A.

CASH AND CASH EQUIVALENTS

In conenction with yopur audit of CC Corporation

for the year ended December 31, 2018, you gathered the
following information :
Current Account at Metrobank 2,000,000
Current Account BPI - 100,000
Payroll account 500,000
Foreign Bankl account -restricted (in equivalent pesos) 1,000,000
Postage stamps 1,000
Employee's postdated checks 4,000
IOU from controller's sister 10,000
Traveler's check 50,000
Credit memo from a vendor for purchase return 20,000
Non-suffcient funds check 15,000
Money order 30,000
Petty cash fund ( P 4,000 in currency and expense
receipts for P 6,000) 10,000
Treasury Bills , due 3/30/19 purchased 12/29/18 200,000
Treasury Bills , due 1/31/19 purchased 2/118 300,000

REQUIRED : Based on the above information and the results of your audit
Compute the amount of Cash and Cash Equivalents that will be
reported December 31, 2018 (Provide a very roganized
solution)
ANSWERS:

Current account at Metrobank ₱ 2,000,000

Payroll account 500,000
Traveler's chek 50,000
Money order 30,000
Petty cash fund (4,000 in currency) 4,000
Treasury Bills , due 3/30/19 purchased 12/29/18 200,000
TOTAL ₱ 2,784,000
Computation fo Adjusted Cash Balance

The cash account of Makati Corporaiton as of Decemeber 31, 2018 consists

of the following:

On deposit in current account with RB Bank 900,000

Cash collection not yet deposited to the bank 350,000
A customer's check returend by the bank for insufficient fund 150,000
A check drawn by the Vice-President of the Corporation dated January 15, 2019 70,000
A check drawn by the supplier dated December 28, 2018 for goods returned by the
60,000
corporation

A check dated May 31, 2018 drawn by the corporation against Pep Bank in payment of
customs duties. Since the importation did not materialize, the check was returned by 410,000
customs broker. This check was outstanding check in the reconciliation for Pep Bank
account
Petty cash fund of which P 5,000 is in currency ; P 3,600 in form of ewmployee's IOUs and
1,400 is supported by approved petty cash vouchers for expenses all dated prior to closing 10,000
of the books on December 31, 2018
Total 1,950,000
Less : Overdraft with PEP Bank secured by a Chattel mortgage on inventories -300,000
Cash Balance per Ledger 1,650,000

Required: AT what amount will the Cash account appear on Decemebr 31, 2018,
Statement of Financial Position
ANSWER:

Current account with RB bank ₱ 900,000

Undeposited collection 350,000
Supplier's check for goods returned by the Corporation 60,000
Unexpected petty cash 5,000
Current account with Piggy Bank ( 410,000 - 300,000) 110,000
TOTAL ₱ 1,425,000
The cash account in the ledger of Pat Company had a balance
of P 844,800 as at December 31, 2018. An examinaiton of the account
however, disclosed the following :

1. The sales book was left open up to January 5, 2019 and cash sales
totaling P 120,000 were conisdered as sales in December
2. Checks of P 74,400 in payment of liabilities were prepared before
December 31, 2018, recorded in the books but not mailed or
delivered to the payees
3. Postdated checks totaling P 62,400 are being held by the cashier
as part of Cash. The company's experience shows that postdated
checks are ventually realized
4. Customer's check for P 12,000 deposited with but returned by bank
"NSF" on December 27, 2018.
5. The Cash account includes P 320,000 earmarked for the purchase
of personal computers which will soon be delivered.

Required : Compute the cash balance that should be reflected at the

Statement of Financial Position as at December 31, 2018.
Answer:
Unadjusted cash balance 844,800
Cash Sales -120,000
Purchase of personal computer -320,000
Adjusted cash balance 404,800
ANSWER:

* Question 1
Accounts receivable, 01/01/18 1,016,000
Add: Sales for 2018 14,244,000
Total collectible accounts 15,260,000
Less: Accounts receivable, 12/31/18 1,248,000
Cash collected from Accounts Receivable 14,012,000

* Question 2
Accounts payable, 01/01/18 792,000
Add: Purchase for 2018:
Cost of goods sold for 11,156,000
Add: Inventory, 01/01/18 1,112,000
Total goods available for sale 12,268,000
Less: Inventory, 12/31/18 956,000 11,312,000
Total accounts to be paid 12,104,000
Less: Accounts payable, 12/31/18 848,000
Cash payments made on Accounts Payable 11,256,000

