1.

Accounts
Receivable

Date
1-Jun Cash
Sales
10-Jun ba
15-Jun bo
20-Jun be
20-Jun Cash
Sales
25-Jun bu

Cash
Sales

Sales
Discoun
t

Net
Cash

800

800

3200
6000
4800

64
120
96

3136
5880
4664
2400

10800

216

26-Jun bo
26-Jun be

4000
4000

240

1050
4
4000
1168
0

30-Jun bo
30-Jun ba

12000
3600
45200

2400

3600
3200

800
4746
4

936

The Following are the company's accounts receivable subsidiary

ledgers. All the debits represent sales. The credit terms are 2/10,
n/30.
ba

bo

3-Jun 3200 10-Jun

3200

2-Jun

6000

4-Jun 4800 30-Jun

4800

9-Jun
15Jun

4000

bu
2-Jun

6000

10-Jun

4800

3600

15Jun
26Jun
30Jun

6000
4000
3600

be
25Jun

1080
0

15Jun
16Jun

4800
1200
0

20Jun
4800
26Jun 12000

1. How much is the correct cash receipts balance?

Solution
1. Cash Receipts per
book
47464
Under statement of Cash
receipts by:
Recording Sales discount for collections made
beyond the discount period:
15-Jun
120
25-Jun
216
336
Overfooting the sales discount
column
(936-736)
200
Corrected Cash
receipts
48000
2.
Outstanding Checks, june 30
Customers NSF Check recorded in july but returned in june.
Service Charges made by the bank in june and recorded in
july
Cash disbursements as of july 30
Checks and Charges from bank statement for december
including a july service charge of 680 and NSF checks of
15000

How much is the Outstanding checks as of july,31?

Solution:
Bank
Disbursement
OC,jun
e
OC,jul
y

19600
0
25000
29,38 (Squeez
0 e)
20038
0

25000
5000
500
190,20
0
196000

book
disbursement
DM,ju
ne
DM,jul
y
DM,jul
y
DM,ju
ne

19020
0
-5000
680
15000
-500
20038
0

3.
Outstanding Checks, june 30
Customers NSF Check not yet recorded in july but returned
in june.
Service Charges made by the bank in june and not yet
recorded in july
Cash disbursements as of july 30
Checks and Charges from bank statement for december
including a july service charge of 680 and NSF checks of
15000

How much is the Outstanding checks as of july,31?

Solution:
bank
Disbursement

19600
0
25000
34,88 (Squeez
0 e)
20588
0

book
disbursement

19020
0

OC,ju
ne
OC,
july

DM,jul
y

680

25000
5000
500
190,20
0
196000

DM,jul
y

15000

The cash receipt and cash payments of GAINZ company for april 2016 are
20588 as follows
0
Cash Receipts
Date

Cash Debit

2-Apr
8
10
16
22
29
Date 30 Item
total
1Balance
Apr
30
30

Cash Payment
Check No.

Cash Credit

208700
20350
27950
109350
CASH
92700
53000
Ref.
16850 Debit
528900

4113
4114
4115
4116
4117
4118
Credit 4119
Balance
4120
95550
4121
4122
Total
528900
624450
546200 78250

44550
7350
96500
33200
73600
50000
31600
83750
5000
120650
546200

CR 6
CP
11
The Cash account of Liezel Company shows the following information at
April 30, 2016:

Liezel Company received the following bank statement

on April 30, 2016:
Bank Statement for April 2016
Beginning Balance
Deposits and other
Credits:
116300 EF
Apr
T
4
208700

95550

4.

9
12
17
22
23

20350
27950
109350
68400 BC
92700

543750

Checks and other

Deposits:
7Apr
13
14
15
18
21
26
30
30

44550
69500
45150 US
7350
33200
10950 EF
T
73600
50000
1000 SC

Ending Balance:

(335300.0
0)
304000

Explanation:
EFT
US
BC
SC

electronic fund
transfer
unauthorized
signature
bank
collection
service
charge

Additional data for the bank reconciliation

include the ff:
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
from Lester Soon.
c. The 68400 bank collection of a note receivable on
April 22 included 9250 interest revenue.

d. The correct amount of check number 4115 , a

payment on account, is 69500. (Liezel's accountant
mistakenly recorded the check for 69500.
How much is the correct cash balance as of April 30?
Book
Unadjusted Balance, April
30
deposit in Transit
Outstanding Checks
Error in Check
4115(96,500-69500)
EFT-Rent
Bank Collection
Unauthorized signature
Check
EFT- Insurance
Service Charge
Adjusted Balance, April 30

