Chapter 3 Cash
MULTIPLE CHOICE Problem 1
(a) Audit adjustments Cash Equivalents 3,000,000 Cash 3,000,000
Other Non-current Financial Assets 3,200,000 Cash 3,200,000
Cash 35,000
Accrued Salaries Expense 35,000
Other Non-current Financial Assets 900,000 Cash 900,000
Miscellaneous Expenses 6,800 Advances to Employees 1,200 Cash (Petty Cash Fund) 8,000 Cash 5,300
Accrued Utilities Expense 5,300 Accounts Receivable 25,000 Cash 25,000
(b) Cash and Cash Equivalents
Savings account with Metrobank P1,500,000
Checking account with Metrobank 800,000 + 5,300 805,300 Certificates of deposit 3,000,000
Tax fund 500,000 Petty cash fund 12,000
Undeposited collections 85,000 – 25,000 60,000 Correct cash and cash equivalents P7,112,300 Problem 2 (Sta. Monica, Inc.)
Expenses 10,500 Petty Cash Fund 10,500
Correct balance of petty cash fund = P20,000 – P10,500 = P9,500 1. C 2. B 3. D 4. A 5. B 6. B 7. C 8. C 9. C 10. D 11. B 12. C 13. C 14. D 15. D Chapter 3 Cash 26
Problem 3 (Victor Company)
(a) Correct amount of petty cash fund Currencies and coins P6,400
(b) Per count
Currencies and coins P 6,400 Paid petty cash vouchers 2,250 Employee’s NSF check 1,200
Wedding gift contribution (with bills) 1,500 Total per count P11,350
Cashier’s accountability:
Wedding gift contribution 1,500 11,500 Cash shortage 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) Total per count P 35,000 Cashier’s Accountability
Petty Cash Fund, per ledger P35,000 Unused postage stamps 1,800 Unused office supplies 1,200
Wedding gift contribution 1,000 39,000 Cash shortage P 4,000
(b). Telephone Expense 1,500 Water Expense 1,600
Office Supplies Expense (3,700 – 1,200) 2,500 Postage Expense (2,800 – 1,800) 1,000 Prepaid Expenses (1,200 + 1,800) 3,000
Petty Cash Fund 17,500
(c) Correct amount of petty cash fund = P35,000 – P17,500 = P17,500 Cash items in the petty cash fund:
Bills and Coins P 2,500 Replenishment check 15,000 Total P17,500 Chapter 3 Cash 27 Problem 5
Bills and Coins (show details of denomination and pieces per denomination) P6,717.50 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 11,700.00 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
01-02-13 001 Freight in 244.70 2,180.00 IOUs
12-21-12 S. Dechavez 300.00 Unused office supplies 40.00 Total per count P20,937.50 Cashier’s 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 21,740.40 Cash shortage P 802.90
Audit Adjusting Entries:
Receivables from Employees (1,500.00 + 300.00) 1,800 Freight out 500
Supplies Expense (100 – 40) 260 Prepaid Expenses 40
Furniture and Equipment 741.10 Freight in 394.20
Cash Shortage (Receivable from Employees) 802.90 Petty Cash Fund 4,538.20
Cash in Bank (1,000.40 + 2,500.00) 3,500.40 Sales 3,500.40
Composed of the following cash items at December 31, 2009 Bills and coins P6,717.50
Checks dated December 7,000.00
Petty cash vouchers dated January (undisbursed as of December 31) 244.70
Total cash items as of December 31 P13,962.20 Unremitted cash sales as of December 31 ( 1,000.40 + 2,500) (3,500.40)
Petty cash fund, per audit, December 31 P10,461.80 Chapter 3
Cash 28
Problem 6 (Da King Company) Bills and coins
500 x 1 P 500 100 x 8 800 50 x 3 150 10 x 4 40 5 x 2 10 1 x 3 3 P 1,503 Checks: 12/29/12 M. Roxas, employee P2,000 12/30/12 J. Madrigal Company 1.500 01/02/13 J. Estrada Junk Shop 2,450
Paid petty cash vouchers:
12/16/12 Vo. No. 145 Freight on goods bought P500 12/26/12 164 Postage 200
12/29/12 165 Transportation of messenger 50
01/02/13 166 Repairs, completed Dec. 29, 2012 1,500 2,250 IOU
Ed Gil, employee 1,200
Postage stamps 10 pcs x P12 120 Total per count P 12,823
Cashier’s accountability Petty cash fund P10,000 Unremitted collections
12/30/12 Refund for merchandise returned P 1,500 01/06/13 Sale of junk and scrap materials 2,450 3,950 Unused postage stamps 120 14,070
Cash shortage P1,247 Adjusting entries
Receivable from Employees (1,800 + 1,200 + shortage of 1,247) 4,247 Freight in/Cost of Goods Sold 500
