supplier in the amount of P 37,210, the
date of which is January 4, 2016, and released in December, 2015.
• On December 31, 2015, the company received and recorded customer's postdated check
amounting to P 30,000.

REQUIRED:
1. Compute for the following as at December 31, 2015:
a. Adjusted deposit in transit c. Adjusted cash in bank
b. Adjusted outstanding check d. Cash shortage

2. Adjusting entries as of December 31, 2015

SOLUTIONS:
a. DIT, beg. P 175,250
Less: postdated checks (30,000)
Adjusted deposit in transit P 145,250

b. Unadjusted outstanding checks P 246,750

Unreleased check (20,100)
Postdated check delivered (37,210)
Adjusted outstanding checks P 189,440

Book balance P 293,500 Bank balance P 350,000

Add: Add: DIT 145,250
Unreleased check 20,100 Total 475,250
Postdated check 37,210 Less: OC (189,440)
Credit memo 15,000 Erroneous bank
Total 360,460 credit ( 30,000)
Less: Adjusted bank bal. P 275,810
Postdated check received (30,000)
Cash Shortage (60,000)
Adjusted book balance P 275,810

Adjusting Entries:
a. Accounts Receivable 30,000
Cash in bank 30,000

b. Cash in Bank 20,100

Accounts Payable 20,100

c. Cash in Bank 37,210

Accounts Payable 37,210

d. Cash in bank 15,000

Account Receivable 15,000

e. Receivable from cashier 60,000

Cash in bank 60,000

PROBLEM NO. 4

TakuMisaki Company presented the following during the course of your audit:

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, 2007 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, 2006 to January 5,

2007.
Question: The adjusted Petty Cash Fund balance of TakuMisaki Company at December 31,
2016 is:

Answer: Currency-bills and coins P958.00

Check of office manager, is a postdated check

Expenses that incurred are not replenished

PROBLEM NO. 5

The following data are gathered from the cash books and bank statement received from Tokyo
Bank by KiSuna 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.

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 Grace
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.

Question: KiSuna Company’s adjusted cash balance at May 31, 2018.

Answer:

Cash in Bank- Book P 290,438.50

Credit Memo- Collected by bank P 44,000

Less: Collection Fee (330) 43,670
Book Error 46,200
(26,400) 19,800
Book Error (20,900)
Debit Memo-NSF Check (34,100)
Interest (1,320)
Adjusted Cash Balance P297,588.50

Or

Cash in Bank-Bank statement P 318,560

Deposit in Transit 26,488

Outstanding Checks:
No.187 3,608
No.189 15,499
No.191 4,400
No.192 1,545.50
No.193 23,001 (48,053.50)
Bank Error 10,802
(10,208) 594
Adjusted Cash in Bank P297,588.50

PROBLEM NO. 6

Keiraki Company provided the following data pertaining to the cash transactions and
bank account for the month of May:

Cash Balance per book 1,894,000

Cash Balanace per bank statement 2,557,000
Bank Service Charge 8,000
Debit memo for the cost of printed checks delivered by the
bank; the charge has not been recorded in the accounting
record 12,000
Outstanding Checks 700,000
Deposit of May 30 not recorderd by bank until June 1 600,000
Proceeds from a customer promissory note, principal amount
P800,000 collected by bank not taken up in the
accounting record with interest 810,000
Check No.1086 issued to a supplier entered in the accounting
record as P210,000 but deducted in the bank statement
at an erroneous amount of 120,000
Stolen check lacking an authorized signature deducted from
Keiraki’s account by the bank in error 80,000
Customer check returned by the bank marked NSF, indicating
that the customer balance was not adequate to cover
check; no entry has been made in the accounting to
record the returned check. 77,000
Cash on Hand 550,000
Petty Cash Fund-included unreplenished petty cash expense
vouchers P6,000 and employees IOU P8,000 40,000
BSP Treasury Bills- 60 days 250,000
BSP Treasury Bill- 120 days 600,000

30% of cash in bank is restricted for acquisition of land

Questions:
1. Keiraki Company’s Adjusted Cash in Bank is,
2. Keiraki Company’s Cash and Cash Equivalent is,

Answer:

Cash in bank per Book 1,804,000

Credit Memo- Proceed from
promissory note with interest 810,000
Debit Memo
Bank Service Charge (8,000)
Cost of printed checks (12,000)
NSF check (77,000)
Adjusted Cash in Bank per book 2,517,000