78250

Bank
304000
69850
-241000

27000
16300
68400
-45150
-10950
-1000
132850

132850

5. The auditor of Unova Company is examining the composition of the cash and cash
equivalent line item on the financial statement prepared by the companys accountant.
The following items are considered:
1. Unova Company has maintained a cash balance of 80,000 at all time with Davao
Bank to ensure future credibility.
2. Savings account and Current account amounting to 800,000 and 1,100,00 are
currently held at the Davao Bank.
3. Undeposited curreny and coins amounting to 11,550
4. Two certificate of deposit, each has an amount of 575,000. Both are purchased 70days before maturity.
5. Unova received a check amounting to 180,000 dated February 28, 2017.
6. The company has a commercial paper due in 120 days at 3,000,000
7. On August 15, 2016, the company acquired marketable shares to be held as
trading at the amount of 30,000. Fair value at the year-end at 20,000.
8. Travel advances of 50,000.

1. How much is the Cash?

2. How much is the Cash Equivalent?

Solution:
1. Saving account Davao Bank

800,000

Checking Account Davao Bank

Undeposited currency and coins
TOTAL CASH
2. Two certificates of deposit
(575,000 x 2)
TOTAL CASH EQUIVALENT

1,100,000
11,250
1,911,250
1,150,000
1,150,000

6. Hoenn Company is under the audit of Ruby audit firm. Part of the audit is to check the
checkbook of Hoenn Company to look if the cash and cash equivalent of Hoenn in its
financial stamen is stated correctly. The checkbook balance as at November 31, 2016,
end of fiscal year, was 120,000. The following items are not recorded but held by the
accounts receivable staffs in safe as of the date of audit.
Amount
65,000

34,000

10,000

Description
Check drawn on Hoenn account,
payable to the supplier, dated
November 25, but not yet mailed to
the payee as of November 30. The
check has not been recorded on the
checkbook.
Check payable to Hoenn company,
dated November 3, 2016 for the
sale of merchandise to Customer
Misty, terms FOB Shipping point,
shipped at November 29 and
currently in transit. Check not
included in the line item cash and
cash equivalent.
Check from a customer, marked by
the bank as DAUD. The return of
the Check was properly recorded.

Cash and cash equivalent on the unaudited statement of financial position of Hoenn
Company as at November 30, 2016 is 354,000 which includes the checkbook balance
above.
The amount to be shown as Cash and cash equivalent on the statement of
financial position of Hoenn Company as at November 30, 2016 is
Solution:
Cash and cash equivalent on the unaudited statement of financial position
120,000

Check payable to Hoenn by Customer Misty

CASH AND CASH EQUIVALENT

34,000
154,000

7. Upon examination of the petty cash fund of Jotho Company on January 5, 2016
11:00 am, the audit found the following items on the petty cash drawer:
a. Total Bills and coins - 7,567
b. Certified check of the general manager Dated December 1, 2015 - 1,500
c. An envelope containing contributions of employees for donation to victims of
recent typhoon has amount written on envelope as 5,000 but the bills and coins
inside only amounts to 3,800.
d. Unused postage stamp 550
e. Check payable to the petty cash custodian, representing cash to replenish the
PCF 4,500
f. Petty cash vouchers not yet replenished
a. PCV # 007 Postage stamps 600 (Dated: January 4, 2016)
b. PCV # 008 Supplies 450 (Dated: December 21, 2015)
c. PCV # 009 Transportation 300 (Dated: December 30, 2015)
It was noted by the auditor that there is a shortage on the petty cash fund in the
amount of 4,285. The shortage will be charge as receivable from petty cash custodian.
1. How much is the adjusted Petty cash balance as of December 31, 2015?
2. How much is the established amount of PCF by Jotho Company?
3. How much is the net Adjustment on the PCF?