* Question 3
Retained earnings, 01/01/18 576,000
Add: Net income for 2018 1,004,000
Total 1,580,000
Less: Retained earnings, 12/31/18 752,000
Total dividend declared 828,000
Less: increase in dividends payable 160,000
Cash payments for dividends 668,000

* Question 4
Proceeds from notes payable 500,000
Proceeds from issuance of common stock 200,000
(P2,400,000 - P2,200,000)
Cash receipts not provided by operations 700,000
(From Financing)

* Question 5
Purchase of available for sale securities 236,000
Purchase of PPE (2,144,000 - 1,636,000) 508,000
Cash payments for assets that were not 744,000
reflected in operations
Cash payments for assets that were not 744,000
reflected in operations
Shown below is the Bank Reconciliation for AD Company for November 2017:

Balance per Bank, November 30, 2017

Add: Deposit in Transit
Total
Less : Outstanding Checks 28,000
Bank creit recorded error 10,000
Cash Balance per Books, November 30, 2017

The Bank statement for December 2017 contains the following data:
Total depsoits 110,000
Total charges , including NSF check of P 8,000 and servcie charge of P 400 96,000

All outstanding checks on November 30, 2017 , including the bank credit, were cleared in
the bank in December 2017

There were otustanding check of P 30,000 and deposit in transit of P 38,000 on December
31, 2017

QUESTIONS :
1. How much is the cash balance per bank on December 31, 2017?
2. How much is the December receipts per books?
3. How much is the December disbursements per books?
4. How much is the cah balance per books on December 31, 2017?
5. Tha adjusted cash in bank balance as at December 31, 2017?
 ANSWER:
150,000
24,000 *
Question 1
174,000 Balance per bank, Nov. 30, 2017 150,000
Add: Total deposits per bank statement 110,000
38,000 Total 260,000
136,000 Less: Total charges per bank statement 96,000
Blance per bank, Dec. 31, 2017 164,000

* Question 2
Total deposits per bank statement 110,000
Less: Deposits in transit, Nov. 30, 2017 24,000
Dec. receipts cleared through the bank 86,000
Add: Deposits in transit, Dec. 31, 2017 38,000
December receipts per books 124,000

* Question 3
Total charges per bank statement
Less: Outstanding checks, Nov. 30, 2017 28,000
Correction od erroneous bank credit 10,000
December NSF check 8,000
December bank service charge 400
Dec. disbursement cleared through the bank
Add: Outstanding checks, Dec. 31, 2017
December disbursements per books

* Question 4
Balance per books, Nov. 30, 2017 136,000
Add: December receipts per books 124,000
Total 260,000
Less: December disbursements per books 79,600
Balance per books, Dec. 31, 2017 180,400

* Question 5
Balance per bank statement, 12/31/17 164,000
Deposits in transit 38,000
Oustanding checks -30,000
Adjusted bank balance, 12/31/17 172,000

Balance per books, 12/31/17 180,400

NSF check -8,000
Bank service charge -400
Adjusted book balance, 12/31/17 172,000
96,000

46,400
49,600
30,000
79,600
Proof of Cash, Computation of Unadjusted and Adjusted Balances
In the audit of Pasig Company’s cash account, you obtained the following information:
The company’s bookkeeper prepared the following bank reconciliation as of November 30, 2006:

Bank balance - November 30, 2017 ₱ 90,800

Undeposited collections 5,000
Bank service charges 100
Bank collection of customer's note -8,000
Outstanding Checks:
Check No. 1159 ₱ 3,000
Check No. 1767 5,000
Check No. 1915 2,000 -10,000
Book balance - November 30, 2017 ₱ 77,900

Additional data are given as follows:

1. Company recordings for December:
Total collections from customers ₱ 165,000.00
Total checks drawn ₱ 98,000.00

2. Bank statement totals for December :

Charges ₱ 123,800.00
credits ₱ 169,000.00

3. Check no. 1159 dated November 25, 2017, was entered as P3,000 in payment of a voucher for P30,000.
Upon examination of the checks returned by the bank, the actual amount of the check was P30,000.

4. Check no. 8113 dated December 20, 2017 was issued to replace a mutilated check (no.1767), which was
returned by the payee. Both checks were recorded in the amount drawn, P5,000, but no entry was made to
cancel check no. 1767.

