Cordillera Career Development College financial statements audit problems

Cordillera Career Development College
COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION

Buyagan, Poblacion, La Trinidad, Benguet
PROBLEM 1
In connection with your audit of the financial statements of Onor Company for the year ended
Dec. 31, 2012, you gathered the following information.
1. The company maintains its current account with Tsunami Bank. The bank Statement on
Dec. 31, 2012 showed a balance of P6380,340.
Your audit of the companys account with Tsunami Bank disclosed the following:
A check for P22,500 received from a customer whose account is current had been
deposited and then returned by the bank on Dec. 28, 2012. No entry was made
for the return of this check. The customer replaced the check on Jan 15, 2013.
A check for P5,720 was cleared by the bank as P7,520. The bank made the
correction on Jan. 2, 2013.
A check for P3,500 representing payment of an employee advance was received
and deposited on Dec. 27, 2012, but was not recorded until Jan. 3, 2013.
Post dated check totaling P67,300 were included in the deposits in transit. These
represent collections of current accounts receivable from customers. The checks
were actually deposited on Jan. 5, 2013.
Various debit memos for drafts purchased for payment of importation of
equipment totaling P230,000 were not yet recorded. These purchases were
previously set up as accounts payable. Said equipment arrived in Dec. 2012.
Interest earned on the bank balance for the 4 th quarter of 2012, amounting
P1,950 was not recorded.
Bank service charges totaling P1,260 were not recorded.
Deposit in transit and outstanding checks at Dec. 31, 2012 totaled P136,250 and
P276,380, respectively.
2. Various expenses from the companys imprest petty cash fund dated December 2012
totaled P16,250, while those dated January 2013 amounted P5,903. Another
disbursement from the fund dated December 2012 was a cash advance to an employee
amounting to P3,500. A replenishment of the petty cash fun was made on January 8,
2013.
3. The companys trial balance on December 31, 2012 includes the following accounts:
Cash in bank Tsunami Bank P784,320`
Cash in bank Earthquake Bank (restricted
account for plant expansion, expected to
be disbursed in 2013) 700,000
Petty cash fund 30,000
Time deposit, placed December 20, 2012 and due
March 20, 2013 1,000,000
Money market placement Prudential Bank 4,000,000
1) What is the adjusted petty cash fund balance on Dec. 31, 2012?
A. P4,347 C. P30,000
B. P10,250 D. P24,097
2) The petty cash shortage on December 31, 2012 is?
A. P0 C. P3,500
B. P5,903 D. P4,347
3) What is the adjusted Cash in bank Tsunami Bank balance on December 31, 2012?
A. P500,000 C. P432,710
B.P748,320 D. P429,110
4) The entry to adjust the Cash in Bank Tsunami Bank account should include a Debit to
A. Account receivable for P89,800 C. Account receivable for P228,200
B. Accounts Receivable for P86,300 D. Account receivable for P1,950
Problem 2:
The accountant of SANTIAGO Company is in the process of preparing the companys financial
statements for the year ended December 31, 2012. He is trying to determine the correct
balance of cash and cash equivalents to be reported as a current asset on the statement of
financial position. The following items are being considered:
Balances in the companys accounts at the Metropolitan Bank:
Current account P81,000
Savings account P132,600
Undeposited customer checks of P22,200 (including a customer check dated January 2,

2013 for 3,000)
Currency and coins on hand P3,480
Savings account at the Northern Philippines Bank with a balance of P2,400,000. This
account is being used to accumulate cash for future plant expansion (in 2013)
Petty cash of P4,000 (currency of P1,200 and unreplenished vouchers P2,800)
P120,000 in a current account at the Northern Philippines Bank. This represents a 20%
compensating balance for P600,000 loan with the bank. SANTIAGO Company is legally
restricted to withdraw the funds until the loan is due in 2015.
Treasury bills:
Twomonth maturity bills P90,000
Sevenmonth bills 120,000
Time deposit P100,000
What is the correct balance of cash and cash equivalents to be reported in the current assets
section of the statement of financial position?
A) P547,480 C)P430,280
B) P427,480 D) P327,480
PROBLEM 3:
Your audit of the December 31, 2012 financial statements of NAGADU CORP. reveals the
following:
Current account at Prime Bank P(30,000)
Current account at Prudent Bank 135,000
Treasury Bills (acquired 3 months before maturity) 300,000
Treasury Bills (maturing date is Dec.31, 2013) 1,500,000
Payroll account 390,000
Foreign bank account restricted (translated using the
Dec. 31, 2012 exchange rate) 2,000,000
Postage stamps 1,250
Employees postdated check 4,500
IOU from the vice-president 8,000
Credit memos from a supplier for a purchase return 8,100
Travelers check 21,000
Money order 12,000
Petty cash fund (P3,000 in currency and expense
Receipts for P12,000) 15,000
What amount would be reported as cash and cash equivalents in the statement of financial
position on Dec. 31, 2012?
A. P840,050 C. P849,400
B. P873,900 D. P861,900
PROBLEM 4:
The cash account of the HANNAH CORPORATION as of December 31, 2012 was composed of
the following:
On deposit in current account with the Bank of PI P900,000
Cash collection not yet deposited in the bank 350,000
A customers check returned by the bank for insufficient fund 150,000
A check drawn by the Vice-President of the company dated
January 15, 2013 70,000
A check drawn by a supplier dated December 28, 2012 for
Goods returned by the company 60,000
A check dated May 31, 2012 drawn by the company against
the Bank of Manila in payment of customs duties.
since the importation did not materialize, the check was
returned by the custom broker. This check an outstanding
check in the reconciliation of the Bank of Manila 410,000
Petty cash fund of which P10,000 is in currency, P7,200 in form
of employees IOUs; and P2,800 is supported by approved
petty cash vouchers for expenses all dated prior to closing
of the books on December 31, 2012 20,000
TOTAL P1,960,000
Less: Overdraft with the Bank of Manila secured by a chattel

mortgage on the inventories 300,000
CASH BALANCE PER LEDGER P1,660,000
What is the amount of cash to be reported in the December 31, 2012 statement of financial
position of HANNAH Corporation?
PROBLEM 5:
The auditor for MELANIE, INC. examined the petty cash fund immediately after the close of
business, July 31, 2012, the end of the companys 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 MELANIE, Inc., payable to the
petty cash custodian 7,200
Postage stamps 300
An employees check, returned by bank, marked NSF 1,000
An envelope containing currency of 1,890 for a gift for
retiring employee 1,890
TOTAL P16,000
The general ledger shows an imprest petty cash fund balance of 16,000.
1) How much is the petty cash shortage overage?

A. P2,190 overage C. P1,890 shortage
B. P2,190 shortage D.P1,890 overage
2) What is the adjusted balance of the petty cash fund at July 31, 2012?
A. P10,740 C. P7,200
B. P3,540 D.P8,850
PROBLEM 6:
On January 1, FORTUNE CO. establishes a petty cash account and designates Tarzan as petty
cash custodian. The original amount included in the petty cash fund is P10,000. The following
disbursements are made from the fund:
Office supplies P3,460
Postage 2,240
Entertainment 840
The balance in the petty cash box is P3,200.
1. The person responsible, at all times, for the amount of the petty cash fund is the
A. Chairman of the board of directors C. Petty cash custodian
B. President of the company D. general cashier
2. The following are appropriate procedures for controlling the petty cash fund, except
A. To monitor variations in diferent types of expenditures, the petty cash custodian files
petty cash vouchers by category of expenditure after replenishing the fund.
B. To replenish the fund, the general cashier issues a company check to the petty cash
custodian, rather than cash.
C. To determine that the fund is being accounted for satisfactorily, surprise counts of
the fund are made from time to time by the internal auditor or other responsible
official.
D. Each individual to whom petty cash is paid is required to present signed receipts to
the petty cash custodian.
3. The entry to record the fund is
A. Office supplies expense 3,460
Postage expense 2,240
Entertainment expense 840
Cash 6,540
B. Office supplies expense 3,460

Cash over and short 260
Petty Cash 6,800
C. Office supplies expense 3,460
Cash over and short 260
Cash 6,800
D. Office supplies expense 3,460
Petty Cash 6,540
4. The objective of establishing a petty cash fund is to
A. Cash checks for employees
B. Account for all cash receipts and disbursements
C. Account for cash sales
D. Facilitate payment of small, miscellaneous items
5. What is the efect of not replenishing the petty cash at year-end and not making the
appropriate adjusting entry?
A. A detailed audit is essential
B. The petty cash custodian should turn over the petty cash to the general cashier
C. Cash will be overstated and expenses understated
D. Expenses will be overstated and cash will be understated
PROBLEM 7:
In connection with your audit of the financial statements of JEFF CORP. for the year ended
December 31, 2012, you conducted a surprise count of the companys petty cash fund and
undeposited collection at 8:20 a.m. on January 3, 2013. Your count disclosed the following:
Bills and Coins:

