Chapter 3 Chapter 3

Cash Cash
MULTIPLE CHOICE
1. C 2. B 3. D 4. A 5. B
(b) Cash and Cash Equivalents
6. B 7. C 8. C 9. C 10. D
Savings account with Metrobank P1,500,000
11. B 12. C 13. C 14. D 15. D
Checking account with Metrobank 800,000 + 5,300 805,300
16. B Certificates of deposit 3,000,000
Payroll fund 1,200,000 + 35,000 1,235,000
Tax fund 500,000
Problem 1 Petty cash fund 12,000
Undeposited collections 85,000 – 25,000 60,000
1. C Correct cash and cash equivalents P7,112,300
2. A, B, D
3. C. D
4. C, D Problem 4 (Sta. Monica, Inc.)
5. B, E
6. A, D
7. A, C Expenses 10,500
8. C Petty Cash Fund 10,500
9. A, C, E
10. D, E Correct balance of petty cash fund = P20,000 – P10,500 = P9,500
Problem 2. Meteor Company

a. Accounts receivable (the check has staled) Problem 5 (Victor Company)

b. Accounts receivable
c. Financial assets at fair value through profit or loss (a) Correct amount of petty cash fund
d. Cash (P3,200 only)
e. Cash ( if good check, otherwise, Receivable from Employees) Currencies and coins P6,400
f. still included in Cash and Accounts Payable until mailed.
g. Notes receivable (b) Per count
Currencies and coins P 6,400
Problem 3 Leila Corporation Paid petty cash vouchers 2,250
(a) Audit adjustments Employee’s NSF check 1,200
Wedding gift contribution (with bills) 1,500
Cash Equivalents 3,000,000 Total per count P11,350
Cash 3,000,000 Cashier’s accountability:
Petty cash fund, per ledger P10,000
Other Non-current Financial Assets 3,200,000 Wedding gift contribution 1,500 11,500
Cash 3,200,000 Cash shortage P 150
Cash 35,000 (b) Audit Adjusting Entries
Accrued Salaries Expense 35,000
Delivery Expense 250
Other Non-current Financial Assets 900,000 Office Supplies Expense 160
Cash 900,000 Employees Medicine 240
Transportation Expense 400
Miscellaneous Expenses 6,800 Repairs and Maintenance 400
Advances to Employees 1,200 Receivables from Employees 2,000
Cash (Petty Cash Fund) 8,000 Cash Shortage (or Misc. Expenses or Receivables fr Employees) 150
Petty Cash Fund 3,600
Cash 5,300
Accrued Utilities Expense 5,300

