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3. Bank service charges for December amounting to P 2,100 were not yet taken up in the books.
4. Included in the outstanding checks are in payment of accounts payable for P226,000. These checks were
prepared and recorded in December 2010 but were released only in January 2011.
5. A check issued to a supplier for P 32,300 was recorded in the cash payments journal as P 33,200. This
check is one of the outstanding checks.
C. A trial balance prepared by the client as of December 31, 2010 showed a petty cash balance of P 25,000
and a cash in bank balance of P 3,470,600.

1. What is the correct amount of the deposits in transit at yearend?

a. P 459,450 b. P 339,250 c. P 375,250 d. P 291,050 e. other amount
2. What is the correct amount of the outstanding checks at December 31, 2010?
a. P 319,850 b. P 320,750 c. P 321,650 d. P 546,750 e. other amount
3. How much is the correct balance of petty cash to be reported in the balance sheet on December 31, 2010?
a. P 4,146 b. P 4,646 c. P 2,255 d. P 2,646 e. other amount
4. How much is the adjusted cash in bank balance as of December 31, 2010?
a. P 328,500 b. P 3,470,300 c. P 3,470,600 d. P 3,471,200 e. other amount
5. How much is the correct amount of cash shortage at December 31, 2010?
a. P 1, 500 b. 2,000 c. P 2,500 d. P 0 e. other amount

PROBLEM 2
You were hired by TRENTON Corporation to examine their accounts for the year ended December 31, 2010 and the
following are the items disclosed in your audit of the cash accounts:

a. A surprise count of cash and cash items was conducted by your audit staff on January 4, 2011. The
company has a petty cash fund of P 70,000 which is maintained on an imprest basis. The cash count sheet disclosed
the following:
Bills and coins 24,250
IOU notes of several employees all dated Dec. 2010 18,000
Paid petty cash vouchers
No. Date Description
108 Dec. 29 Representation & Advertising 10, 214
109 Dec. 30 Office and store supplies
3,652
110 Dec. 31 Repair of air conditioning units 6,500
111 Jan. 02 Transportation expense 280
112 Jan. 03 Representation expense 7,104

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b. The company maintains accounts with East West Bank and you were given a copy of the bank
reconciliation statement which showed the following:
Balance per bank 1,314,680
Add Deposits in transit 272,500
Your
Bank Debit memos 550,000
further
Bank error 72,500
Less Outstanding checks 552,760 analysis
Book Error 18,000 reflected
Balance per books 1,638,420 the
following: following
A. A check for P 90,000 received from a customer had been deposited and then returned by the bank on
December 26, 2010. No entry was made for the returned check. The customer replaced the check
on January 15, 2011.
B. Among the checks returned with the bank statement is a check issued by the company in payment of
accounts payable for P 90,600 but was recorded in the books as P 108,600 and a check issued by Golden
Fiesta Corp. for P 72,000 incorrectly charged by bank.
C. Postdated checks totaling P 134,600 were included in the deposits in transit. These represent collections of
accounts receivable from customers. The checks were actually deposited on January 8, 2011.
D. Various bank debit memos for drafts purchased for payment of importation of previously set up as
accounts payable. Said computers arrived in December 2010.
E. Included in the outstanding checks are checks in payment of accounts payable for P 230,000. These
checks were prepared and recorded in December 2010, but not released until January 10, 2011.

1. What is the adjusted balance of Petty Cash Fund as of December 31, 2010?
a. 24,250 b. 31,634 c. 70,000 d. 38,366 e. other amount
2. Using the adjusted balance method in preparing bank reconciliation statement, how much is the net
adjustment to the balance per bank?
a. 112,860 b. 436,600 c. 208,260 d. 532,000 e. other amount
3. Using the adjusted balance method in preparing bank reconciliation statement, how much is the net
adjustment to the balance per books?
a. 112,860 b. 436,600 c. 208,260 d. 532,000 e. other amount
4. What is the adjusted balance of Cash in Bank as of December 31, 2010?
a. 1,314,680 b. 1,638,420 c. 1,201,820 d. 1,106,420 e. other amount