Bill Coins:
P100.00 5 pieces 5.00 18 pieces
50.00 40 pieces 1.00 206 pieces
20.00 48 pieces 0.25 32 pieces
Postage Stamps (unused) - P365
Checks
Date payee Maker Amount
Dec. 30 cash custodian P1,200
Dec.30 Jef Corp. SLV, Inc. 14,000
Dec.31 Jef Corp. Mario Lansang, 1,680
sales manager
Dec.31 Jef Corp. MSU corp. 17,800
Dec. 31 Jef Corp. Ateneo Inc. 8,300
Dec. 31 Taiwan Corp. Jef Corp. 27,000
Unreimbursed vouchers
Date Payee Description Amou
nt
Dec. 23 Mario Lansang, sales Advances for trip to P20,00
manager Tagaytay City 0
28 Central Post Office Postage stamps 1,620
29 messengers Transportation 150
29 Byte, Inc. Computer Repair 800
Other items found inside the cash box:

1. Unclaimed pay envelope of Sinsinan MacDonut. Indicated on the pay slip is his salary of
P7,500. Your inquiry revealed that Sinsinans salary is mingled with the petty cash fund.
2. The sales managers liquidation report for his Tagaytay City trip.
Cash Advance received on Dec.23 P20,000

Less: Hotel accommodation, meals, etc. P16,000
Bus fare for two 1,200
Cash given to Pablo, salesman 1,000 18,200
Balance P1,800
Accounted for as follows:

Cash returned by Pablo to the sales manager P120
Personal check of the sales manager 1,680
TOTAL 1,800
Additional information:
1. The custodian is not authorized to cash checks.
2. The last official receipt included in the deposit on December 30 is No. 4351 and the last
official receipt issued for the current year is No. 4355. The following official receipts are
all dated December 31, 2012.
OR # Amount Form of Payment
4352 P13,600 cash
4353 17,800 check
4354 3,600 cash
4355 8,300 check
3. The petty cash balance per ledger is P25,000. The last replenishment of the fund was
made on December 22, 2012.
1. What is the amount of shortage due from the sales manager?

A. P240 C. P120
B. P1,800 D. P0
2. What is the amount of undeposited collections on Dec.31, 2012?
A. P44,300 C. P57,300
B. 84,300 D. P41,000
3. The adjusting entries on December 31, 2012 should include a net debit to Travel expense of
A. P17,320 C. P18,200
B. P18,320 D. P18,080
4. The cash count should include total checks of
A. P69,980 C. P41,780
B. P42,980 D. P41,300
5. What is the total cash shortage?
A. P22,166 C. P22,406
B. P8,166 D. P20,486
PROBLEM 8:
Tanya Velasco is reviewing the cash accounting for ABX, Inc. Tanyas review will focus on the
petty cash fund account and the bank reconciliation for the month ended may 31, 2012. She
has collected the dfollowing information from ABXs bookkeeper for this task.
Petty cash Fund

1. The petty cash fund was established on May 2, 2012, in the amount of P10,000.
2. Expenditures from the fund by the custodian as of May 31, 2012, were ecvidenced by
approved petty cash vouchers for the following;
Various office supplies P3,920
IOU from employees 1,200
Shipping charges 2,298
Miscellaneous expense 1,526
On May 31, 2012, the petty cash fund was replenished and increased to 12,000;
currency and coin in the fund at the time totaled 756.
Bank Reconciliation
Shore Bank
Bank Statement
Disbursements Receipts Balance

Balance, May 1, 2012 P350,760
Deposits P1,120,000
Note payment direct from
customer (interest of 1,200) 37,200
Checks cleared during May P1,246,000
Bank service charge 1,080
Balance, May 31, 2012 260,880
ABX, Inc.s Cash Account

Balance, May 1, 2012 P354,000
Deposits during May 2012 1,240,000
Checks written during May 2012 1,273,000
Deposits in transit are determined to be P120,000, and checks outstanding at May 31 total
P34,000. Cash on han (besides petty cash) at May 31, 2012, is P9,840.
1. What is the amount of petty cash shortage?

A. P2,300 C. P300
B. P11,244 D. P0
2. The journal entry to record the replenishment of and increase in the petty cash fund
includes a credit to.
A. Cash of P10,944 C. Petty cash fund of P10,944
B. Cash of P11,244 D. Petty cash fund of P11,244
3. What amount of cash should be reported in the May 31, 2012, statement of financial
position?
A. P368,720 C. P368,420
B. P356,720 D. P358,880
PROBLEM 9:
Presented below are a series of unrelated situations:
1. The accountants of NARCISA Co. provided the following data in reconciling the April 30
cash in bank balance:
Balance per bank, April 30 P130,350
Balance per book, April 30 85,000
Bank service charge 2,000
Deposit in transit 49,000
Outstanding checks 17,650
Note collected by bank including P11,200 interest
(Narcisa not yet informed) 136,000
Check drawn by XYZ Co. erroneously charged by
Bank to Narcisas account 54,600
A transportation error was made in recording a sale and deposit in the sales journal and
cash receipts journal in April.
Correct amount P13,658
Recorded as P16,358
What is the adjusted cash balance on April 30?
2. The following information is included in EMIL CORPORATIONs bank statement for the
month of march:
A customers check has been marked NSF by the
Bank and returned P13,000
Bank service charge for March 1,200
In comparing the bank statement to the companys cash records, you found:
Outstanding checks March 31 P184,000
Deposit made but are not yet shown in the April
bank statement 14,000
The deposits in transit and outstanding checks have been correctly taken up in the
companys books. You also found a customers check for P17,400 that had not yet been
deposited and had not been recorded in Emils books. Your clients books show a cash
balance of P36,420.
What is Emil Corporation correct cash balance at March 31?
3. The following information pertains to a checking account of a company at June 30, 2012.
Balance per bank statement P200, 000
Interest earned for the second quarter 500
Outstanding checks 15, 000
Customers checks returned for insufficient funds 5, 000
Deposit in transit 25, 000
What is the adjusted cash balance at June 30, 2012?
4. A company is reconciling its bank statement with internal records. The cash balance per
the companys books is P45,000. There are P5, 000 of bank charges not yet recorded,
P7,500 of outstanding checks, P12,500 of deposits in transit, and P 15,000 of bank
credits and collections not yet taken up in the companys books.
What is the cash balance per bank?
5. A company shows a cash balance of P 175,000 on its bank statement dated June 30. As
of June 30, there are P55, 000 of outstanding checks and P37,500 of deposits in transit.
What is the correct cash balance on the company nooks as of June 30?
6. The cash account shows a balance of P225,000 before reconciliation. The bank
statement does not include a deposit of P11, 500 made on the last day of the month.
The bank statement shows a collection by bank of P4,700 and a customers check for
P1,600 was returned because it was NSF. A customers check for P2,250 was recorded
on the books as P2,700, and a check written for P395 was recorded as P485.
What should be the correct cash balance?
7. On July 5, 2012, EMILIA CORP. received its bank statement for the month ending June 30.
The statement showed a P209,500 balance while cash account balance on June 30 was
P35,000. In reconciling the balances, the auditor discovered that:
1. The June 30 collections of P176,000 were recorded on the books but were not
deposited until July.
2. The bank service charges for the month of June totaled P3,000.
3. A paid check for P24,300 was entered incorrectly in the cash payments as P34,200.
What is the total outstanding check at June 31, 2012?
Answer the questions relating to each of the seven situations. . .
PROBLEM 10:
The bank statement for the current account of IAN Co. showed a December 31, 2012, balance
of P585,284. Information that might be useful in preparing bank reconciliation is as follows:
a) Outstanding checks were P52,810
b) The December 31, 2012, cash receipts of P23,000 were not deposited in the bank until
January 2, 2013.
c) One check written in payment of rent P8,940 was correctly recorded by the bank but
was recorded by IAN Co. as a P9,840 disbursement
d) In a accordance with prior authorization, the bank withdrew P18,000 directly from the
current account as payment on a mortgage not payable. The interest portion of that
payment was P14,000. Ian Co. has made no entry to record the automatic payment.
e) Bank service charges of P740 were listed on the bank statement
f) A deposit of P35,000 was recorded by the bank on December 12, but it did not belong to
Ian Co.
g) The bank statement included a charge of P3,400 for a not-sufficient-fund check. The
company will seek payment from the customer.
h) Ian Co. maintains an P8,000 petty cash fund that was appropriately reimbursed at the
end of December.
i) According to instructions from Ian Co. on December 31, the bank withdrew P40,000 from
the account and purchased Treasury bills for Ian Co. the company recorded the
transaction in its books on December 31 when it received notice from the bank. Half of
the treasury bills mature in 3 months and the other half in 6 months.
1. What is the cash bank balance per books on December 31, 2012?
A. P549,714 C. P534,914
B. P543,514 D. P541,714
2. What is the adjusted cash in bank balance on December 31, 2012?
A. P520,474 C. P518,674
B. P527,274 D. P520,154
3. What amount would Ian Co. report as cash and cash equivalents in the current asset
section of the December 31, 2012, statement of financial position?
A. P928,474 C. P720,474
B. P728,474 D. P735,274
PROBLEM 11:
The following data were taken from GARAYs check register for the month of April. Garays
bank reconciliation for March showed one outstanding check, check no. 178 for P2,150 (written
on March 20), and one deposit for P4,350 (made on March 31).
2012, April Item checks deposits balanc

e
1 Beginning 6,150
Balance
1 Deposit 26,167 32,317
1 Check No. 179 250 32,567
4 Check No. 180 10,673 21,898
27 Deposit 11,774 33,672
29 Check No. 181 13,217 20,490
The following is from Garays Bank statement for April:

Date Item Checks Deposi Balance
ts
2012, April Beginning Balance 3,950
1
3 Check No. 179 250 3,700
3 Deposit 4,350 8,050
5 Check no. 180 10,673 (2,623)
5 Automatic loan 8,150 5,527
5 Deposit 26,417 31,944
20 NSF check 1,000 30,944
20 Service charge 600 30,344
30 interest 82 30,426
Assume that any errors or discrepancies you find are Garays, not the banks.
What is the adjusted cash balance as of April 30?