Solution:
Count I (composition: Bills and coins, Employees good check and replenishment
check)
Bills and coins
7,565
Certified check of the general manager
1,500
Replenishment Check
4,500
Commingled cash from the opened envelop
(5,000 3,800)
(1,200)
PCV # 007 (Dated: January 4, 2016)
600
ADJUSTED PETTY CASH FUND BALANCE
12,965 (1)

Count II (composition: Supporting documents representing valid disbursement

from PCF)
PCV # 008 (Dated: December 21, 2015)
PCV # 009 (Dated: December 30, 2015)
TOTAL
Count I
Count II

450
300
750
12,965
750

Total
Established PCF balance (SQUEEZE)
Shortage
Established PCF balance
Adjusted PCF balance
Net Adjustment on the PCF

13,715
(18,000) (2)
4,285
18,000
(12,965)
5,035 Debit (3)

8. You are auditing general cash for Pichu Company for the fiscal year ended July 31,
2014. 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 the Pichu Companys clerk. You obtain the following information:
General ledger
41,110

Beginning balance
Deposits
Cash receipts journal
Checks cleared
Cash Disbursement journal
July bank service charge
Note paid directly
NSF check
Ending balance

Bank statement
57,530
250,560

254,560
(236,150)
(218,110)
(870)
(61,000)
(3,110)
82,560

6,960

June 30 Bank reconciliation

Information from General ledger and bank statement
Balance per bank
Deposit in Transit
Outstanding checks
Balance per books

57,530
6,000
(17,420)
46,110

Additional information:
a. Checks clearing that were outstanding on June 30 totaled 16,920.
b. Checks clearing that were recorded in the July disbursement journal totaled
204,670.
c. A check for 10,600 cleared in the bank, but had not been recorded in the cash
disbursement journal. It was for an acquisition of inventory. Mew used the periodic
inventory method.
d. A check for 3,960 was charged to Mew Company but had been written on different
companys bank account.
e. Deposits included 6,000 from June and 244,560 for July.
f. The bank charge Mew Companys account for a NSF check totaling 3,110. The
credit manager concluded that the customer intentionally closed its account and
the owner left the city. The check was turned over to a collection agency.
g. A note for 58,000, plus interest, was paid directly to the bank under an
arrangement signed 4 months ago. The note payable was recorded at 58,000 on
mew companys books.

1. How much is the outstanding check on July 31?

2. How much is the deposit in transit on July 31?
3. The adjusted cash balance on July 31 is
Solution:
1. Outstanding checks, June 30
Checks issued in July
Cash disbursement journal
Unrecorded check
Checks paid in bank in July
Erroneous check charge by bank
OUTSTANDING CHECK, JULY 31

17,420
218,110
10,600
236,150
(3,960)

2. Deposit in Transit, June 30

July deposit per cash receipts journal
Deposit credited by the bank in July
DEPOSIT IN TRANSIT, JULY 31
3.

(232,190)
13,940
6,000
254,560
(250,560)
10,000

Book
Unadjusted balances
Outstanding checks (solution 1)
Deposit in Transit (solution 2)
Bank service charge
Unrecorded check
Check erroneously charge to Pichu
NSF check
Note payable (58,000 + 3,000)
Adjusted Balances

228,710

Bank
82,560

6,960
(13,940)
10,000

(870)
(10,600)
3,960
(3,110)
(61,000)
6,980
6,980

9. The auditor of Celebi Company gathered the following information:

a) The March 31 bank statement balance include bank service charge of 2,000.
b) The March 31 cash balance in the Books was 244,500.
c) Undeposited receipsy were 36,000 while outstanding checks (all not cleared) were
63,000.
d) The bank statement shows a bank service charge amounting to 3,000.
e) The April 30 cash balance in the books was 319,750, which recognizes 482,750 for
April receipts and 405,500 for checks written in April. In transit to the bank were
receipts of 28,750. Check of 15,000 written prior to April and checks of 60,500
written in April had not yet cleared by the bank.
1.
2.
3.
4.

What
What
What
What

is
is
is
is

the
the
the
the

total book disbursement for April?

March 31 bank balance?
total bank receipts in April?
total bank disbursement in April?

5. What is the bank balance on April 30?

Solution:
1. Checks written during April
November bank service charge recorded on the
Company book in April
Total Book disbursement

Balance per
books
Undeposited
receipts:
March 31
April 30
Oustanding
checks:
March 31
April 30
Bank service
charge:
March 31
April 30
Balance per
bank

Balance
March 31

April receipts

244,500

482,750

(36,000)

36,000
(28.750)

63,000

(2,000)
269,500 (2)

490,000 (3)

April
Disbursemen
t
407,500

405,500
2,000
407,500
Balance April
30
319,750

(28,750)

63,000
(75,500)

75,500

(2,000)
3,000
396,000 (4)

(3,000)
363,500 (5)

10 . The bookkeeper-cashier of the Lugia absconded on the evening of July 16, 2016,
apparently with a large portion of the companys cash. He had taken with him certain
accounting record, including the cahs journal and the general ledger. You are called upon
to look if shortages are existing on which the missing employee is accountable for.
You obtained the following information from the available records.
Balances at the close of business, July 16, 2016:
Accounts receivable
Accounts payable
Cash in Bank, less checks outstanding