Or

Cash in bank per Bank 2,627,000

Deposit in Transit 600,000
Bank Error 80,000
Outstanding Checks (700,000)
Bank Error (210,000-120,000) (90,000)
Adjusted Cash in Bank per bank 2,517,000

Adjusted Cash in bank (70%) 1,761,900

Cash on Hand 550,000
Petty Cash Fund-(P40,000-6,000-8,000) 26,000
BSP Treasury Bills- 60 days 250,000
Cash and Cash Equivalents 2,587,900

PROBLEM NO. 7

Agtang Company had the following bank reconciliation on June 30, 2018

Balance per bank statement, June 30, 2018 P 6,000,000

Add: Deposit in transit 800,000
Total 6,800,000
Less: Outstanding Checks 1,800,000
Balance per book, June 30 P 5,000,000

The bank statement for the month of July 2018 showed the following:

Deposits (including P400,000 note collected for Agtang) P 18,000,000

Disbursements (including P280,000 NSF check and P 20,000 service charge) 14,000,000

All the reconciling items on June 30, 2018 cleared through the bank in July. The outstanding
checks totaled P 1,200,000 and the deposits in transit amounted to P 2,000,000 on July 31,
2018.
Determine the following:

1. Cash receipts per books in July

2. Cash Disbursement per books in July
3. Cash balance per books at July 31
4. Adjusted Cash balance at July 31

Answer

Total Deposits per bank statement in June P 18,000,000

Note Collected by bank in July (400,000)
Deposits in transit, June 30 (800,000)
Deposits in transit, July 31 2,000,000
Cash Receipts per books in July P 18,800,000

Total disbursements per bank statement in June P 14,000,000

July NSF check (280,000)
July Service charge ( 20,000)
Outstanding checks, June 30 (1,800,000)
Outstanding checks, July 31 1,200,000
Cash Discbursements per books in July P 13,100,000

Balance per books, June 30, 2018 P 5,000,000

July receipts per books ( see #1 ) 18,800,000
July Disbursements ( see #2 ) (13,100,000)
Balance per books, July 31, 2018 P10,700,000

Balance per bank statement, july 31 ( 6M+18M-14M ) P 10,000,000

Deposits in transit, July 31 2,000,000
Outstanding checks, July 31 (1,200,000)
Adjusted Bank Balance, July 31 P 10,800,000

Balance per books, July 31 10,700,000

Note Collected by bank in July 400,000
NSF check (280,000)
Bank Service charge ( 20,000)
Adjusted book balance, July 31 P10,800,000

PROBLEM NO. 8

The bank statement for the account of JB Company at December 31, 2006 showed a
credit balance of P20,000, while the company’s ledger balance of the cash account as
of November 30, 2006 was a debit of P40,000. During December, 2006, the ledger
showed two postings, a debit of P60,000 and a credit of P39,000 from the Cash
Receipts and Check Disbursements Journal, respectively.
Your examination revealed that the cash column of the receipts book was underfooted
by P6,400. The receipts book recorded only the collections from customers and did not
include a bank credit in December for P8,000, representing loan proceeds of a P10,000
promissory note.

An examination of the customers’ subsidiary ledgers showed total credits to individual

accounts amounting to P70,400. The December Check Disbursements Journal which
was overfooted by P500, records only the checks issued by the company. In the month
of December, 2006, the bank charged ARNOLD COMPANY for P5,000 representing a
loan guaranteed by the client but was dishonored by the maker, the company vice-
president. The December bank service charges of P1,200 were erroneously charged
by the bank to the account of Ronald Company. The bank made the correction in
January, 2007. The outstanding checks as of December 31, 2006 amounted to P5,600.