A. P26,833 C. P30,4226
B. P26,838 D P26,872
PROBLEM 12:
The following information pertains to FLINT CORP:
Flint Corp
BANK RECONCILIATION
November 31, 2012
Balance per bank statement P435,000

Less: outstanding checks
No. 4321 P6,000
4329 15,000
4340 1,700
4341 4,675 27,375
P407,625
Add: Deposit in Transit 16,200
Balance per books P423,825
CHECK REGISTER
December 2012
Date Payee No. Vouchers discount Cash
Payable
Dec. 1 San Beda, 4342 P10,000 P500 P9,500
Inc
3 Miriam Corp. 4343 4,200 - 4,200
7 UE 4344 3,755 - 3,755
Enterprises
12 PSBA Corp. 4345 12,000 120 11,880
15 Payroll 4346 96,000 - 96,000
16 BU, Inc. 4347 6,300 - 6,300
18 New Era Co. 4348 14,200 142 14,058
21 UST, Inc. 4349 7,000 - 7,000
22 Petty cash 4350 10,000 - 10,000
fund
28 Payroll 4351 98,000 - 98,000
TOTAL P261,455 P762 P260,69
3
BANK STATEMENT
BANKABLE BANK
PERIOD: November 30, 2012 December 31, 2012
No: 001-43-44
Date Description Check Debit Credit Balance
No.
Balance last P435,000
statement
Dec. 1 Cash deposit P15,000 451,200
1 Check issued 4329 9,500 P16,200 436,200
4 Check issued 4342 4,675 426,700
4 Check issued 4341 422,025
5 Check 4,200 49,000 471,025
6 Check 4343 466,825
8 Check 3,755 14,000 480,825
10 Check 4344 96,000 477,070
15 Encashment 4346 10,000 381,070
22 Encashment 4350 98,000 271,070
28 Encashment 4351 273,070
29 Debit memo 1,000 272,070
service charge
29 Credit memo- 1,550 273,620
interest
Deposits in transit at December 31 totaled P49,000.
1. What is the total book receipt for December?

A. P113,550 C. P63,000
B. P80,750 D. P112,000
2. What is the cash balance per books on December 31, 2012?
A. P275,132 C. P291,332
B. P266,132 D. P274,370
3. What is the total outstanding check on December 31, 2012?
A. P68,313 C. P46,938
B. P39,238 D. P40,938
4. What is the adjusted cash balance on November 31, 2012?
A. P446,375 C. P423,825
B. P417,825 D. P435,000
5. What is the adjusted cas354h balance on December 31, 2012?
A. P281,682 C. P226,682
B. P275,682 D. P274,920
PROBLEM 13:
EDGARDO CO. was organized on January 2, 2012. The following items are from the companys
trial balance on December 31, 2012.
Ordinary share capital P1,500,000
Share premium 150,000
Merchandise inventory 69,000
Land 1,000,000
Building 1,400,000
Furniture and fixture 367,000
Accounts receivable 165,400
Accounts payable 389,650
Notes payable-bank 500,000
Sales 6,235,200
Operating expenses (including depreciation of P400,000) 1,005,150
Additional information as follows:

1. Deposits in transit, December 31 P384,660
2. Service charges for December 2,000
3. Outstanding checks, December 31 475,000
4. Bank balance, December 31 892,000
5. Edgardo Co.s mark up on sales is 30%
1. What is the total collections from sales?

A. P6,114,967 C. P6,235,200
B. P4,119,240 D. P6,069,800
2. What is the total payments for merchandise purchases?
A. P3,905,990 C. P4,043,990
B. P4,649,140 D. P5,914,550
3. What is the total cash receipts per books?
A. P7,819,800 C. P8,219,800
B. P.8,169,800 D. P8,069,800
4. What is the total cash disbursements per books?
A. P7,816,140 C. P8,021,290
B. P7,416,140 D. P7,278,140
5. What is the cash balance per books on December 31?
A. P653,660 C. P1,203,660
B. P803,660 D. P707,060
6. What is the adjusted cash balance on December 31?
A. P801,660 C. P1,201,660
B. P651,660 D. P803,660
PROBLEM 14:
In connection with your audit of the cash account of ANNIE CROP., you gathered the following
information.
a. Balance per bank, December 1, 2012 P145,000
b. Total bank receipts (credits) in December 346,000
c. Balance per bank, December 31, 2012 114,500
d. Outstanding checks, Nov. 30, 2012 (including P12,000
paid by bank in December) 67,000
e. Outstanding checks, December 31,2012 (including
checks issued in November) 94,462
f. Deposit in transit, November 30, 2012 39,458
g. A customers check received on December 4, 2012,
was returned by bank on December 7 marked
NSF. It was redeposited on December 8, 2012.
The only entry made was to take up the collection
on December 4, 2012. 11,143
1. What is the total book receipt in December?

A. P295,399 C. P334,857
B. P306,542 D. P346,000
2. What is the total bank disbursement in December?
A. P315,500 C. P231,500
B. P376,500 D. P201,000
3. What is the total book disbursement in December?
A. P447,519 C. P403,662
B. P331,519 D. P392,519
PROBLEM 15:
Your audit of the cash account of JUNIE CORP. disclosed the following information:
1. Cash in bank balance per books, Dec. 31, 2012 P35,000
2. Bank statement balance, Dec. 31, 2012 60,000
3. Note collected by bank in December (principal plus interest
of P800, less collection fee of P200) 27,600
4. Debit memo for a checkbook ?
5. Deposit in transit, Dec. 31, 2012 15,200
6. Transportation error made by bank in recording
deposit of Dec. 28:
Recorded as 54,000 9,000
7. Erroneous bank debit
8. Included in the cash bank account is petty cash fund of P10,000.
Your count on Dec. 31, 2012, revealed the following fund items:
Currency and coins P3,000
Supplies 2,400
Transportation 100
IOUs 4,000 9,500
9. Erroneous bank debit 11,000
1. What is the principal amount of the note collected by bank in December?

A. P27,600 C. P28,200
B. P26,800 D. P27,000
2. What is the adjusted cash in bank balance at December 31, 2012?
A. P52,500 C. P53,000
B. P52,700 D. P51,900
3. The cost of checkbook is
A. P600 C. 0
B. P300 D. P100
4. What is the amount of petty cash shortage at December 31, 2012?
A. P400 C. P100
B. P500 D. P0
5. What is the adjusted petty cash balance?
A. P9,500 C. P3,000
B. P3,500 D. P10,000
PROBLEM 16:
The cash receipts and the cash payments of LIEZEL COMPANY for April 2012 follow:
Cash receipts (cr) Cash payments (cp)
Date Cash debit Check no. Cash credit
April 2 P208,700 4113 P44,500
8 20,350 4114 7,350
10 27,950 4115 96,500
16 109,350 4116 33,200
22 92,700 4117 73,600
29 53,000 4118 50,000
30 16,850 4119 31,600
TOTAL 528,900 4120 83,750
4121 5,000
4122 120,650
TOTAL P546,200
The cash account of Liezel Company shows the following information at April 30, 2012:
CASH
Date item ref. debit credit balance
April 1 balance 95,550
30 CR 6 528,900 624,450
30 CP 11 546,200 78,250
Liezel Company received the following bank statement on April 30, 2012.
Bank statement for April 2012

Beginning balance P95,550
Deposits and other
credits: P16,300 EFT
April 1
4 208,700
9 20,350
12 27,950
17 109,350
22 68,400 BC
23 92,700 543,750
Checks and other
Debits: P44,550
April 7
13 69,500
14 45,150 US
15 7,350
18 33,200
21 10,950 EFT
26 73,600
30 50,000
30 1,000 SC (335,300)
Ending balance P304,00
0
Explanation: EFT - - ELECTRONIC FUND TRANSFER
US - - unauthorized signature
BC - - bank collection
SC - - service charges
Additional data for the bank reconciliation include the following:

a. The EFT deposit was a receipt of monthly rent. The EFT debit was a monthly insurance
payment.
b. The unauthorized signature check was received form Lester Doon.
c. The P68,400 bank collection of a note receivable on April 22 included P9,250 interest
revenue.
d. The correct amount of check number 4115, a payment on account , is P69,500. (Liezels
accountant mistakenly recorded the check for P96,500.)
1. What is the amount of deposits in transit on April 30?