Accounts Receivable 25,000

Cash 25,000

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Chapter 3 Chapter 3
Cash Cash
Cash shortage P 802.90
Problem 6 (Rainbow Corporation)
Audit Adjusting Entries:
(a) Total per count P 35,000
Cashier’s Accountability Receivables from Employees (1,500.00 + 300.00) 1,800
Petty Cash Fund, per ledger P35,000 Freight out 500
Unused postage stamps 1,800 Supplies Expense (100 – 40) 260
Unused office supplies 1,200 Prepaid Expenses 40
Wedding gift contribution 1,000 39,000 Furniture and Equipment 741.10
Cash shortage P 4,000 Freight in 394.20
Cash Shortage (Receivable from Employees) 802.90
(b). Telephone Expense 1,500 Petty Cash Fund 4,538.20
Water Expense 1,600
Office Supplies Expense (3,700 – 1,200) 2,500 Cash in Bank (1,000.40 + 2,500.00) 3,500.40
Postage Expense (2,800 – 1,800) 1,000 Sales 3,500.40
Prepaid Expenses (1,200 + 1,800) 3,000
Receivables from Employees (3,900 + 4,000) 7,900 Correct balance of petty cash fund (P15,000 – 4,538.20) P10,461.80
Petty Cash Fund 17,500
Composed of the following cash items at December 31, 2015
(c) Correct amount of petty cash fund = P35,000 – P17,500 = P17,500 Bills and coins P6,717.50
Checks dated December 7,000.00
Cash items in the petty cash fund: Petty cash vouchers dated January (undisbursed as
Bills and Coins P 2,500 of December 31) 244.70
Replenishment check 15,000 Total cash items as of December 31 P13,962.20
Total P17,500 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
Problem 7 San Rafael Company
Problem 8 (Da King Company)
Bills and Coins (show details of denomination and pieces per denomination) P6,717.50 Bills and coins
Checks: 500 x 1 P 500
Date Maker Amount 100 x 8 800
12-28-17 Urquiola, employee P 3,000.00 50 x 3 150
12-29-17 Sta. Maria, employee 1,500.00 10 x 4 40
12-31-17 L. Chua, customer 2,500.00 5x2 10
01-02-18 A. Bobadilla, customer 3,200.00 1x3 3 P 1,503
01-12-18 C. German, employee Checks:
(check received 12-28-17) 1,500.00 11,700.00 12/29/17 M. Roxas, employee P2,000
Vouchers 12/30/17 J. Madrigal Company 1.500
Date Voucher No. Particulars Amount 01/02/18 J. Estrada Junk Shop 2,450
12-15-17 151 Freight out P 500.00 01/15/18 F. Chavez, employee (received 12/27/15) 1,800 7,750
12-28-17 183 Supplies 300.00 Paid petty cash vouchers:
12-29-17 184 Freight In 394.20 12/16/17 Vo. No. 145 Freight on goods bought P500
12-31-17 189 Freight on cabinet 741.10 12/26/17 164 Postage 200
01-02-18 001 Freight in 244.70 2,180.00 12/29/17 165 Transportation of messenger 50
IOUs 01/02/18 166 Repairs, completed Dec. 29, 2012 1,500 2,250
12-21-17 S. Dechavez 300.00 IOU
Unused office supplies 40.00 Ed Gil, employee 1,200
Total per count P20,937.50 Postage stamps 10 pcs x P12 120
Cashier’s accountability: Total per count P 12,823
Petty cash fund, per ledger P15,000.00 Cashier’s accountability
Unremitted cash sales Petty cash fund P10,000
Inv. # 118 December 30 P1,000.40 Unremitted collections
Inv. # 129 December 31 2,500.00 12/30/17 Refund for merchandise returned P 1,500
Inv. # 133 January 2 3,200.00 6,700.40 01/02/18 Sale of junk and scrap materials 2,450 3,950
Unused office supplies 40.00 21,740.40 Unused postage stamps 120 14,070

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Cash Cash
Cash shortage P1,247
Adjusting Entries:
Adjusting entries
Receivable from Employees (1,800 + 1,200 + shortage of 1,247) 4,247 Receivable from Employees (1,380 + 84) .............................................. 1,464
Freight in/Cost of Goods Sold 500 Office Suplies Expense 390 – 150 ............................................ 240
Transportation Expense 50 Prepaid Expenses ........................................... 150
Postage Expense (200 – 120) 80 Transportation Expense ........................................... 206
Prepaid Expenses 120 Freight in ............................................ 220
Petty Cash Fund 4,997 Petty Cash Fund .............................................................. 2,280

Repairs and Maintenance 1,500 Cash .............................................................. 6,000

Accrued Expenses 1,500 Accounts Receivable .............................................................. 6,000

Cash in Bank 1,500 Cash .............................................................. 2,600

Purchase Returns and Allowances /Cost of Goods Sold 1,500 Salaries Payable .............................................................. 2,600

Correct Petty Cash Fund = P10,000 – P4,997 = P5,003

Cash items as of December 31: Problem 10 (Cisco Systems, Inc.)
Bills and coins P1,503 (1) Bank reconciliation:
Checks dated December 3,500
Petty cash voucher dated January 2016 1,500 Per bank Per books
Cash refund for purchase returns (1,500) Unadjusted balances P 1,463,212 P1,352,312*
Correct petty cash fund balance P5,003 Outstanding checks (140,000)
Undeposited receipts 59,500
Problem 9 General Company Error in recording check issued for rental payment 1,800
Bank charge for payment of loan and interest (45,000)
Per count Bank service charges (1,400)
Currency ........................................................................................................................... P 3,020.00 Deposit of another company (87,500)
Checks: 12/29/17 Judith Cruz, Employee...................................................... 1,200.00 Customer’s DAIF check (12,500)
12/29/17 Viva Company, Customer ................................................. 2,500.00 Adjusted balances P1,295,212 P1,295,212
12/30/17 Alvin Taipan, Employee .................................................... 1,100.00
1/15/18 Judith Cruz, Employee
Cashed, December 30, 2017 .......................................................... 1,380.00 (2) Adjusting entry:
12/31/17 Manila Company, Customer .................................................... 3,500.00
Vouchers: ( All dated on or before 12/31/17) Notes Payable – Bank 40,000
Office Supplies ………………. ...................................................... 390.00 Interest Expense 5,000
Transportation expense .............................................................. 206.00 Bank Service Charges 1,400
Freight on purchases …………………………………………… 220.00 Accounts Receivable 12,500
Estimated unused office supplies) .............................................................. 150.00 Rent Expense 1,800
Total per count .............................................................. P13,666.00 Cash in Bank 57,100
Cashier’s accountability
Petty cash fund P 5,000.00 (3) Cash and cash equivalents:
Undeposited collections (2,500 + 3,500) 6,000.00 Petty cash fund P 20,000
Unrelieaed payroll 2,600.00 Cash in bank 1,295,212
Unused office supplies 150.00 .... 13,750.00 Treasury bills maturing in 2 months 500,000
Cash shortage .............................................................. P 84.00 Total cash and cash equivalents P1,815,212