On the morning of January 2, 2007, a cash count conducted produced the following:

Bills and coins P 5,200

Three (3) duplicate copies of ARNOLD CO.
official receipts, all dated Jan. 2, 2007 1,800
Checks 2,900
NSF check charged by the bank on Jan. 2, 2007 1,400

REQUIREMENTS:

1. Deposit in Transit
2. Cash shortage at December 31, 2006
3. Adjusted cash balance at December 31, 2006
SOLUTIONS:

Book Bank
Unadjusted balance 61,000 20,000
Understatement of receipts 6,400
CM 8,000
Overstatement of disbursements 500
DM – service charge (5,000)
DM – service charge not recorded
in the book and erroneously
recorded by the bank (1,200) (1,200)
Outstanding checks (5,600)
Deposit in transit
(5,200 + 2,900 – 1,800) ______ _6,300_
Total 69,700 19,500
Cash shortage (50,200) _______
Adjusted cash balance 19,500 19,500
PROBLEM NO. 9
In connection with your examination, the MQM Company presented to you the following
information regarding its Cash in Bank account for the month of December 2015:

a) Balances per bank statements: November 30, P215,600, and December 31,
P230,400.

b) Balances of cash in bank account in company's books: November 30, P165,450,

and December 31, 226,800.

c) Total receipts per books were P2,221,900 of which P12,100 was paid in cash to a
creditor on December 24.

d) Total charges in the bank statement during December were P2,189,700.

e. Undeposited receipts were: November 30, P90,600 and December '11, P101,200.

f) Outstanding checks were: November 30, P26,750, and December 31, P19,300: of
which a check for P5,000 was certified by the hank on December 26.

g) NSF checks returned, recorded as reduction of cash receipts, were:

• Returned by bank on December, recorded also in December, P10,400.
• Returned by bank on December but recorded in January, P8,600

h) Collections by bank not recorded by Company were P121,500 in November and

P116,400 in December:

i) Bank service charges not entered in company's books were: November 30, P7,500
and December 31, P4,200.

j) A check for P9,500 of QMQ Company was charged to MQM Company in error.

k) A check drawn for P8,400 was erroneously entered in the books as P4,800.

REQUIRED:

1. Prepare a 4-column bank reconciliation for the month. December

a. Bank to book method;
b. Book to bank method; and
c. Adjusted balance method

1. Adjusting entries as of December 31, 2015.

SOLUTIONS:
A. Bank to Book Method
Nov. 30 Receipts Disbursement Dec. 31
Bank balance 215,600 2,204,500 2,189,700 230,400
Deposit in Transit
November 90,600 (90,600)
December 101,200 101,200
Outstanding Checks
November (26,750) (26,750)
December 14,300 (14,300)
Cash payment to creditor 12,100 12,100
Bank charges
November 7,500 7,500
December (4,200) 4,200
Collections by bank not
recorded to book
November (121,500) 121,500
December (116,400) (116,400)
Check of another company
erroneously charged by the
bank (9,500) 9,500
NSF Checks returned
November (10,400) (10,400)
December (8,600) 8,600
Error (3,600) 3,600
Book Balance 165,450 2,221,900 2,160,550 226,800

B. Book to Bank Method

Nov. 30 Receipts Disbursement Dec. 31
Book Balance 165,450 2,221,900 2,160,550 226,800
Bank charges
November (7,500) (7,500)
December 4,200 (4,200)
Collections by bank not
recorded to book
November 121,500 (121,500)
December 116,400 116,400
Check of another company
erroneously charged by the
bank 9,500 (9,500)
NSF Checks returned
November 10,400 10,400
December 8,600 (8,600)
Error 3,600 (3,600)
Deposit in Transit
November (90,600) 90,600
December (101,200) (101,200)
Outstanding checks
November 26,750 26,750
 December (14,300) 14,300
Cash payment to creditor (12,100) (12,100)
Bank Balance 215,600 2,204,500 2,189,700 230,400

C. Adjusted Balance Method

Nov. 30 Receipts Disbursement Dec. 31
Unadjusted Book Balance 165,450 2,221,900 2,160,550 226,800
Bank charges
November (7,500) (7,500)
December 4,200 (4,200)
Collections by bank not
recorded to book
November 121,500 (121,500)
December 116,400 116,400
NSF Checks returned
November 10,400 10,400
December 8,600 (8,600)
Error 3,600 (3,600)
Adjusted Cash Balances 279,450 2,227,200 2,179,850 326,800

Nov. 30 Receipts Disbursement Dec. 31

Unadjusted Bank Balance 215,600 2,204,500 2,189,700 230,400
Deposit in Transit
November 90,600 (90,600)
December 101,200 101,200
Outstanding checks
November (26,750) (26,750)
December 14,300 (14,300)
Check of another company
erroneously charged by the
bank (9,500) 9,500
Cash payment to creditor 12,100 12,100
Adjusted Bank Balances 279,450 2,227,200 2,179,850 326,800