A. P53,000 C. P45,150
B. P69,850 D. P115,000
2. What is the amount of outstanding checks on April 30?
A. P241,000 C. P286,150
B. P337,500 D. P310,500
3. What is the amount of bank reconciliation on April?
A. P543,750 C. P459,050
B. P527,450 D. P528,900
4. What is the amount of bank disbursements in April?
A. P290,150 C. P289,150
B. P335,300 D. P316,150
5. What is the correct cash balance as of April 30?

A. P132,850 C. P122,150
B. P87,700 D. P223,150
PROBLEM 17:
FERLYN COMPANYs check register shows the following entries for the month of December:
Date Checks Deposits Balance
2012, Dec Beg. Balance P89,300
1
5 Deposit P65,000 154,300
7 Check no. P32,500 120,800
14344
11 Check no. 14,000 106,800
14345
26 Deposit 49,000 155,800
29 Check no. 8,600 147,200
14346
Ferlyns bank reconciliation for November revealed one outstanding check (no. 14343) for
P12,000 (written on November 28), and one deposit in transit for P5,550 (made on November
29).
The following is from Ferlyns bank statement for December 2012:

Date checks Deposits Balance
2012, Dec. 1 Beg. Balance P95,750
1 deposit P5,550 101,300
4 Check no. P32,500 68,800
14344
5 Deposit 56,000 124,800
14 Check no. 14,000 110,800
14345
15 Loan 500,000 610,800
proceeds
20 NSF check 7,600 603,200
29 Service 1,000 602,200
charge
31 Interest 3,600 605,800
Assume that all errors were committed by Ferlyn Company, not the bank.
Based on the preceding information, determine the following:

1. Adjusted cash balance on November 30
a. P89,300 C. P102,200
b. P95,750 D. P101,300
2. Outstanding checks on December 31
a. P46,500 C. P8,600
b. P45,500 D. P20,600
3. Deposit in transit on December 31]
a. P52,600 C. P5,550
b. P49,000 D. P43,450
4. Total bank receipts in December
a. P114,000 C. P565,150
b. P119,550 D. P61,550
5. Adjusted cash balance on December 31
a. P663,800 C. P748,200
b. P634,200 D. P597,200
PROBLEM 18:
In connection with an audit, you are given the following bank reconciliation.
BANK RECONCILIATION
December 31, 2012
Balance per ledger, December 31, 2012 P34,350
Add: Collections received on the last day of December

And charged to Cash in Bank on books but
Not deposited 5,325
Debit memo for customers check returned unpaid
(Check is on hand but no entry has been made
On the books) 4,000
Debit memo for bank service charge for December 1,000
P46,675
Deduct:
Outstanding checks (see detailed list below) P18,625
Credit memo for proceeds of a note receivable
Which had been left at the bank for
Collection but which has not been
Recorded as collected 8,000
Check for an account payable entered on books a
P12,625 but drawn and paid by bank as
P16,225 3,600 32,225
Computed balance P14,450
Unlocated diference 36,600
Balance per bank (checked to confirmation) P51,050
LIST OF OUTSTANDING CHECKS

December 31, 2012
Check No. Amount
14344 P 5,820
14358 1,295
14367 3,543
14399 2,001
14401 4,892
14407 5,074
P18,625
1. What is the correct amount of outstanding checks on December 31?

A. P18,625 C. P17,625
B. P22,625 D. P21,625
2. The journal entry to correct the outstanding checks should include a
A. Debit to Cash in bank of P4,000
B. Credit to Cash in bank of P4,000
C. Debit to accounts payable of P4,000
D. No journal entry is necessary
3. The correct amount of unlocated diference is
A. P32,600 C. P36,600
B. P35,600 D. P0
4. The Cash in bank to be shown on the companys December 31, 2012 statement of financial
position is
A. P34,750 C. P33,750
B. P37,350 D. P37,750
5. The journal entry to adjust the Cash in bank account of December 31 should be
A. Debit Cash in bank of P8,000
B. Credit to Cash in bank of P8,600
C. Net credit to Cash in bank of P600
D. Net debit to Cash in bank of P600
PROBLEM 20:
In auditing the HECTOR COMPANY, you obtained the bank statement, cancelled checks, and
other memoranda which relate to the companys bank account for December 2012. In
reconciling the bank balance with that shown on the companys books, you observed the facts
set forth below:
(1) Balance per bank statement, 12/31/12 P47,174
(2) Balance per books, 12/31/12 19,289
(3) Outstanding checks, 12/31/12 63,000
(4) Receipts of 12/31/12, deposited 1/2/13 6,260
(5) Service charge for November, per bank memo of
12/15/12 1,000
(6) Proceeds of bank loan, 12/15/12, discounted
For 3 months at 18% per annum,
Omitted from company books 47,750
(7) Deposit of 12/22/12, omitted from bank
Statement 9,170
(8) Check of Milano Company, returned on
12/21/12, for absence of counter-signature
And redeposited with complete signature on
1/3/13, no entry on the books having been
Made for the return or redeposit 77,320
(9) Error on bank statement in entering deposit of
12/18/12;
Entered in statement 160 1,440
(10) Check No. 021261 of Yek Company,
Charged by bank im error to
Companys account 13,600
(11) Proceeds of note of Harthur Co.,
Collected by bank, 12/10/12, not
Entered in cash book (principal amount of
P25,000 plus interest of P1,125, less
Collection fee) 25,625
(12) Erroneous debit memo of 12/28/12, to charge
Companys account with settlement of bank loan
Which was paid by check no. 112170 on same
Date 5,000
(13) Error on bank statement in entering
Deposit of 12/4/12:
Entered as P14,200.62
Correct Amount 12,400.62 1,800
(14) Deposit of Bunso Co. 12/02/12,
Credited in error to this company 3,500
1. What is the principal amount of the loan obtained from bank in December?
a. P50,000 c. P48,125
b. P47,750 d. P49,625
2. What amount of prepaid interest should be shown on Hectors December 31, 2012
statement of financial position?
a. P2,250 c. P375
b. P0 d. P1,875
3. The amount of collection fee is
a. P625 c. P375
b. P1,625 d. P0
4. What is the adjusted Cash in bank balance as of December 31, 2012?
a. P14,344 c. P17,944
b. P11,464 d. P9,344
5. The Cash in bank per ledger as of December 31, 2012, should be increased (decreased) by
a. P4,945 c. P(4,945)
b. P5,945 d. P(5,945)
PROBLEM 21:
You are auditing general cash for DION COMPANY for the fiscal year ended July 31, 2012. The
client has not prepared the July 31 bank reconciliation. After a brief discussion with the owner
you agree to prepare the reconciliation, with assistance from one of Dion Companys clerks.
You obtain the following information:
General Bank
Ledger Statement
Beginning balance P 46,110 P 57,530
Deposits 250,560
Cash receipts journal 254,560
Checks cleared (236,150)
Cash disbursement (218,110)
journal
July bank service charge (870)
Note paid directly (61,000)
NSF check (3,110)
Ending Balance P82,560 P 6,960
Information in General Ledger and Bank Statement

Balance per bank P57,530
Deposits in transit 6,000
Balance per books 46,110
Additional information obtained is:

1. Checks clearing that were outstanding on June 30 totaled P16,920.
2. Checks clearing that were recorded in the July disbursements journal totaled P204,670.
3. A check for P10,600 cleared the bank, but had not been recorded in the cash disbursements
journal. It was for an acquisition of inventory. Dion uses the periodic inventory method.
4. A check for P3,960 was charged to Dion Company but had been written on a diferent
companys bank account.
5. Deposits included P6,000 from June and P244,560 for July.
6. The bank charged Dion Companys account for a not-sufficient-fund check totaling P3,110.
The credit mnager concluded that the customer intentionally closed its account and the owner
left the city. The check was turned over to a collection agency.
7. A note for P58,000, plus interest, was paid directly to the bank under an agreement signed
four months ago. The note payable was recorded at P58,00 on Dion Companys book.
Based on facts given, answer the following:

