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Tarlac State University - College of Business & Accountancy Accountancy Department – Quiz No.

2 (FAR 0)
Name: _________________________________________ Section: ____________ Score:____________
PART 1 Directions: Encircle the letter choice that corresponds to your answer. Erasures on the letter choices shall render
your answers invalid.

1. In the absence of bank reconciling items, [A] the book balance is the adjusted balance [B] the book balance is higher than the
bank balance [C] the bank balance is the adjusted balance [D] the bank balance is higher than the book balance

2. At the end of 2018, the Company’s accountant prepared a check for a supplier which was not recorded and not delivered to the
latter. In preparing the reconciliation statement under the adjusted balance method, the accountant treated the check as part of
the outstanding checks and deducted the same from the unadjusted bank statement balance. Was the check treated properly in
the preparation of bank reconciliation? [A] Yes, because the check is undelivered [B] No, the check should be added to the
unadjusted bank statement balance [C] No, the check should be added back to the unadjusted cash in bank balance per book
[D] No, the check is not a reconciling item in either records

3. Under the fluctuating fund system of accounting for petty cash fund, which of the following entries would most likely not be
recorded? [A] charges against the fund [B] replenishment of the fund [C] adjusting entry at year end for unreplenished charges
[D] increase or decrease in the fund

4. How should deposit in transit and NSF customer check be treated under the book to bank reconciliation method? [A] added,
deducted [B] deducted, deducted [C] added, added [D] deducted, added

5. RGP Co. issued a check to a supplier for Php 100,000, the correct amount, which was erroneously recorded in its record for
Php 10,000. Upon presentment of the same check for encashment, the bank, in error, charged it to the account of RPG Co.
How should the error be corrected? [A] The unadjusted cash in bank balance per bank should be increased by Php 90,000. [B]
The cash in bank balance per depositor’s record should be increased by Php 90,000. [C] The unadjusted cash in bank balance
per bank should be decreasedby Php 100,000 [D] The cash in bank balance per depositor’s record should be decreasedby Php
100,000

6. Which of the following post-dated checks, if recorded, should be added back to cash as at year-end? [A] those issued to
suppliers [B] those received from customers [C] both A & B [D] neither A nor B

7. The following items are part of cash and cash equivalents except [A] preference shares with mandatory redemption date of 3
months or less [B] savings deposit set aside for the acquisition of land which will be disbursed within 1 month after the cut –
off reporting period [C] unrestricted compensating balance related to a long-term loan [D] sinking fund set aside for the
payment of a current liability

8. How should a legally restricted compensating balance related to a short-term loan be presented on the face of the statement of
financial position? [A] part of cash and cash equivalents [B] part of cash and cash equivalents with appropriate disclosure on
the restriction [C] part of current assets, separately as “cash held as compensating balance” [D] not given

9. In the preparation of a proof of cash under the adjusted balance method, how should the deposits in transit for the previous
month and deposits in transit for the current month be adjusted to the unadjusted bank receipts for the current month,
respectively? [A] added, deducted [B] deducted, deducted [C] deducted, added [D] added, added

10. If the adjusted cash in bank balance is more than the cash balance per depositor’s ledger and neither the depositor nor the bank
committed any error during the period, which of the following reconciling items will most probably support such a case? [A]
deposit in transit [B] proceeds of loan credited by the bank to the depositor’s account [C] NSF customer check charged by the
bank against the account of the depositor [D] outstanding checks

PART 2 Directions: Provide all answers and necessary solutions on your worksheet or columnar papers.

Problem No. 1
The cash account of NO FERA Company on December 31, 2018 includes the following:
Cash on hand 200,000
Petty cash fund (imprest balance) 20,000
BDO – current account 800,000
BPI – current account (net of bank overdraft) 590,000
China Bank - time deposit, 90 days 500.000
Government treasury bills 600,000
Sinking fund 800,000
Total 3,010,500

 Cash on hand does not include the following items:


 Customer check for Php 10,000 received on January 10, 2019 dated December 22, 2018.
 Postal money order amounting to Php 5,000.