Adjusting Entries:

a. Accounts Receivable 8,600

Cash in Bank 8,600

b. Cash in bank 116,400

Notes Receivable 116,400

c. Bank Service Charge 4,200

Cash in Bank 4,200

d. Cash in bank 3,600

Accounts payable 3,600
PROBLEM NO. 10

You were able to obtain the following information during your audit of PAPASA
Company

Reconciling items:
Nov. 30 Dec. 31
Undeposited collections P 200,000 P120,000
Outstanding checks 80,000 60,000
Customer's notes collected by bank 100,000 120,000
Bank service charges 2,000 3,000
Erroneous bank debits 10,000 20,000
Erroneous bank credits 40,000 30,000
NSF checks not redeposited 5,000 7,000
Customers check deposited December 10,
returned by bank on December 16 marked NSF,
and redeposited immediately;
no entry made on books for return or redeposit 10,000

Unadjusted balances:
Books ? P90,000
Bank 230,000 ?

December Transactions:

Bank Books
Receipts P420,000 P270,000
Disbursements 500,000 407,000

REQUIRED:

1. Prepare a 4-column bank reconciliation for the month of December

a. Bank to book method;
b. Book to bank method; and
c. Adjusted balance method

2. Adjusting entries as of December 31, 2015.

 SOLUTIONS:
A. Bank to Book Method
Nov. 30 Receipts Disbursement Dec. 31
Bank balance 230,000 420,000 500,000 150,000
Deposit in Transit
November 200,000 (200.000)
December 120,000 120,000
Outstanding Checks
November (80,000) (80,000)
December 60,000 (60,000)
Error – bank debits
November 10,000 (10,000)
December (20,000) 20,000
Error – bank credits
November (40,000 (40,000)
December (30,000) (30,000)
Bank charges
November 2,000 2,000
December (3,000 3,000
Customer’s note collected by
bank
November (100,000) 100,000
December (120,000) (120,000)
NSF Checks returned
November (5,000 5,000
December (7,000) 7,000
NSF Checks redeposited (10,000) (10,000)
Book Balance 227,000 270,000 407,000 90,000

B. Book to Bank Method

Nov. 30 Receipts Disbursement Dec. 31
Book Balance 227,000 270,000 407,000 90,0000
Bank charges
November (2,000) (2,000)
December 3,000 (3,000)
Collections by bank not
recorded to book
November 100,000 (100,000)
December 120,000 120,000
Check of another company
erroneously charged by the
bank
NSF Checks returned
November (5,000) (5,000)
December 7,000 (7,000)
Error
Deposit in Transit
November (200,000) 200,000
December (120,000) (120,000)
Outstanding checks
 November 80,000 80,000
December (60,000) 60,000
Error – bank debits
November (10,000) 10,000
December 20,000 (20,000)
Error – bank credits
November 40,000 40,000
December 30,000 30,000
NSF Checks Redeposited 10,000 10,000
Bank Balance 230,000 420,000 500,000 150,000

C. Adjusted Balance Method

Nov. 30 Receipts Disbursement Dec. 31
Unadjusted Book Balance 227,000 270,000 407,000 90,000
Bank charges
November (2,000) (2,000)
December 3,000 (3,000)
Collections by bank not
recorded to book
November 100,000 (100,000)
December 120,000 120,000
Check of another company
erroneously charged by the
bank
NSF Checks returned
November (5,000) (5,000)
December 7,000 (7,000)
Error
Adjusted book Balances 320,000 290,000 410,000 200,000

Nov. 30 Receipts Disbursement Dec. 31

Unadjusted Bank Balance 230,000 420,000 500,000 150,000
Deposit in Transit
November 200,000 (200,000)
December 120,000 120,000
Outstanding checks
November (80,000) (80,000)
December 60,000 (60,000)
Bank debits error
November 10,000 (10,000)
December (20,000) 20,000
Bank credits error
November (40,000) (40,000)
December (30,000) (30,000)
NSF checks returned;
redeposited (10,000) (10,000)
Adjusted Bank Balances 320,000 290,000 410,000 200,000
Adjusting Entries:
1. Cash in Bank 120,000
Notes Receivable 120,000

2. Bank Service Charge 3,000

Cash in Bank 3,000

3. Accounts Receivable 7,000

Cash in Bank 7,000