1. The checks outstanding on June 30 amount to
a. P 9,980 c. P13,940
b. P10,830 d. P3,340
2. The deposits in transit on June 30 amount to
a. P6,890 c. P6,000
b. P10,000 d. P9,110
3. The adjusted cash balance on July 31 is
a. P6,980 c. P3,870
b. P10,940 d. P3,020
4. Which of the following audit procedures would be used to verify the payment of note in July?
a. Check the arithmetical accuracy of the July 31 reconciliation.
b. Check the absence of not on July 31 bank confirmation.
c. Trace payment to duplicate deposit slip.
d. Obtain cutof bank statement.
5. The auditor would perform the following procedures to verify the unrecorded check of
P10,600, except
a. Obtain cutof bank statement
b. Examine checks returned with July bank statement.
c. Trace check number to absence in July cash disbursements journal and recording in
August.
d. Examine supporting documentation.
PROBLEM 22
The cash account of VELASCO COMPANY shows the following activities:
Date Debit Credit Balance
Nov. 30 Balance P115,000
Dec. 2 November bank charges P50 114,950
4 November bank credit for
notes receivable collected P10,000 124,950
15 NSF check 1,300 123,650
20 Loan proceeds 48,500 172,150
21 December bank charges 60 172,090
31 Cash receipts book 707,300 879,390
31 Cash disbursements book 4 471,390
08,000
CASH BOOKS
RECEIPTS PAYMENTS
Date OR No. Amount Check No. Amount
Dec. 1 110-120 P11,0 801 P 2,000
00
2 121-136 21,300 802 3,000
3 137-150 20,000 803 1,000
4 151-165 56,000 804 3,000
5 166-190 39,000 805 12,000
8 191-210 66,000 806 19,000
9 211-232 88,000 807 26,000
1 233-250 77,000 808 30,000
0
1 251-275 21,000 809 61,000
1
1 276-300 30,000 810 7,000
2
1 301-309 55,000 811 8,000
5
1 310-350 8,000 812 16,
6 000
1 351-390 19,000 813 20,000
7
1 391-420 9,000 814 22,000
8
1 421-480 17,000 816 36,000
9
2 481-500 21,000 817 11,000
2
2 501-525 32,000 818 50,000
3
2 - - 819 7,000
3
2 - - 820 4,000
3
2 526-555 74,000 821 3,000
6
2 556-611 5,000 822 12,000
8
2 - - 823 13,000
8
2 612-630 38,000 824 29,000
9
2 - - 825 2,000
9
2 - - 826 11,000
9
Totals P707,
300 P408,000
BANK STATEMENT
Date Check No. Charges Credits
Dec. 1 792 P2,500 P8,500
2 802 3,000 11,000
3 - - 21,300
4 804 3,000 20,000
5 EC 81,000 81,000
8 805 12,000 95,000
9 CM 16 - 12,000
10 799 7,050 154,000
11 DM 57 1,300 77,000
12 808 30,000 21,000
15 803 1,000 -
16 809 61,000 85,000
17 DM 61 60 8,000
18 813 20,000 19,000
19 CM 20 - 48,500
22 815 6,000 -
23 816 36,000 47,000
23 811 8,000 -
23 801 2,000 -
26 814 22,000 32,000
28 818 50,000 74,000
28 DM 112 120 -
29 821 3,000 5,000
29 CM 36 - 12,000
29 820 4,000 -
Totals P353,0 P831,300
30
1. DMs 61 and 112 are for service charges.
2. EC is error corrected
3. DM 57 is for an NSF check.
4. CM 20 is for loan proceeds, net of P150 interest charges for 90 charge.
5. CM 16 is for the correction of an erroneous November bank charge.
6. CM 36 is for customers notes collected by bank in December.
7. Bank balance on December 31 is P592,270.
1. The total outstanding checks t November 30 should be

a. P9,550 c. P13,050
b. P7,050 d. P15,550
2. The total outstanding checks at December 31 should be
a. P147,000 c. P153,000
b. P16,550 d. P159,000
3. The deposit in transit at November 30 should be
a. P8,500 c. P48,500
b. P19,500 d. P0
4. The deposit in transit at December 31 should be
a. P44,000 c. P46,500
b. P0 d. P38,000
5. The adjusted book balance at November 30 should be
a. P125,000 c. P115,000
b.P124,950 d. P136,950
6. The adjusted bank receipts for the month of December should be

a. P763,800 c. P765,800
b. P773,800 d. P767,800
7. The adjusted book disbursements for the month of December should be
a. P403,480 c. P415,480
b. P415,540 d. P409,480
8. The adjusted bank balance at December 31 should be
a. P592,270 c. P558,270
b. P477,270 d. P483,270
PROBLEM 23
Shown below is the May 31, 2012, bank reconciliation prepared by your clients staf.
RECONCILIATION
May 31, 2012
Bank Balance P652,000
Add: Deposit in transit 10,000
Total P662,000
Less: Outstanding checks
No. 640 P10,000
652 8,000
653 2,000
Book Balance P570,800

Add: Proceeds of note receivable
Collected in May P70,000
Deposit on May 31 not
Recorded on books until
June 2,000 72,000
Total P642,800
Less: Bank service charge 800
Adjusted book balance P642,000
The June 2012 bank statement is shown below:

Pasig Bank
Period Covered: May 31, 2012-June 30,2012
Account No.: 0021261
Date Checks Deposits
June 1 8,000 10,000
June 8 2,000
June 11 14,000 20,000
June 13 1,000 DM 1,000
June 16 4,000
June 21 12,000 56,000
June 27 18,000
June 29 1,000 EC 1,000 EC
June 30 200 SV
June 30 3,000 DM
SV- Service Charges DM-Debit Memo

EC- Error Corrected CM- Credit Memo
The paid checks accompanying this bank statement (all clearing in June) are the following:
No. 652 P8,000 No. 654 P14,000 No.657 P12,000
No. 653 P2,000 No. 655 P4,000 No. 658 P18,000
The check register reveals that the last check issued in June is No. 659 for P5,000 and that
Check No. 656 is for P2,600.
Cash received for the period June 22 through June 30 of P70,000 was deposited in the bank on
July 1.
The debit memos on June 13 and June 30 represent customers NSF checks returned by the
bank. The June 13 NSF check was immediately redoposited without entry. The June 30 NSF was
redoposited on July 1 without entry.
1. What is the total bank receipts in June?

a. P87,000 c. P77,000
b. P88,000 d. P78,000
2. What is the total bank disbursements in June?
a. P59,200 c. P58,200
b. P58,000 d. P63,200
3. What is the balance per bank statement on June 30,2012?
a. P676,800 c. P732,400
b. P627,200 d. P729,200
4. What is the total book receipts in June?
a. P88,000 c. P146,000
b. P220,000 d. P218,000
5. What is the total book disbursements in June?
a. P53,000 c. P56,400
b. P57,400 d. P63,200
6. What is the book balance on June 30, 2012?
a. P732,200 c. P732,400
b. P729,200 d. P676,800
PROBLEM 24
The following information was obtained in an audit of the cash account of CHELSEE COMPANY
as of December 31, 2012. Assume that the CPA has satisfied himself as to the propriety of the
cash book, the bank statement, and the returned checks, except as noted:
1. The bookkeepers bank reconciliation at November 30, 2012.
Add: Deposit in transit 11,000
Total P205,000
No. 1434 P1,400
No. 1562 7,500
No. 1571 5,800
No. 1584 8,000
No. 1591 300 23,000
Balance per books P182,000
2. A summary of the bank statement for December 2012.

Balance brought forward P194,000
Deposits 1,487,000
Total P1,681,000
Charges (1,325,000)
Balance, December 31, 2012 P 356,000
3. Included in cancelled checks returned with the December bank statement were the
checks listed below.
4. The Chelsee Company discounted its own 60-day note for P90,000 with the bank on
December 1, 2012. The discount rate was 6 percent. The accountant recorded the
proceeds as a cash receipt at the face value of the note.
5. The accountant records customers dishonored checks as a reduction of cash receipts.

When the dishonored checks are redeposited they are recorded as a regular cash
receipt. Two NSF checks for P1,800 and P2,200 were returned by the bank during
December. Both checks were redopsited and were recorded by the accountant.
6. Cancellations of Chelsee Company checks are recorded by a reduction of cash

disbursements.
7. December bank charges were P200. In addition, a P100 service charge was made in
December for the collection of a note receivable in November. These charges were net
recorded on the books.
8. Check No. 1434 listed in the November outstanding checks was drawn by 2010. Since
the payee cannot be located, the president of Chelsee Company agreed to the CPAs
suggestion that the check be written back into the accounts by a journal entry.
9. Outstanding checks at December 31, 2012, totaled P49,400, including checks 1434 and
1584.
10.The cutof bank statement disclosed that the bank had recorded a deposit of P24,000 on
January 2, 2013. The accountant had recorded this deposit on the books on December
31, 2012, and then mailed the deposit to the bank.
Cancelled Checks Returned with the December Bank Statement

Numb Date of Amount of Comments
er Check Check
1562 11/28/12 P750 This check was in payment of an invoice for
P7,500 and was recorded in the cash book as
P7,500.
1571 11/28/12 5,800 This check was in payment of an invoice for

P5,800 and was recorded in the cash book as
P5,800.
1583 12/04/12 1,500 Examination of this check revealed that it was

unsigned. A discussion with the client disclosed
that it had been mailed inadvertently before it
was signed. The check was endorsed and
deposited by the payee and processed by the
bank even though it was a legal nullity. The
check was recorded in the cash disbursements
journal.
1588 12/12/12 8,000 This check replaced 1584, which was returned
by the payee because it was mutilated. Check
1584 was not cancelled on the books
--- 12/19/12 2,000 This was a counter check drawn at the bank by
the president of the company as a cash
advance for travel expense. The president
overlooked informing the bookkeeper about the
check.
--- 12/20/12 3,000 The drawer of this check was the Chelsee
Company.
1595 12/20/12 3,500 This check had been labeled NSF and returned
to the payee because the bank had erroneously
believed that the check was drawn by the
Chelsee Company. Subsequently, the payee was
advised to redeposit the check.
1599 01/05/13 100,000 This check was given to the payee on December
30, 2012, as a postdated check with the
understanding that it would not be deposited
until January 5. The check was not recorded on

the books in December.
1. What is the correct amount of outstanding checks on December 31?