5. The December bank statement included a check drawn by Sipag Company for P1,500

6. Undeposited collections on December 31, 2017 - P8,000.

7. The service charge for December was P150 which was charged by the bank to another client.

8. The bank collected a note receivable of P7,000 on December 28, 2017, but the collection was not
received on time to be recorded by pasig.

9. The outstanding checks on December 31, 2017, were:

Amount Amount
Check No. 1767 ₱ 5,000 Check No. 2910 ₱ 2,300
Check No. 2856 ₱ 1,300 Check No. 2925 ₱ 4,100
REQUIREMENTS : Provide an organized solutions for each of the following:
a. Prepare a Proof of Cash Bank Reconciliation
b. Unadjusted Cash Balance per Books as at December 31, 2017
c. Adjusted Cash Balance as at November 30, 2017
d. Adjusted book receipts for december 2017
e. Adjusted bank disbursement for December 2017
f. Adjusted Cash balance as at December 31, 2017
ANSWERS:

Unadjusted book balance, 11/30/17

Add: Unadjusted book receipts:
Collection frombycustomers
Note collected bank in 165,000
Nov. presumed recorded in
8,000
Dec.
Total
Less: Unadjusted book disbursements:
Checks drawn 98,000
BSC for Nov. presumed recorded in Dec. 100
Unadjusted book balance, 12/31/17

Question 2-5
Pasig Company
Proof of Cash
For the month ended December 31, 2017
30-Nov Receipts
Balance per bank statement 90,800 169,000
Deposits in transit:
30-Nov 5,000 -5,000
31-Dec 8,000
Outstanding checks:
30-Nov -32,000
31-Dec
Bank errors - Dec.
Checks of Sipag Co.
BSC charged to another client
Adjusted Bank Balance 63,800 172,000

Balance per books 77,900 173,000

Customer's note collected by bank:
November 8,000 -8,000
December 7,000
Bank service charge:
November -100
December
Book errors:
Check No. 1159
(30000 - 3000) -27,000
Check No. 1767
(mutilated check) 5,000
Adjusted Book Balance 63,800 172,000
 77,900

173,000
250,900

98,100
152,800

mber 31, 2017

Disbursement 31-Dec (90800 + 169000 - 123800)
123,800 136,000

8,000

-32,000
7,700 -7,700

-1,500 1,500
150 -150
98,150 137,650

98,100 152,800

7,000

-100
150 -150

-27,000

5,000
98,150 137,650
7. Victory Corporation was organized on January 15, 2017 and started operation
soon thereafter. The Company's cashier who acted also as the bookkeeper
had kept the accounting records very haphazrdly. The manager suspects him of
defalcation and engaged you to audit his account to find out the extent of
fraud , if there is any:
On November 15 when you started the examination of the accounts, you find
that the cash on hand to be P 25,700. From inquiry at the bank , it was
ascertained that the balance of the Company's bank deposit in current account
on the same date was P 131,640. Verification revealed that the check issued for
P 9,260 is not yet paid by the bank. The corporation selss at 40% above cost

Your examination of the available records disclosed the following information:

Share capital issued at par for cash 1,600,000
Real estate purchased and paid in full 1,000,000
Mortgage liability secured by real estate 400,000
Furnitures and Fixtures (gross) bought on which there is still a balance unpaid
of P 30,000 145,000
Outstanding noted due to the bank 160,000
Total amount owed to creditors on open account 231,420
Total sales 1,615,040
Total amount due from customers 426,900
Inventory of merchandise on November 15 at cost 469,600
Expenses paid excluding purchases 303,780
REQUIRED : Compute for the following: Provide an organized solution
1. Collection from sales
2. Payments for purchases
3. Total cash disbursements
4. Unadjusted cash balance
5. Cash shortage
ANSWERS:

* Question 1
Sales 1,615,040
Less: Accounts receivable, 11/15 426,900
Collections from sales 1,188,140

* Question 2
Cost of sales (1,615,040/ 1.4) 1,153,600
Add: Merchandise inventory, 11/15 469,600
Purchases 1,623,200
Less: Accounts payable, 11/15 231,420
Payments for Purchases 1,391,780

* Question 3
Purchase of real estate 1,000,000
Payment for furniture and fixtures
(145,000 - 30,000) 115,000
Expenses paid 303,780
Payments for purchases *Q2 1,391,780
Total cash disbursement 2,810,560