442,550
207,300
98,830

Transactions, January 1 to July 16, 2016:

Sales, per receivable clerk
5,876,170
Cash sales
none
Sales allowance in customers account
18,330
Cash purchase of furniture, per dealers invoice
3,000
Total merchandise purchases
3,615,260
Cash dividends declared, 50,000 (of which 10,000 remains unpaid)
1,865,830
A check for 100,000 had been cashed by the bookkeeper shortly before his departure.
Although the signature on the check had been obviously forged, it was paid by the bank
and retuned with other canceled checks.
Lugia Company
Statement of Financial Position
December 31, 2015
Assets
Cash
Accounts receivable
Inventory (at cost)
Furniture
Accumulated depreciation
Total assets

32,670
226,230
440,350
74,560
(31,800)
42,760
742,010
Liabilities and Shareholders equity

Accounts payable
Share capital
Retained earnings
Total Liabilities and Shareholders equity

114,720
500,000
127,290
742,010

1. What is the total amount paid for merchandise purchases?

2. What is the cashiers accountability (correct cash balance before

shortage) on July 16, 2016?
3. What is the amount of cash shortage chargeable against the cashier?
Solution:
1. Accounts payable, December 31, 2015
Purchases
Accounts payable, July 16, 2016
Payment for merchandise purchases
2. Cash Balance, December 31, 2015
Collections
Disbursement
Cash Balance, July 16, 2016
3. Cash accountability (solution 2)
Cash accounted
Total shortage
Shortage chargeable against the bank
Shortage chargeable against the cahier

114,720
3,615,260
(207,300)
3,522,680
32,670
5,641,520
(5,431,510)
242,680
242,680
(98,830)
143,850
(100,000)
43,850

CORRECTION OF ERROR
In the Past, Bea5tmode Company has depreciated its computer hardware using
the straight line method. The computer hardware has a 0% salvage value and an
estimated usefil life pf 5 years. AS a resilt of the rapid advancement in information
technology, management of the company determined that it receives most of the
benefits from its computer facilities in the first few years of ownership. Hence, as
of January 1, 2016 the company proposes changing tto the sum of the years digits
method for depreciating its computer hardware. The following computer purchases
were made by the company at the beginning of each year.

2013
2014
2015

90000
50000
60000

1. How much depreciation expense that should be recognized for the years
2013,2014,2015?

Solution :
2013 acquisition:
Cost:

90000

Less: Accum.
Depreciation, Dec. 31
2015 (16,200 x 3)
Book Value: Jan 1, 2016

48600
41400

Less: Salvage Value (10%

x 90,000)
Remaining Depreciable
Cost
SYD RATE
2014 acquisition:
Cost:
Less: Accum.
Depreciation, Dec. 31
2015 (9000 x 2)
Book Value: Jan 1, 2016
Less: Salvage Value (10%
x 90,000)
Remaining Depreciable
Cost
SYD RATE

9000
32400
x 2/3

2160
0

50000
18000
32000
5000
27000
x 3/6

1350

2015 acquisition:
Cost:
Less: Accum.
Depreciation, Dec. 31
2015
Book Value: Jan 1,
2016
Less: Salvage Value
(10% x 60,000)
Remaining
Depreciable Cost
SYD RATE
Total Depreciation

60000

10800
49200
6000
43200
x 4/10

17280
52380

2. The audited income statement of GAINZ BRUH, Co. shows a net income of 175000 for the
year ended December 31, 2016. Adjustments were made for the following errors:
a. December 31, 2015, inventory overstated by 22500
b. December 31, 2016, inventory was understated by 37500
What is the adjusted net income for the year ended Dec, 31 2016?
Solution:
Unadjusted net
income(squeeze)
December 31,2015 - inventory
overstated
December 31,2016 - inventory
understated
Adjusted Net income

1150
00
22500
37500
17500
0

3. The audited income statement of GAINZ BRUH, Co. shows a net income of 175000 for the
year ended December 31, 2016. Adjustments were made for the following errors:
a. December 31, 2015, inventory understated by 22500
b. December 31, 2016, inventory was overrstated by 37500
What is the adjusted net income for the year ended Dec, 31 2016?
Solution:
Unadjusted net
income(squeeze)

2350
00

December 31,2015 - inventory

overstated
December 31,2016 - inventory
understated
Adjusted Net income
4.

(2250
0)
(3750
0)
17500
0