Transportation Expense 50 Postage Expense (200 – 120) 80 Prepaid Expenses 120
Petty Cash Fund 4,997
Repairs and Maintenance 1,500 Accrued Expenses 1,500
Cash in Bank 1,500
Purchase Returns and Allowances /Cost of Goods Sold 1,500 Correct Petty Cash Fund = P10,000 – P4,997 = P5,003 Cash items as of December 31:
Bills and coins P1,503
Checks dated December 3,500
Petty cash voucher dated January 2013 1,500 Cash refund for purchase returns (1,500) Correct petty cash fund balance P5,003 Chapter 3
Cash 29
Problem 7 (Cisco Systems, Inc.) (1) Bank reconciliation:
Per bank Per books
Unadjusted balances P 1,463,212 P1,352,312* Outstanding checks (140,000)
Undeposited receipts 59,500
Error in recording check issued for rental payment 1,800 Bank charge for payment of loan and interest (45,000) Bank service charges (1,400)
Deposit of another company (87,500) Customer’s DAIF check (12,500)
Adjusted balances P1,295,212 P1,295,212 (2) Adjusting entry:
Notes Payable – Bank 40,000 Interest Expense 5,000 Bank Service Charges 1,400 Accounts Receivable 12,500 Rent Expense 1,800
Cash in Bank 57,100
(3) Cash and cash equivalents: Petty cash fund P 20,000 Cash in bank 1,295,212
Treasury bills maturing in 2 months 500,000 Total cash and cash equivalents P1,815,212 Problem 8 (Sunshine Corporation)
1. Per Bank Per Books
Unadjusted Balances P 424,000 P465,000 Outstanding checks (113,000)
Undeposited collections 48,000
Customer’s note collected by bank 19,000 Bank service charge (1,500)
Adjusted balances P359,000 P482,500 Cash shortage (123,500)
Cash balance, December 31, per audit P359,000 P359,000 2. Understated book balance 456,000 – 465,000 P 9,000 Overstated bank balance 424,000 – 454,400 30,400 Omitted outstanding checks
198 12,500
Understated outstanding checks 52,000 – 25000 27,000
9,000 – 900 8,100 25,000 – 15,000 10,000
Overstated undeposited collections 3,000 Omission of bank credit memo 19,000 Total cash shortage P123,500
Chapter 3 Cash 30
3. Undeposited collections, December 31 P 48,000 Collections, January 1 – 15 199,000
Total amount available for deposit P247,000 Amount deposited, per deposit slips (110,000) Undeposited collections, January 15 P137,000 Cash on hand, January 15 (52,000)
Additional cash shortage in January P 85,000 .4. Adjusting Entries
Bank Charges 1,500
Receivable from Employees (or Loss) 123,500 Cash 106,000
Notes Receivable 19,000
Problem 9 (Pamela Manufacturing Company) Nov. 30 Receipts Disbursements. Dec. 31
Unadjusted bank balance 876,750 9,153,760 8,526,550 1,503,960 Outstanding checks November 30 (254,720) (254,720) December 31 335,610 (335,610) Deposits in transit November 30 164,220 (164,220) December 31 209,180 209,180
Check of Pamplona Company (5,830) 5,830
Adjusted Balances 786,250 9,198,720 8,601,610 1,383,360 Nov. 30 Receipts Disbursements Dec. 31
Balance per books 821,950 9,198,720 8,613,010 1,407,660 Error in recording check no. 359 2,700 2,700
Bank service charge November (3,500) (3,500) December 2,250 (2,250)
NSF check returned in November (34,900) (34,900) Interest charged by the bank 24,750 (24,750)
Adjusted Balances 786,250 9,198,720 8,601,610 1,383,360 Audit adjusting entries:
Cash in Bank 2,700 Office Furniture 2,700 Bank Service Charge 2,250 Cash in Bank 2,250
Interest Expense 24,750 Cash in Bank 24,750 Chapter 3
Cash 31
Problem 10 (Golden Bells Company) Nov. 30 Receipts Disbursements Dec. 31
Unadjusted bank balance 2,500,000 2,300,000 1,700,000 3,100,000 Deposits in transit November 30 58,000 (58,000) December 31 47,000 47,000 Outstanding checks November 30 (97,000) (97,000) December 31 46,000 (46,000) Erroneous bank charges November 30 25,000 (25,000) December 31 (37,000) 37,000 Erroneous bank credit
November 30 (45,000) (45,000) December 31 (50,000) (50,000)
Adjusted balances 2,441,000 2,214,000 1,567,000 3,088,000 Nov. 30 Receipts Disbursements Dec. 31