a. P41,400 c. P48,000
b. P33,250 d. P40,000
2. What is the amount of cash receipts per book in December?
a. P1,496,900 c. P1,495,100
b. P1,504,900 d. P1,487,000
3. What is the amount of cash disbursements per book in December?
a. P1,254,850 c. P1,256,850
b. P1,252,850 d. P1,248,850
4. What is the cash in bank balance per book of December 31?
a. P426,050 c. P430,050
b. P428,250 d. P343,200
5. What is the adjusted balance as of December 31?
a. P343,000 c. P347,000
b. P340,000 d. P344,200
PROBLEM 25
The following information was obtained in connection with the audit of PINKY COMPANYS cash
account as of December 31, 2012.
Outstanding checks, 11/30/12 P16,250

Outstanding checks, 12/31/12 12,500
Deposit in transit, 11/30/12 12,500
Cash balance per general ledger 12/31/12 37,500
Actual company collections from its customers during 152,500
December
Company checks paid by bank in December 130,000
Bank service charges recorded on company books in 2,500
December
Bank service charges per December bank statement 3,250
Deposits credited by bank during December 145,000
November bank service charges recorded on company
books in December 1,500
The cash receipts book of December is underfooted by P2,500.

The bank erroneously charged the companys account for a P3,750 check of another
depositor. This bank error was corrected in January 2013.
1. How much is the deposit in transit on December 31, 2012?

a. P5,000 c. P22,500
b. P20,000 d. P17,500
2. The total unrecorded bank service charges as of December 31, 2012 is
a. P750 c. P1,750
b. P2,250 d. P4,250
3. What is the total book receipts in December?
a. P150,000 c. P155,000
b. P152,500 d. P147,500
4. What is the total amount of company checks issued in December?
a. P130,000 c. P133,750
b. P123,000 d. P126,250
5. What is the total book disbursements in December?
a. P123,750 c. P126,250
b. P128,500 d. P128,750
6. What is the book balance on November 30, 2012?
a. P16,250 c. P37,500
b. P21,250 d. P35,000
7. What is the bank balance on November 30,2012?
a. P23,000 c. P43,500
b. P18,500 d. P16,250
8. What is the total bank receipts in December?
a. P120,000 c. P145,000
b. P140,000 d. P150,000
9. What is the total bank disbursements in December?
a. P154,500 c. P129,500
b. P132,500 d. P137,000
10.What is the bank balance on December 31, 2012?
a. P21,500 c. P31,000
b. P26,500 d. P33,250
PROBLEM 26
In your audit HARRY INCs cash account as of December 31, 2012, you ascertain the following
information:
The bookkeepers bank reconciliation on November 30, 2012, is as follows:
Balance per bank statement, November 30 P24,298
Add: Deposits in transit 3,648
Total P27,946
No. 3408 P 440
No. 3413 300
No. 3414 6,820
No. 3416 3,924
No. 3417 800 12,284
Balance P15,662
Add: Bank service charge for November 36*
Balance per general ledger, November 30 P15,698
*Entered in Check Register in December
The Cash Receipts Journal shows total receipts for December of P371,766. The Check Register
reflects total checks issued in December of P377,632. A collection of P5,912 was recorded on
company books on December 31 but was not deposited until January 2, 2013.
The balance per bank statement at December 31, 2012 is P17,516. This statement shows total
receipts of P373,502 and checks paid of P380,284.
Your examination reveals the following additional information:

1. Check No. 3413 dated November 24, 2012, was entered in the Check Register as P300. Your
examination of the paid checks returned with the December bank statement reveals that the
amount of this check is P30.
2. Check No. 3417 was mutilated and returned by the payee. A replacement check (no. 3453)
was issued. Both checks were entered in the Check Register but no entry was made to cancel
check no. 3417.
3. The December bank statement includes an erroneous charge of P480.
4. On January 3, 2013, the bank informed your client that a December bank service charge of
P42 was omitted from statement.
5. Your examination of the bank credit memo accompanying the December bank statement
discloses that it represents proceeds from the note receivable collection in December for
P4,000.
6. The outstanding checks at December 31, 2012, are as follows:
No. 3408 P440 No. 3418 P2,814
No. 3417 800 No. 3419 5,788
1. What is the total book disbursements for the month of December?

a. P377,668 c. P377,632
b. P377,710 d. P377,596
2. What is the book balance at December 31?
a. P9,832 c. P9,754
b. P9,868 d. P9,796
3. The outstanding checks at December 31 totaled
a. P8,602 c. P9,042
b. P9072 d. P9,796
4. What is the adjusted bank balance on November 30?
a. P16,690 c. P16,804
b. P16,732 d. P16,774
5. The adjusted book receipts for the monthe of December should be
a. P375,724 c. P371,238
b. P371,766 d. P375,766
6. The adjusted book disbursements for the month of December should be
a. P377,590 c. P377,674
b. P377,662 d. P377,632
7. What is the adjusted book balance on December 31?
a. P14,824 c. P14,908
b. P14,866 d. P14,782
8. A proof of cash used by an auditor
a. Provides that the clients year-end balance of cash is fairly stated.
b. Confirms that the client has properly separated the custody function from the
recording function with respect to cash.
c. Validates that the clients bank did not make an error during the period being
examined.
d. Determines whether any unauthorized disbursements or unrecorded deposits were
made for the given time period.
PROBLEM 27
The following data are assembled by the accountant of the HAROLD COMPANY:
Nov. 30, 2012 Dec. 31,
2012
Cash account balance P41,175.00 P100,712.50
Bank statement balance 267,705.00 344,542.50
Deposits in transit 20,502.00 32,200.00
Outstanding checks 69,295.00 75,280.00
Bank service charges 1,800.00 1,500.00
NSF check* 20,625.00
Companys notes receivable collected 179,53 202,250.00
by bank 7.50
*Redeposited in the same month. No entries made to take up the return and redeposit.
The bank statement and the companys cash records show the following totals:
Cancelled checks and debit memos per bank statement P545,932.50
Cash receipts per cash book 411,592.50
Checks written per cash book 529,792.50
Deposits and credit memos per bank statement 622,770.00
1. What is the total book receipt in December?

a. P613,842.50 c. P411,592.50
B. P591,130.00 d. P580,330.00
a. P531,592.50 c. P533,092.50
b. P529,792.50 d. P531,292.50
3. What is the adjusted book balance on November 30?
a. P220,712.50 c. P218,912.50
b. P222,512.50 d. P217,412.50
4. The adjusted bank receipts in December should be
a. P634,168.50 c. P632,667.50
b. P622,770.00 d. P634,467.50
5. The adjusted book disbursements in December should be
a. P545,932.50 c. P548,917.50
b. P552,517.50 d. P551,917.50
a.P301,462.50 c. P322,087.50
b. P302,662.50 d. P280,537.50
PROBLEM 28
The auditor of TSIKOY COMPANY gathered the following information.
1. The November 30 bank statement balance included bank service charges P2,000.
2. The November 30 cash balance in the general ledger was P244,500.
3. Outstanding checks on November 30 were P63,000 while undeposited receipts were
P36,000.
4. The bank service charges as shown on the bank statement totaled P3,000.
5. The December 31 cash balance in the general ledger was P319,750, which recognized
P482,750 for December receipts and P405,500 for checks written during December. In
transit to the bank were receipts of P28,750. Checks of P15,000 written to prior to
December and checks of P60,500 written in December had not yet cleared the bank.
1. What is the total book disbursement for December?

a. P403,500 c. P407,500
b. P404,500 d. P405,500
2. What is the November 30 bank balance?
a. P271,500 c. P268,500
b. P269,500 d. P266,500
a. P490,000 c. P497,250
b. P482,750 d. P488,000
4. What is the total bank disbursements in December?
a. P419,000 b. P408,500
b. P405,500 d. P396,000
5. What is the bank balance on December 31?
a. P316,750 b. P322,750
b. P363,500 c. P366,500
PROBLEM 29
RODELIO CO. has a current account in Pinoy Bank. Your audit or the companys cash account
reveals the following:
1. Balances taken from the companys general ledger:
Cash balance, Nov. 30, 2012 P637,860
Cash balance, Dec. 31, 2012 576,420
Receipts, Dec. 31, 2012 306,220
2. Balances taken from the December bank statement:
Bank balance, Nov. 30, 2012 P685,180
Bank balance, Dec. 31, 2012 637,220
Disbursements (debits) 356,080
3. Outstanding checks, Nov. 30, 2012 (P26,140 was
Paid by bank in December) 64,140
4. Checks written and recorded in December: not
Included in the checks returned with the
December bank statement 36,080
5. Deposit in transit, Nov. 30, 2012 15,260
6. Deposit in transit, Dec. 31, 2012 16,140
7. A bank credit memo was issued in December to
Correct an erroneous charge made in November 1,500
8. Note collected by bank in December
(company was not informed of the collection) 2,060
9. A check for P2,020 (payable to a supplier) was
Recorded in the Check Register in December as P3,000 980
10.A check for P2,240 was charged by the bank as P2,420 in
December 180
11.Rodelio Co. issued a stop payment order to the bank in
December. This pertains to a check written in
December which was not received by the payee.