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PROBLEM 3
HICKSON Company has a current account in Metrobank. Your audit of the companys cash account reveals the
following:
a. Balances taken from the companys general ledger:
Cash balance, November 30, 2010 P 637,860
Cash balance, December 31, 2010 576,420
Receipts, December 1-31, 2010 306, 220
b. Outstanding checks, November 20, 2010
(P 26, 140 was paid by bank in December) 64,140
c. Checks written and recorded in December; not included in the checks
returned with the December bank statement 36,080
d. Deposit in transit, November 30, 2010 15,260
e. Deposit in transit, December 31, 2010 16,140
f. A bank credit memo was issued in December to correct an erroneous
charge made in November 1,500
g. Note collected by bank in December ( company was no informed of
the collection) 2,060
h. A check for P 2,020 (payable to a supplier) was recorded in the Check
Register in December as P 3,000 980
i. A check for P 2,240 was charged by the bank as P 2,420 in December 180
j. HICKSON Company issued a stop payment order to the bank in
December. This pertains to a check written in December which was not
not received by the payee. A new check was written and recorded in the
Check Register in December. The old check was written off by a journal
Entry, also in December. 780
k. bank service charge, November 30, 2010 60
1. The total outstanding checks on December 31, 2010, should be:
a. P 38,000 b. P 74,080 c. P 36,080 d. P 62, 220 e. other amount
2. What is the bank statement balance on November 30, 2010?
a. P 684,400 b. P 587,420 c. P 685,180 d. P 688,180 e. other amount
3. What is the bank statement balance on December 31,2010?
a. P 636,440 b. P 637,220 c. P 637,580 d. P 637,160 e. other amount
4. The total bank receipts for the month of December should be:
a. P 309,680 b. P 304,000 c. P 308,900 d. P 308,120 e. other amount
5. The total bank disbursements for the month of December is:
a. P 356,080 b. P 356,860 c. P 357,640 d. P 356,200 e. other amount

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PROBLEM 4

You have been asked by the proprietor of IVY to verify the accountability of the cashier- bookkeeper, who was
allowed to take a vacation leave a few days ago.

a. The bank reconciliation statements prepared by the cashier bookkeeper are presented below:
Nov, 30 2010
Balance per bank statement P 21,500
Cash on hand 500
Total 22,000
Outstanding checks
No. 2520 P 2,000
2521 1,400
2522 1,900 (3,300)
Erroneous bank charge 2,000
Erroneous bank credit (500)
Book balance P 20,200
Dec 31, 2010
Balance per bank statement P 135,000
Cash on hand 6,300
Total 141,300
Outstanding checks
No. 2674 P 31,000
2675 10,300
2676 5,000 (41,300)
Erroneous bank charge 3,000
Erroneous bank credit (600)
Book balance P 102,400

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b. The cash in bank account in the general edger shows the following debits and credits during Dec. of 2010.

Cash in bank
Dec. Dec.
1 Balance 20,200 1 Checks issued 2,000
2 Received from customers 4,500 5 Checks issued 5,200
7 Received from customers 5,000 14 Checks issued 31,000
12 Received from customers 20,000 24 Checks issued 46,000
17 Received from customers 30,000 28 Checks issued 7,600
23 Received from customers 9,000
27 Received from customers 70,000
31 Received from customers 48,500 31 Balance 102,400
Total 198,200 Total 198,200

c. The following summarized transactions were taken from the bank statement for the month of Dec. 2010
Balance, Dec 1, 2010 P 16,500
Total deposits 173,700
The total deposits per bank statement include:
Collection of notes receivable P 5,000
Correction of Nov. erroneous bank charge 2,000
Dec. 10 deposit of Fresh credited in error to V-fresh 600
Total checks 65,200
The total checks per bank statement include:
d.
Correction of Nov. erroneous bank credit 500
Dec. check of Freeze charged in error to V-fresh 3,000

d. Cash on hand per count in the early morning of Jan 2, 2011 amounted to P 6,300.
e. Before leaving his company for a one-week vacation, the proprietor had left several signed black checks
that the cashier bookkeeper had cashed for his personal use.

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1. What is the cash shortage as of Nov 30, 2010?

a. P 5,00 0 b. P 7,000 c. P 33,000 d. P 13,200 e. other amount
2. What is the adjusted cash balance on Nov 20, 2010?
a. P 16,500 b. P 13,200 c. P 20,200 d. P 14,500 e. other amount
3. The amount of unaccounted receipts in Dec 2010 is:
a. P 11,000 b. P 13,200 c. P 9,000 d. P 15,100 e. other amount
4. The amount of unrecorded/ unsupported disbursements in Dec. 2010 is:
a. P 15,100 b. P 10,900 c. P 7,000 d. P 5,000 e. other amount
5. What is the total cash shortage as of Dec 31, 2010?
a. P 26,000 b. P 15,100 c. P 33,000 d. P 7,000 e. other amount
6. What is the adjusted cash balance on Dec 31, 2010?
a. P 102,400 b. P 125,000 c. P 87,400 d. P 11,400 e. other amount

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PROBLEM 5
You are examining the records of HAMILTON Corp. where internal control is found to be weak. From your
preliminary review of the entitys internal control, you found out that the cashier is also the bookkeeper. Part of your
work includes reconciliation of cash for December 2010. You have determined that the clients reconciliation as of
November 30, 2010 is correct. The following information is available to you..