Unadjusted book balances (squeezed) 2,390,000 2,206,000 1,549,000 3,047,000 NSF checks returned by bank
December 31 25,000 (25,000) Bank service charges
November (10,000) (10,000) December 18,000 (18,000) Note collected by bank November 76,000 (76,000) December 84,000 84,000
Adjusted balances 2,441,000 2,214,000 1,567,000 3,088,000 Accounts Receivable 25,000
Cash in Bank 25,000
Bank Service Charges / Miscellaneous Expenses 18,000 Cash in Bank 18,000 Cash in Bank 84,000 Notes Receivable 84,000 Chapter 3 Cash 32
Problem 11 (Starr Company) May 1-31
Apr. 30 Receipts Disb. May 31
Unadjusted bank balance 470,360 883,200 1,320,600 32,960 Deposits in transit
April 30 29,360 (29,360)
May 31 (squeezed) 40,560 40,560 Outstanding checks
April 30 (144,800) (144,800) May 31 133,600 (133,600)
Adjusted balances 354,920 894,400 1,309,400 (60,080) May 1-31
Apr. 30 Receipts Disb. May 31
Unadjusted book balances (squeezed) 363,040 654,400 621,240* 396,200 DAIF checks returned by bank
April 30 (8,000) (8,000) May 31
Bank service charges April (120) (120) May 280 (280)
Check issued by the treasurer to himself 696,000 (696,000) Proceeds of loan granted by bank
May 240,000 240,000 Adjusted balances 354,920 894,400 1,309,400 (60,080) *621,240 = 613,120 + 8,000 + 120 (a) 1. P363,040 2. P40,560 3. P696,000 4. P(60,080) (b) Adjusting entries: Bank Service Charges 280 Cash in Bank 280
Cash in Bank 696,000 Cash in Bank 240,000
Notes Payable – Bank 240,000 Chapter 3
Cash 33
Problem 12 (Rocky Mountain High) Nov. 30 Receipts Disbursements Dec. 6
Unadjusted bank balance P888,800 P555,500 P666,600 Deposits in transit
November 30 148,900 (148,900)
December 31 (102,000 – 12,000) 90,000 90,000 Payment from collections 12,000 12,000 Outstanding checks November 30 (116,200) (116,200) December 31 = 62,000 + 105,000 + 30,000 + 40,000 237,000 (237,000) Adjusted balances 921,500 508,600 799,400 630,700 Nov. 30 Receipts Disbursements Dec. 6
Unadjusted book balances (squeezed) 921,500 508,600 571,400 858,700 Bank charges in December (200,000 + 28,000) 228,000 (228,000)
Adjusted balances 921,500 508,600 799,400 630,700 Answers:
(a) P148,900 (b) P116,200 (c) P921,500 (d) P630,700 Problem 13 1. A,D 6. M, P 11. D, F 16. I, L
2. C, G. 7. I, L 12. A, D 17. Not a reconciling item 3. B, F 8. K, O 13. F, G 18. J, N
4. E, H 9. D, H 14. D, F 19. L, N 5. J, N 10. B, F 15. J, N 20. N, O Problem 14 (Contronics Company) Petty Cash
Fund Purchasing Fund
Cash in Bank Total
Balances, per ledger P 15,000 P 35,000 P134,500 P184,500 Disbursed in 2012 (6,000) (20,000) (26,000)
Bank credit memo 58,000 58,000
Balances per audit P9,000 P15,000 192,500 P216,500 Adjusting entries
Gasoline Expense 4,500 Miscellaneous Expenses 500 Transportation Expense 1,000 Petty Cash Fund 6,000
Purchases or Inventory 20,000 Purchasing Fund 20,000 Cash in Bank 58,000 Notes Receivable 58,000 Chapter 3 Cash 34
Problem 15 (Fortune Company) (a) Audit Adjustments
Sales 285,200 Cash 285,200 Cash 19,300 Utilities Payable 19,300 Accounts Receivable 57,800 Cash 57,800 Accounts Receivable 32,500 Cash 32,500
No entry, dividend fund is part of cash. Accounts Receivable 3,500
Cash 3,500
Cash Shortage/ Receivable from Employees 550 Cash 550
No entry, payroll fund is part of cash.
Cash Shortage / Receivable from Employees 300 Miscellaneous Expenses 5,500
Cash 5,800 Cash 13,500
Miscellaneous Income 13,500 (b) Correct amount of cash
Cash balance, per ledger P1,640,000 Cash sales of 2013 (285,200)
Unreleased check for utilities 19,300 Postdated checks received (57,800) Customers’ NSF checks (32,500) Stale check (3,500)
Shortage in the change fund (550) 2012 vouchers in petty cash fund (5,500) Cash shortage in the petty cash fund (300) Unrecorded deposits (sale of scrap) 13,500 Cash balance, per audit 1,287,450
Supply the Answers
Note to the Teacher: Please supply the petty cash imprest balance of P50,000 in problem B. (You may supply another figure for variation in your other classes.)