Cash items Problem 11 (Sunshine Corporation)

Currency .............................................................. P3,020.00
Checks dated December .............................................................. 8,300.00 1. Per Bank Per Books
Collections from customers .............................................................. ( 6,000.00) Unadjusted Balances P 424,000 P465,000
Unreleased payroll .............................................................. ( 2,600.00) Outstanding checks (113,000)
Correct petty cash fund, December 31 .............................................................. P 2,720.00 Undeposited collections 48,000
Customer’s note collected by bank 19,000
Bank service charge (1,500)

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Cash Cash
Adjusted balances P359,000 P482,500
Cash shortage (123,500)
Cash balance, December 31, per audit P359,000 P359,000 Audit adjusting entries:

2. Understated book balance 456,000 – 465,000 P 9,000 Cash in Bank 2,700

Overstated bank balance 424,000 – 454,400 30,400 Office Furniture 2,700
Omitted outstanding checks
183 4,500 Bank Service Charge 2,250
198 12,500 Cash in Bank 2,250
Understated outstanding checks
52,000 – 25000 27,000 Interest Expense 24,750
9,000 – 900 8,100 Cash in Bank 24,750
25,000 – 15,000 10,000
Overstated undeposited collections 3,000
Omission of bank credit memo 19,000 Problem 13 (Golden Bells Company)
Total cash shortage P123,500
Nov. 30 Receipts Disbursements Dec. 31
3. Undeposited collections, December 31 P 48,000 Unadjusted bank balance 2,500,000 2,300,000 1,700,000 3,100,000
Collections, January 1 – 15 199,000 Deposits in transit
Total amount available for deposit P247,000 November 30 58,000 (58,000)
December 31 47,000 47,000
Amount deposited, per deposit slips (110,000)
Outstanding checks
Undeposited collections, January 15 P137,000
November 30 (97,000) (97,000)
Cash on hand, January 15 (52,000)
December 31 46,000 (46,000)
Additional cash shortage in January P 85,000
Erroneous bank charges
November 30 25,000 (25,000)
.4. Adjusting Entries December 31 (37,000) 37,000
Bank Charges 1,500 Erroneous bank credit
Receivable from Employees (or Loss) 123,500 November 30 (45,000) (45,000)
Cash 106,000 December 31 (50,000) (50,000)
Notes Receivable 19,000 Adjusted balances 2,441,000 2,214,000 1,567,000 3,088,000

Nov. 30 Receipts Disbursements Dec. 31

Problem 12 (Pamela Manufacturing Company)
Unadjusted book balances (squeezed) 2,390,000 2,206,000 1,549,000 3,047,000
NSF checks returned by bank
Nov. 30 Receipts Disbursements. Dec. 31
November 30 (15,000) (15,000)
Unadjusted bank balance 876,750 9,153,760 8,526,550 1,503,960
December 31 25,000 (25,000)
Outstanding checks
Bank service charges
November 30 (254,720) (254,720)
November (10,000) (10,000)
December 31 335,610 (335,610)
December 18,000 (18,000)
Deposits in transit
Note collected by bank
November 30 164,220 (164,220)
November 76,000 (76,000)
December 31 209,180 209,180
December 84,000 84,000
Check of Pamplona Company (5,830) 5,830
Adjusted balances 2,441,000 2,214,000 1,567,000 3,088,000
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
Accounts Receivable 25,000
Error in recording check no. 359 2,700 2,700
Cash in Bank 25,000
Bank service charge
November (3,500) (3,500)
Bank Service Charges / Miscellaneous Expenses 18,000
December 2,250 (2,250)
Cash in Bank 18,000
NSF check returned in November (34,900) (34,900)
Interest charged by the bank 24,750 (24,750)
Cash in Bank 84,000
Adjusted Balances 786,250 9,198,720 8,601,610 1,383,360
Notes Receivable 84,000