Clients Reconciliation, November 30, 2010

Cash per general ledger P 2,631.74
Less: Cash on hand 210.89
2,420.85
Less: Bank service charge for November 9.00
2,411.85
Add: Outstanding checks 991.00
Balance per Bank P 3,402.85

Cash receipts are summarized weekly; the cash receipts and disbursements book for December appears below:

Date Particulars Debit Credit

Nov 30 Balance P, 2,631.74
Dec 1 November service charge 9.00
3 Checks 5,236.50
5 Checks 3,645.21
8 Received on accounts 25,774.80
9 Checks 16,394.89
10 Checks 15,873.42
12 Checks 4,848.89
15 Received on accounts 27,447.56
19 Checks 3,622.83
21 Received on accounts 4,659.82
22 Cheeks 3,692.09
29 Received on accounts 5,886.85
31 Checks 7,657.70
31 Balance 4,311.24
TOTAL P 65,300.77 P 65,300.77

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Cash on hand December 31 amounted to P 100. The transactions per December bank statement, which are correctly
by the bank, show that deposits amounted to P 62, 870.92; checks paid amounted to P 57, 952.03; service charges
for the month were P 10, and a charge of P 100 was made against the account because of the return of a customers
check. The service charge and the returned check were not recorded on the clients nooks. The total of outstanding
checks as of December 31 was found to be P 4,110.50.
1. How much is the cash shortage as of November 30?
a. P 0 b. P 100 c. P 1,000 d. P 109

2. How much is the total cash shortage as of December 31?

a. P 1,109.00 b. P 1,100 c. P 2,109 d. P 0

3. How much is the adjusted cash balance as of November 30?

a. P 2,622.74 b. P 2,631.74 c. P 2,640.74 d. P 2,411.85

4. How much is the adjusted cash balance as of December 31?

a. P 5,310.24 b. P 5,301.24 c. P 4,192.24 d. P 4,201.24

5. The bookkeeper/ cashier attempted to conceal the shortage by:

a. Underfooting the cash disbursements book
b. Not recording the cash receipts
c. Underfooting cash receipts books
d. Kiting

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PROBLEM 6
Your examination of the cash account of HUGHES Company disclosed the following information

Balance per bank statement November 9, 2010 P 15,120

Balance per books October 31, 2010 13,280
Bank charges November 1 to 9 (including a collection charge of P 10
not recorded on Companys books) 5,900

Bank credits November 1 to 9 ( which includes an erroneous credit

representing a deposit made by Arnold, Inc. of P 290) 8,150

Disbursements per Companys books November 1 to 9 6,500

Receipts per Companys books November 1 to 9 8,600

All receipts are deposited on the morning of the following day; November 9 receipts amounted to P 1,500. All
checks issued between October 31and November 9 have been cashed by the Bank except for two checks totaling P
570.

On November 6, a disbursement check for P 250 was recorded as P 570. In attempting to correct this, the
bookkeeper entered P 250 as a cash receipt, and then when recording it again is disbursement, he absentmindedly
entered it as P 350. All of these are reflected in the above receipts and disbursements figures.

1. Compute for the Bank Balance as at October 31, 2010.

a. P 14,520 b. `12,870 c. P 17,370 d. P 13, 020
2. Compute for the Book Balance as at November 9, 2010.
a. P 11,180 b. P 15, 530 c. P 11,030 d. P 15,380
3. Compute for the Undeposited Collections as at October 31, 2010.
a. P 1,040 b. P 790 c. P 1,300 d. P 1,960
4. Compute for the Outstanding Checks as at October 31,2010.
a. P 510 b. P 880 c. P 640 d. P 630
5. Compute the adjusted cash balance as of November 9, 2010.
a. P 15,790 b. P 13,280 c. P 15,160 d. P 16,380

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VI. Undeposited collections on December 31, 2010, P 8,000

VII The service charge for December was P 150 which was charged by the bank to Boston
VIII The bank collected a note receivable of P 7,000 on December 28, 2010, but the collection was not received
on time to be recorded by Phoenix Company.
IX. The outstanding checks on December 31, 2010, were:
Check No. Amount Check No. Amount
7767 P 5,000 8910 P 2,300
8856 1,300 8925 4,100
Based on the above and the result of your audit, determine the following:
1. Unadjusted cash balance

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