Summary of Answers: 1. 308.40 2. 4,606.60 Chapter 3 Cash 35 3. 5,000 shortage
4. 35,000 5. 800 6. 5,700 7. 400 8. 5,300 9. 53,800 10. 838,600 11. 157,950
12. 780,650 or 761,650 (NSF checks may be treated as deduction from receipts) 13. 625,700 or 606,700 (NSF checks may be treated as deduction from receipts) 14. 3,000
15. 92,000 16. 145,600 17. 71,950 18. 1,828,212
19. imprest system – deposit of collections intact to the bank
20. segregation of duties of custodial function and bookkeeping function 21. 125,250
22. 194,550 23. 255,700 24. 55,000
SUPPORTING COMPUTATIONS A. 1. Total per count P 10,761.60 Cashier’s accountability
Postage stamps 220
Other collections 350 11,070 Cash shortage P308.40
2. Correct petty cash fund = 1,156.60 + 3,450 P4,606.60 B. 3. Total per count P 53,500
Cashier’s accountability Petty cash fund P 50,000 Check payable to Meralco 3,500 Birthday gift contribution 4,500 Unused postage 500 58,500 Cash shortage P 5,000
4. Correct petty cash fund = P17,000 + P18,000 P35,000 C. 5. Total per count P19,700
Cashier’s accountability Petty cash fund P 15,000.00
Undeposited collections 5,500.00 20,500 Cash shortage P 800
6. Bills and coins P6,400 Customers’ checks 4,800 Undeposited collections (5,500) Petty cash fund, per audit P5,700 Chapter 3
Cash 36
Cashier’s accountability Petty cash fund P15,000
Unreleased payroll 5,000 20,000 Cash shortage P 400
8. Bills and coins P7,300
Vouchers with January 2013 dates 200
Employee’s check dated December 2012 2,800 Total cash items as of December 31 P10,300 Unreleased payroll (5,000)
Correct petty cash balance on December 31 P5,300 E. Bank Books
9. Unadjusted balances P850,000 P750,500 Bank credit memo 150,000
Bank debit memo (4,500) Outstanding checks (120,400) Check of Kin 21,000
Error in recording check (3,600) Cash on hand 88,000
Balances before cash shortage P838,600 P892,400 Cash shortage ( 53,800)
10. Cash balance, per audit P838,600 P838,600 F. January 31 Receipts Disbursements Feb. 28
Unadjusted balances per bank 13,500 790,450 647,700 156,250 Outstanding checks
February 28 43,000 (43,000) Deposits in transit
January 31 54,500 (54,500) February 28 44,700 44,700
Adjusted balances 3,000 780,650 625,700 157,950 January 31 Receipts Disbursements Feb. 28
Unadjusted balances, per books (92,250) 805,350 630,300 82,800 Bank credit memo
January 123,500 (123,500) February 98,800 98,800 Bank service charges January (3,250) (3,250) February 4,650 (4,650) NSF checks returned by bank January (25,000) (25,000) February 19,000 (19,000) Adjusted balances 3,000 780,650 625,700 157,950 Chapter 3 Cash 37 G. December Disbursements Per bank Per books
15. Unadjusted disbursements P195,000 P190,400 Outstanding checks, November 30 (90,000) Customers’ NSF checks
November (6,000) December 12,000 Bank service charges November (2,400) December 3,000
Balances before outstanding checks, December 31 P105,000 P197,000 105,000
Outstanding checks, December 31 P92,000 H. June Receipts
Per bank Per books
16. Unadjusted receipts in June P310,000 420,000 Collections made directly by bank in May (30,300) Deposits in transit, May 31 (15,000)
Loans granted by bank in June 50,000 Error in recording deposit 900
Balances before deposits in transit, June 30 P295,000 P440,600 295,000
Deposits in transit, June 30 P145,600 I. Per bank Per books
Unadjusted balances 1,555,000 1,890,162 Credit memo for collections by bank 10,000 Outstanding checks (106,229)
Undeposited receipts 379,441
Balances before shortage P1,828,212 P1,900,162 17. Amount stolen (71,950)
18. Actual cash existing P1,828,212 P1,828,212
19. and 20. Features of internal control missing: Imprest system and segregation of duties J. Per bank Per books
Unadjusted balances P350,000 P293,500 Erroneous bank credit (25,000)
22. Outstanding checks (246,750 – 15,000 – 37,200) (194,550) Unreleased checks 15,000
Postdated checks issued and recorded as disbursements 37,200 Customer’s postdated check (50,000)
21. Deposits in transit (175,250 – 50,000) 125,250 Note collected by bank 15,000
Balances before cash shortage P255,700 P310,700 24. Cash shortage (55,000)