A new check was written and recorded in the
Check register in December. The old check was
Written of by a journal entry also in December. 780
12.Bank service charge, Nov. 30, 2012 60

a. P367,660 c. P369,720
b. P244,780 d. P368,540
a. P260,160 c. P306,060
b. P308,120 d. P309,020
3. What is the total outstanding checks on December 31?
a. P100,220 c, P62,220
b. P38,000 d. P74,080
4. What is the adjusted bank balance on November 30?
a. P636,300 c. P637,800
b. P685,180 d. P634,800
5. What is the adjusted book receipts in December?
a. P307,500 c. P303,380
b. P306,220 d. P305,440
6. What is the adjusted bank disbursements in December?
a. P353,980 c. P345,960
b. P365,840 d. P366,020
a. P577,500 c. P576,420
b. P577,400 d. P579,460
PROBLEM 30
Data for the ANNABELLE, INC. are shown below:
Nov. 30 Dec. 31
Cash account balance P20,340 P48,540
Bank statement balance 107,060 137,820
Deposits in transit 8,200 12,880
Outstanding checks 27,700 30,100
Bank service charges for the month, not shown
on company books 720 600
NSF checks returned by bank, not shown on
company books 4,300 8,240
Bank collections from company customers, not
shown on company books 72,240 80,900
1. Deposits and credit memos per bank statement P249,100
2. Cancelled checks and debit memos per bank statement 218,340
3. Cash receipts per cash book 172,880
4. Checks written per cash book 211,900
1. What is the total book receipts in December?

a. P172,880 c. P253,780
b. P245,120 d. P181,540
a. P211,900 c. P211,180
b. P216,200 d. P216,920
3. What is the adjusted cash balance on November 30?
a. P89,000 c. P71,160
b. P87,560 d. P96,160
4. What is the adjusted cash balance on December 31?
a. P120,600 c. P137,080
b. P94,840 d. P155,040
5. What is the adjusted book receipts in December?
a. P253,780 c. P244,420
b. P236,460 d. P270,180
6. What is the adjusted bank disbursements in December?
a. P215,940 c. P248,440
b. P220,740 d. P204,260
PROBLEM 31
The bookkeeper-cashier of the TANYING COMPANY absconded on the evening of April 16, 2013,
apparently with a large portion of the companys cash. He had taken with him certain
accounting records, including the cash journals and the general ledger. You are called upon to
ascertain, if possible, the shortage with which the missing employee may be charged.
You obtained the following information from the available subsidiary journals, ledgers, and
other data.
Balances at close of business, April16, 2013:

Accounts receivable P442,550
Accounts payable 207,300
Cash in bank, less checks outstanding 98,830
Transactions, January 1_April 16, 2013:
Sales, per receivable clerk P5,876,170

Cash sales none
Sales allowances in customers accounts 18,330
Cash purchase of furniture, per dealers invoice 3,000
Total merchandise purchases 3,615,260
Expenses paid, supported by paid invoices and payrolls 1,865,830
Cash dividend declared, P50,000 (of which, P10,000 remains 40,000
unpaid)
A check for P100,000 had been cashed by the bookkeeper shortly before hid departure.
Although the signature on the check had been obviously forged, it was paid by the bank and
returned with other cancelled checks.
A statement of financial position prepared from the books and other files follows:
Tanying Company
Statement of Financial Position
December 31, 2012
ASSETS
Cash P32,670
Inventory (at cost) 440,350
Furniture P74,560
Less: Accumulated 31,800 42,760
depreciation
Total assets P742,010
LIABILITIES AND SHAREHOLDERS EQUITY

Account payable P114,720
Share capital 500,000
Retained earnings 127,290
Total liabilities and shareholders equity P742,010
1. What is the total amount paid for merchandise purchases?

a. P3,615,260 c. P3,522,680
b. P3,293,240 d. P3,707,840
2. What is the total amount of collections from sales?
a. P5,641,520 c. P6,074,160
b. P5,659,850 d. P6,092,490
3. What is the total amount of cash disbursements from January 1-April 1, 2013?
a. P5,524,090 c. P5,431,510
b. P5,202,070 d. P5,432,510
4. What is the cashiers accountability (correct cash balance before shortage) on April 15,
2013?
a. P242,680 c. P143,850
b. P98,830 d. P43,850
5. What is the amount of cash shortage chargeable against the cashier?
a. P100,000 c. P143,850
b. P43,850 d. P242,680
PROBLEM 32
The JUNNEL COMPANY had weak internal controls over its cash transactions. Facts about its
cash position at November 30, 2012 were as follows:
The cash books showed a balance of P94,508, which included undeposited receipts. A credit of
P500 on the banks records did not appear on the books of the company. The balance per bank
statement was P77,750. Outstanding checks were no. 8420 for P581, no. 8422 for P750, no.
8430 for P1,266, no. 8621 for P954, no. 8623 for P1,034, and no. 8632 for P726.
The cashier stole all undeposited receipts in excess of P18,972 and prepared the following
reconciliation:
Balance per books, Nov. 30, 2012 P94,508
Add: Outstanding checks
8621 P 954
8623 1,034
8632 726 2,214
96,722
Less: Undeposited receipts 18,972
Balance per bank, Nov. 30, 2012 77,750
Less: Unrecorded credit 500
True cash, Nov. 30, 2012 P77,250
1. What is the correct amount of cash that should be on hand for deposit on November 30,
2012?
a. P23,069 c. P22,569
b. P18,972 d. P22,069
2. How much was stolen by the cashier?
a. P3,597 c. P4,097
b. P3,097 d. P0
3. The cashier attempted to conceal his theft by
I. Not listing all outstanding checks.
II. Underfooting outstanding checks shown on the reconciliation.
III. Adding an item to the bank balance that should be deducted from the book
balance.
a. I and II only c. I and III only
b. II and III only d. I, II, and III
4. Taking only the information given, which of the following internal control deficiencies allowed
the cashier to steal cash and conceal his theft?
a. The cashier is also responsible for preparing the reconciliation.
b. No one other than the cashier is responsible for tracing cash receipts to the deposits
in the bank.
c. Both a and b
d. Neither a nor b.
5. What is the adjusted cash balance as of November 30, 2012?
a. P95,008 c. P94,008
b. P91,411 d. P87,814
PROBLEM 33
Presented below is the cash receipts book of APPLE INC.:
CASH RECEIPTS BOOK

June 1-30, 2012
Date Accounts Cash Sales Net Cash
Receivab Sales Discoun
The le t following are
the June 1 Cash Sales P800 P800 companys
10 BA P3,200 P64 3,136 accounts
15 BO 6,000 120 5,880 receivable
20 BE 4,800 96 4,664 subsidiary
20 Cash Sales 2,400 2,400 ledgers. All the
25 BU 10,800 216 10,504 debits
26 BO 4,000 4,000 represent
26 BE 12,000 240 11,680 sales. The
30 BO 3,600 3,600 credit terms
are 30 BA 800 800 2%-10 days,
net P45,200 P3,200 P936 P47,464 30 days.
BA BO
June 3 3,200 June 10 June 2 6,000 June 15
3,200 6,000
4 4,800 30 9 4,000 26
800 ,000
15 3,600 30
3,600
BU BE
June 2 6,000 June 25 June 15 4,800 June 20
10,800 4,800
10 4,800 16 12,000 26
12,000
1. What is the correct amount of cash receipts in June?

a. P47,000 c. P48,000
b. P47,000 d. P47,664
2. What is the cash shortage on June 30?
a. P336 c. P200
b. P0 d. P536
PROBLEM 34
You started the audit of the financial statements of ARCHIE, INC. on January 15, 2013, for the
year ended December 31, 2012. The general ledger shows cash account balance P247,200 as
at December 31, 2012.
The following items are included in December 31, 2012, reconciliation prepared by the cashier:
Cash per records, December 31, 2012 P247,200
Cash per bank statement, December 264,095
31, 2012
Check of Tsikoy Co., charged by bank in
error on December 28, 2012:
corrected by bank on January 2, 2013 750
Deposit in transit 3,500
From January 2, 2013 to January 15, 2013, the date of your cash count, total cash receipts
appearing in the cash records amounted to P53,500. During the same period, the bank had
credited total deposits of P47,965. The following cash and cash items were on hand at the
close of business on January 15, 2013:
Currency P1,425
Customers checks 1,950
Expense vouchers 375
P3,750
Your further investigation revealed the following:

a. Cash received on account from customers:
DATE AMOUNT ENTRY MADE
07/05/1 P4,000 Allowance for bad debts 4,00
2 Accounts receivable 0 4,000
12/10/1 3,000 Inventory 3,00
2 Accounts receivable 0 3,000
12/15/1 3,500 Not recorded