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Cash Cash

Problem 14 (Starr Company) Problem 15 Barry Company

May 1-31
Apr. 30 Receipts Disb. May 31 (1) Deposits in transit
Unadjusted bank balance 570,360 883,200 1,320,600 132,960 Deposits in transit, beginning P 60,000
Deposits in transit Deposits made 2,520,000
April 30 29,360 (29,360) Deposits recorded by bank (2,500,000)
May 31 (squeezed) 40,560 40,560 Deposits in transit, June 30 P 80,000
Outstanding checks
April 30 (144,800) (144,800) (2) Outstanding checks
May 31 133,600 (133,600) Outstanding checks, beginning P 175,000
Adjusted balances 454,920 894,400 1,309,400 39,920 Checks recorded by Barry 2,380,000
Unrecorded check issued 100,000
May 1-31 Checks cleared (2,354,600 – 39,600) (2,315,000)
Apr. 30 Receipts Disb. May 31 Outstanding checks, June 30 P 340,000
Unadjusted book balances (squeezed) 463,040 654,400 621,240* 496,200
DAIF checks returned by bank Bank Books
April 30 (8,000) (8,000) Unadjusted balances, June 30 P 270,900 P 805,000
May 31 Deposits in transit 80,000
Bank service charges Outstanding checks (340,000)
April (120) (120) Check of another company 39,600
May 280 (280) NSF check (36,000)
Check issued by the treasurer to himself 696,000 (696,000) Bank service charge (8,500)
Proceeds of loan granted by bank Unrecorded check issued (100,000)
May 240,000 240,000 Direct payment of bank loan (610,000)
Adjusted balances 454,920 894,400 1,309,400 39,920 Adjusted balances P 50,500 P 50,500

*621,240 = 613,120 + 8,000 + 120 Audit adjustments:

(a) 1. P463,040 Accounts receivable 36,000

2. P40,560 Cash 36,000
3. P696,000
4. P39,920 Miscellaneous Expenses 8,500
Cash 8,500
(b) Adjusting entries:
Purchases 100,000
Bank Service Charges 280 Cash 100,000
Cash in Bank 280
Notes Payable – Bank 595,000
Loss from Theft/Receivable from Officers 696,000 Interest Expense 15,000
Cash in Bank 696,000 Cash 610,000

Cash in Bank 240,000

Notes Payable – Bank 240,000 Problem 16 (Rocky Mountain High)
Nov. 30 Receipts Disbursements Dec. 6
Unadjusted bank balance P888,800 P555,500 P666,600 777,700
Deposits in transit
November 30 148,900 (148,900)
December 6 (102,000 – 12,000) 90,000 90,000
Payment from collections 12,000 12,000
Outstanding checks
November 30 (116,200) (116,200)
December 6 = 62,000 + 105,000 + 30,000 +
40,000 237,000 (237,000)
Adjusted balances 921,500 508,600 799,400 630,700

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Cash Cash
Accounts Receivable 32,500
Nov. 30 Receipts Disbursements Dec. 6 Cash 32,500
Unadjusted book balances (squeezed) 921,500 508,600 559,400 870,700
Payment from receipts 12,000 (12,000) No entry, dividend fund is part of cash.
Bank charges in December (200,000 + 28,000) 228,000 (228,000)
Adjusted balances 921,500 508,600 799,400 630,700 Accounts Receivable 3,500
Cash 3,500
Answers:
(a) P148,900 Cash Shortage/ Receivable from Employees 550
(b) P116,200 Cash 550
(c) P921,500
(d) P630,700 No entry, payroll fund is part of cash.