* Question 4
Proceeds form issuance of common stock 1,600,000
Proceeds from mortgage not payable 400,000
Proceeds from notes payable - bank 160,000
Collections from sales *Q1 1,188,140
Total cash receipts 3,348,140
Less: Cash disbursements *Q3 2,810,560
Unadjusted cash balance 537,580

* Question 5
Cas accountability
Less: Cash accounted (Adjusted cash balance):
Unadjusted bank balance 131,640
Deposit in transit 25,700
Outstanding checks -9,260
Cash shortage
537,580

148,080
389,500
Your audit disclosed that on December 31, 2017 , the accounts receivabel control
account of Aim Company had a balance of P 2,865,000 . An analysis of accounts
receivable account showed the following:

1. Accounts know to be worthless 37,500

2. Advance payments to creditors on purchase orders 150,000
3. Advances to affiliated companies 375,000

4. Customer's accounts reporting credit balances arisign - 225,000

from sales return
5. Interest receivable on bonds 150,000
6. Other trade accounts receivable-unassigned 750,000
7. Subscription receivable due in 30 days 825,000

8. Trade accounts receivable - assigned (Aim Company's 375,000

equity in assigned accounts is P150,000)

9. Trade installment receiveable due 1-18 months 330,000

includiing unearned finance charges P 30,000
10. Trade receivables from officers due currently 22,500

75,000
11. Trade accounts on which post-dated chaecks are held
(no entries were made on thereceipts of the checks)
TOTAL 2,865,000

QUESTIONS :
1. The trade accounts receivable as at December 31, 2017 is
2. The net current trade and other receivables as at December 31, 2017
3. How much of the foregoing will be presented as noncurrent
assets as at December 31, 2017?
ANSWER:

* Question 1
Other trade accounts receivable-unassigned
Trade accounts receivable - assigned
Trade installment receiveable due 1-18 months, net of unearned finance
charges of P30000
Trade receivables from officers due currently
Trade accounts which post-dated checks are held
Trade accounts receivable

*Question 2
Trade accounts receivable *Q1
Advance payments to creditors on purchase orders
Interest receivable on bonds
Subscription receivable due in 30 days
Current trade and other receivable

*Question 3
Advances to affiliated companies
* normally presented under non-current assets
 750,000
375,000
300,000
22,500
75,000
1,522,500

1,522,500
150,000
150,000
825,000
2,647,500

375,000
ANSWER:
Question 1
GL SL
Unadjusted balances 788,000 792,960
Add (deduct):
Definitely uncollectible accounts -4,000 -4,000
Advances from customers 8,000 8,000
Accounts w/ credit balances 2,000 2,000
Unlocated difference 4,960
Adjusted balances 798,960 798,960

Question 2
Account classification Adjusted baRate

0 to 1 month 380,960 1%
1 to 3 months 309,280 2%
3 to 6 months 88,720 3%
Over 6 months 20,000 8,000 – 50%
12,000 – 20%

Question 3
Balance per books 48,000
Add (deduct) adjustments:
AJE No. 1 1,296
AJE No. 2 -4,000
AJE No. 3 -26,239 28,943
Required allowance (See No. 2) 19,057

Question 4 & 5
Balance per books (P39,400-P1,296) 38,104
Add (deduct) adjustments:
AJE No. 1 1,296
AJE No. 4 -26,239 -24,943
Doubtful accounts expense per audit 13,161
 0 to 1 1 to 3 3 to 6 over 6
372,960 307,280 88,720 24,000

-4,000
8,000
2,000

380,960 309,280 88,720 20,000

Required Allowance

3,810
6,186
2,662
4,000
2,400
19,057

Question 5
Question 4
 Cabuyao Company provides for doubtful accounts
based 3% of credit sales. The following data
are availbale for 2017
Credit sales during 2017 21,000,000
Allowance for doubtful accounts January 1, 2017 170,000
Collection of accounts written off in priro years 80,000
( Customer credit was reestablsihed)
Customer accounts written off as uncollectible
during 2017 300,000

What is the balance of allowance for doubtful

accounts as at December 31, 2017?

ANSWER:

Allowance for doubtful accounts January 1, 2017 170,000

Establishment of accounts written off in prior years 80,000
Customer accounts written off in 2017 -300,000
Bad debt expense for 2017 (21,000,000 X 3%) 630,000
Allowance for doubtful accounts 12/31/17 580,000