2
b. Unrecorded but deposited checks received from customers from January 2, 2013 to
January 15, 2013 totaled P2,000.
c. The cashier presented receipts for collections from customers on January 10, 2013
totaling P4,500: these were recorded and undeposited.
1. What adjusting entries would you provide for item (a) through (c)?
2. What is the total cash shortage as of December 31, 2012?
a. P21,180 c. P14,680
b. P16,180 c. P4,180
3. What is the total cash shortage as of January 15, 2013?
a. P26,465 c. P27,965
b. P18,430 d. P24,930
PROBLEM 35
The LEINOR COMPANY does not have adequate controls over its cash transactions. During an
audit, you found the following data concerning its cash position at December 31, 2012.
1. On the companys record the cash balance is P173,500.
2. A credit of P2,500 for a note collected by the bank does not appear on the companys
records.
3. The bank statement balance is P135,000.
4. Outstanding checks are as follows:
NUMBER AMOUNT
1428 P5,200
1431 3,600
1445 4,080
1446 3,460
The cashier made the following reconciliation:

Deduct: Outstanding checks:
No. 1431 P3,600
No. 1445 4,080
No. 1446 3,460 10,140
P124,860
Add: Undeposited collections (per count) P46,140
Collected note 2,500 48,640
Cash per books, December 31, 2012 P173,500
1. What is the total shortage?

a. P11,200 c. P5,000
b. P8,700 d. P6,000
2. How did the cashier attempt to conceal the shortage?
PROBLEM 36
The following table summarizes the cash receipts and disbursements of LOI COMPANY for the
last six months of 2012:
MONTH RECEIPTS DISBURSEMEN
TS
July P102,000 P60,000
August 70,000 110,000
September 120,000 68,000
October 172,000 92,000
November 260,000 122,000
December 280,000 180,000
P964,000 P668,000
1. Bank balance, July 1, 2012 P200,000
2. Bank balance, December 31, 2012 524,000
3. Outstanding checks, December 31, 2012 42,000
(No checks were outstanding on July)
4. Undeposited receipts, December 31, 2012 24,000
(included in the December receipts)
5. Bank deposits, July 1 through December 31 914,000
What is the total shortage?

a. P0 c. P30,000
b. P76,000 d. P66,000
PROBLEM 38
JAM COMPANYS unadjusted trial balance at December 31, 2012, included the following
accounts:
DEBIT CREDIT
Cash P 69,200
Merchandise 947,160
inventory
Accounts payable P789,715
Accrued expenses 13,21
4
Jam Co.s year-end is December 31. At the end of 2012, it held its cash book open so that its
statement of financial position would show a more favorable financial condition. Your audit
revealed the following items:
1. The December cash book included January cash receipts of {65,460, of
which P36,010 represents cash sales and P29,450 represents collections
from customers, net of 5% cash discounts.
2. The December check register included payments of accounts to suppliers
of P37,240 on which discounts of P1,240 were taken.
3. The merchandise inventory account balance was determined by physical
count on December 31, 2012.
1. What are Jams working capital and current ration at December 31, 2012, based on balances
per company books?
WORKING CAPITAL CURRENT RATIO

a. P316,081 1.42
b. P316,081 1.39
c. P329,295 1.42
d. P329,295 1.39
2. What are Jams correct working capital and current ratio at December 31, 2012?
WORKING CAPITAL CURRENT RATIO
a. P244,381 1.29
b. P278,831 0.33
c. P330,835 1.40
d. P280,381 1.33
PROBLEM 39
FE COMPANY, organized on March 1, 2012, has a very poor internal control system. The
companys cashier is also its accountant. After 9 months of operations, the companys
manager suspects that the cashier-accountant has been misappropriating company
collections. You have been engaged to audit the companys accounts to determine the extent
of fraud, if any.
You started the audit on November 15. On that date, the cash on hand per your surprise count
was P5,140. Also on that date, the bank confirmed that the balance of the companys current
account was P26,328.Your examination of the records reveals that a check for P1,852 was
outstanding on November 15. The companys mark up is 40% of sales.
Further examination of the companys records reveals the following balances at November 15,
2012:
Ordinary share capital P300,000
Share premium 20,000
Real property purchased for cash 200,000
Mortgage payable 80,000
Furniture and fixtures (of the acquisition cost,
P6,000 remains unpaid as of Nov. 15) 29,000
Notes payable-bank 32,000
Accounts payable-trade 46,281
Expenses paid (excluding purchases) 60,756
Merchandise inventory at cost 93,920
Accounts receivable-trade 85,380
Total sales P340,000
1. How much was paid for inventory purchases?
a. P157,716 c. P183,636
b. P293,716 d. P251,636
2. How much was collected from customers?
a. P118,620 c. P50,620
b. P254,620 d. P340,000
3. How much is the cashiers accountability at November 15, 2012?
a. P131,228 c. P145,228
b. P83,228 d. P151,228
4. What is the adjusted bank balance as of November 15, 2012?
a. P31,468 c. P29,616
b. P26,328 d. P23,040
5. The cash shortage as of November 15, 2012 totaled
a. P121,612 c. P127,612
b. P101,612 d. P206,992
PROBLEM 40
Your client, a successful small business, has never given much attention to a sound internal
control. In its employ is Alex Coopit, the companys cashier-bookkeeper. Alex handles cash
receipts, makes small disbursements from cash receipts, maintains accounting records, and
prepares the monthly bank reconciliation.
The bank statement for the month ended March 31, 2012, show a cash balance of P590,000.
The following checks are outstanding on March 31:
No. 7163 P 8,623
No. 7284 7,320
No. 7285 10,612
No. 8722 6,322
No. 8724 12,280
No. 8733 6,200
The companys general ledger shows a cash balance of P696,499 on March 31, 2012.
Realizing that being the cashier-accountant of the company he can easily misappropriate
collections and conceal it, Alex removed all the cash on hand in excess of P127,301, and then
prepared the following reconciliation in an efort to conceal this theft.
BANK RECONCILIATION
Balance per accounting records P696,499
Add: Outstanding checks
No. 8722 P 6,322
No. 8724 12,280
No. 8733 6,200 20,802
Total 717,301
Deduct: Cash on hand 127,301
Balance per bank statement, March P590,000
31
1. How much was taken by the cashier-accountant?

a. P30,555 c. P4,000
b. P157,856 d. P26,555
2. What is the amount of cash that should be on hand at November 15, 2012?
a. P127,301 c. P157,856
b. P131,301 d. P30,555

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COLLEGE OF BUSINESS EDUCATION AND ADMINISTRATION

Undeposited customer checks of P22,200 (including a customer check dated January 2,

Less: Overdraft with the Bank of Manila secured by a chattel

1) How much is the petty cash shortage overage?

B. Office supplies expense 3,460

Bills and Coins:

Postage Stamps (unused) - P365

Other items found inside the cash box:

Cash Advance received on Dec.23 P20,000

Accounted for as follows:

1. What is the amount of shortage due from the sales manager?

Petty cash Fund

Disbursements Receipts Balance

ABX, Inc.s Cash Account

1. What is the amount of petty cash shortage?

What is the adjusted cash balance on April 30?

What is Emil Corporation correct cash balance at March 31?

What is the adjusted cash balance at June 30, 2012?

What is the cash balance per bank?

What should be the correct cash balance?

What is the total outstanding check at June 31, 2012?

Answer the questions relating to each of the seven situations. . .

2012, April Item checks deposits balanc

The following is from Garays Bank statement for April:

What is the adjusted cash balance as of April 30?

Balance per bank statement P435,000

1. What is the total book receipt for December?

Additional information as follows:

1. What is the total collections from sales?

on December 4, 2012. 11,143

1. What is the total book receipt in December?

1. What is the principal amount of the note collected by bank in December?

Bank statement for April 2012

Additional data for the bank reconciliation include the following:

1. What is the amount of deposits in transit on April 30?

5. What is the correct cash balance as of April 30?

The following is from Ferlyns bank statement for December 2012:

Based on the preceding information, determine the following:

December 31, 2012

Balance per ledger, December 31, 2012 P34,350

Add: Collections received on the last day of December

LIST OF OUTSTANDING CHECKS

1. What is the correct amount of outstanding checks on December 31?

Information in General Ledger and Bank Statement

Additional information obtained is:

Based on facts given, answer the following:

1. The total outstanding checks t November 30 should be

6. The adjusted bank receipts for the month of December should be

Book Balance P570,800

The June 2012 bank statement is shown below:

SV- Service Charges DM-Debit Memo

1. What is the total bank receipts in June?

2. A summary of the bank statement for December 2012.

5. The accountant records customers dishonored checks as a reduction of cash receipts.

6. Cancellations of Chelsee Company checks are recorded by a reduction of cash

Cancelled Checks Returned with the December Bank Statement

1571 11/28/12 5,800 This check was in payment of an invoice for

1583 12/04/12 1,500 Examination of this check revealed that it was

until January 5. The check was not recorded on

1. What is the correct amount of outstanding checks on December 31?

Outstanding checks, 11/30/12 P16,250