Cash Shortage / Receivable from Employees 300

Problem 17 Miscellaneous Expenses 5,500
Cash 5,800
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 Cash 13,500
3. B, F 8. K, O 13. F, G 18. J, N Miscellaneous Income 13,500
4. E, H 9. D, H 14. D, F 19. L, N
(b) Correct amount of cash
5. J, N 10. B, F 15. J, N 20. N, O
Cash balance, per ledger P1,640,000
Cash sales of 2018 (285,200)
Problem 18 (Contronics Company)
Unreleased check for utilities 19,300
Postdated checks received (57,800)
Petty Cash Purchasing Cash in Bank Total
Customers’ NSF checks (32,500)
Fund Fund
Stale check (3,500)
Balances, per ledger P 15,000 P 35,000 P134,500 P184,500
Shortage in the change fund (550)
Disbursed in 2015 (6,000) (20,000) (26,000)
2017 vouchers in petty cash fund (5,500)
Bank credit memo 58,000 58,000
Cash shortage in the petty cash fund (300)
Balances per audit P9,000 P15,000 192,500 P216,500
Unrecorded deposits (sale of scrap) 13,500
Cash balance, per audit 1,287,450
Adjusting entries
Gasoline Expense 4,500
Summary of Answers:
Miscellaneous Expenses 500
Transportation Expense 1,000
1. 308.40
Petty Cash Fund 6,000
2. 4,606.60
3. no shortage
Purchases or Inventory 20,000
4. 35,000
Purchasing Fund 20,000
5. 800
6. 5,700
Cash in Bank 58,000
7. 400
Notes Receivable 58,000
8. 5,300
9. 53,800
10. 838,600
Problem 19 (Fortune Company)
11. 157,950
(a) Audit Adjustments
12. 780,650 or 761,650 (NSF checks may be treated as deduction from receipts)
Sales 285,200
13. 625,700 or 606,700 (NSF checks may be treated as deduction from receipts)
Cash 285,200
14. 3,000
15. 92,000
Cash 19,300
16. 145,600
Utilities Payable 19,300
17. 71,950
18. 1,828,212
Accounts Receivable 57,800
19. imprest system – deposit of collections intact to the bank
Cash 57,800
20. segregation of duties of custodial function and bookkeeping function
21. 125,250

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Cash Cash
22. 194,550
23. 255,700
24. 55,000 E. Bank Books
9. Unadjusted balances P850,000 P750,500
SUPPORTING COMPUTATIONS Bank credit memo 150,000
Bank debit memo (4,500)
A. 1. Total per count P 10,761.60 Outstanding checks (120,400)
Cashier’s accountability Check of Kin 21,000
Petty cash fund P 10,500 Error in recording check (3,600)
Postage stamps 220 Cash on hand 88,000
Other collections 350 11,070 Balances before cash shortage P838,600 P892,400
Cash shortage P308.40 Cash shortage ( 53,800)
10. Cash balance, per audit P838,600 P838,600
2. Correct petty cash fund = 1,156.60 + 3,450 P4,606.60
F. January 31 Receipts Disbursements Feb. 28
B. 3. Total per count P 53,500 Unadjusted balances per bank 13,500 790,450 647,700 156,250
Cashier’s accountability Outstanding checks
Petty cash fund P 45,000 January 31 (65,000) (65,000)
Check payable to Meralco 3,500 February 28 43,000 (43,000)
Birthday gift contribution 4,500 Deposits in transit
Unused postage 500 53,500 January 31 54,500 (54,500)
Cash shortage P 0 February 28 44,700 44,700
Adjusted balances 3,000 780,650 625,700 157,950
4. Correct petty cash fund = P17,000 + P18,000 P35,000 January 31 Receipts Disbursements Feb. 28
Unadjusted balances, per books (92,250) 805,350 630,300 82,800
C. 5. Total per count P19,700 Bank credit memo
Cashier’s accountability January 123,500 (123,500)
Petty cash fund P 15,000.00 February 98,800 98,800
Undeposited collections 5,500.00 20,500 Bank service charges
Cash shortage P 800 January (3,250) (3,250)
February 4,650 (4,650)
6. Bills and coins P6,400 NSF checks returned by bank
Customers’ checks 4,800 January (25,000) (25,000)
Undeposited collections (5,500) February 19,000 (19,000)
Petty cash fund, per audit P5,700 Adjusted balances 3,000 780,650 625,700 157,950

D. 7. Total per count (exclude the unsigned pay envelope with no contents) P 19,600
Cashier’s accountability G. December Disbursements
Petty cash fund P15,000 Per bank Per books
Unreleased payroll 5,000 20,000 15. Unadjusted disbursements P195,000 P190,400
Cash shortage P 400 Outstanding checks, November 30 (90,000)
Customers’ NSF checks
8. Bills and coins P7,300 November (6,000)
Vouchers with January 2018 dates 200 December 12,000
Employee’s check dated December 2017 2,800 Bank service charges
Total cash items as of December 31 P10,300 November (2,400)
Unreleased payroll (5,000) December 3,000
Correct petty cash balance on December 31 P5,300 Balances before outstanding checks, December 31 P105,000 P197,000
105,000
Outstanding checks, December 31 P92,000

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Cash

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)
23. Actual cash existing P255,700 P255,700

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