 The petty cash fund was replenished on December 31, 2018. Prior to its replenishment, the fund was found to include the
following:
Currency and coins 5,000
Employee IOUs 3,000
Unreplenished vouchers for miscellaneous expenses 12,000
Total 20,000

 The balance of the BDO current account reflected in the cash account summary was taken from the bank statement
which was received from BDO few days after the end of 2018. The following items were noted in relation to the BDO
current account as at year-end:
 Check written for the correct amount of Php 35,000, dated and delivered on December 26, 2018 and cleared through
the bank on December 28, 2018. The check was incorrectly recorded in the cash disbursements journal of the
depositor in the amount of Php 53,000 but was correctly paid by the bank.
 Checks written for Php 100,000, dated and delivered to payees during the year 2018. The checks were not yet
presented for encashment or payment in the bank as at December 31, 2018. Half of the aforementioned checks were
already certified by the bank while the other half were considered long outstanding and were rendered stale by the
bank.

 The overdrawn current account with IBP bank amounting to Php 10,000 was offset against the BPI current account as at
year-end.

 The time deposit with China Bank was placed on October 10, 2018 and is set aside for the acquisition of a factory
machine in early January 2019.

 The government treasury bills pertain to 1-year debt securities which are scheduled to mature on February 01, 2019. The
investments were acquired by NO FERA on January 31, 2018.

 The sinking fund is intended to be used in the settlement of a bond liability which is due for redemption on June 30, 2020.

REQUIRED:
1. Adjusted Cash on Hand balance as at December 31, 2018
2. Adjusted Petty Cash Fund balance as at December 31, 2018
3. BDO current account, adjusted balance as at December 31, 2018
4. BPI current account classified as part of cash and cash equivalents, adjusted balance as at December 31, 2018
5. Total cash as at December 31, 2018
6. Total cash equivalents as at December 31, 2018.
7. Total adjusted cash and cash equivalents as at December 31, 2018

Problem No. 2
The following information related to cash were provided by CASHA-KEITH Company as at December 31, 2018:
Correct cash in bank balance 890,000
Outstanding checks (excluding certified checks of Php 50,000) 350,000
Deposit in transit 200,000
Bank charges not yet taken up in the book 5,000
Understatement in recording a check payment in the cash disbursements journal of the depositor 90,000
Erroneous bank debit during the month of December 25,000
Proceeds of customer note credited by the bank to the account of the depositor during the month of December 80,000
Cash on hand (excluding a customer post-dated check of Php 10,000) 40,000
Petty cash fund (net of unreplenished expense vouchers of Php 5,000) 15,000

REQUIRED:
8. Cash in bank balance per bank statement as at December 31, 2018
9. Cash in bank balance per depositor’s ledger as at December 31, 2018
10. Total cash to be presented in the statement of financial position as at December 31, 2018

Problem No. 3
DITOC Company prepared the following bank reconciliation on November 30:
Balance per bank statement 1,750,000 Balance per book 1,795,000
Deposit in transit 150,000 Note collected by bank 50,000
Outstanding checks (60,000) Bank service charge (5,000)
Correct cash balance 1,840,000 Correct cash balance 1,840,000

Data for the month of December:


PARTICULARS BANK DEPOSITOR PARTICULARS BANK DEPOSITOR
Deposits recorded 880,000 820,000 Service charge – Dec 10,000
Checks recorded 810,000 795,000 Note collection by bank – Nov 50,000
Service charge – Nov 5,000 Note collection by bank – Dec 70,000

REQUIRED:
11. Deposit in transit, December 31
12. Outstanding checks, December 31
13. Cash in bank balance per bank statement as at December 31, 2018
14. Cash in bank balance per depositor’s ledger as at December 31, 2018
15. Adjusted cash in bank balance, December 31