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AP CASH & CASH EQUIVALENTS

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.

1. Puma Company has a following cash balance at the end of the year

Cash in bank 1,000,000

Cash on hand 1,500,000
Petty cash fund 500,000
Sinking Fund 2,000,000
Money Order 1,000,000
Managers Check 900,000
Certificate of deposit maturity of 3mos. 10,000,000
Treasury bill with a maturity of 6mos 10,000,000
Post dated Check 1,000,000
Savings Deposit 1,000,000
Voucher paid out of collection not recorded 2,000,000
IOUs signed by employees 5,000,000

The sinking fund is set aside for the payment of bonds due next year.

What amount should be reported as Cash on December 31, 2018?

a. 10,000,000
b. 7,900,000
c. 9,500,000
d. 9,000,000

2. The controller of the Red Wing Corporation is in the process of preparing the companys 2018 financial
statements. Shes trying to determine the correct balance of cash and cash equivalents to be reported
as current asset in the statement of financial position. The following items are being considered:

Balances in the companys accounts at First National Bank; checking P13,500, savings P22,100
Undeposited customer checks of P5,200
Currency and coins on hand P580
Savings account at East Bay Bank with a balance of P400,000. This account is being used to
accumulate cash for future plant expansion (2020)
P20,000 in checking account at East Bay Bank. The balance in the account represent a 20%
compensating balance for a P100,000 loan with the bank. Red Wing may not withdraw the funds
until the loan is due in (2020)
Treasury bills; 2-month maturity bills totaling P15,000(purchased 2-months before maturity), and
7-month bills totaling P20,000.

Q1. What is the correct balance of cash?

a. P41,380
b. P36,180
c. P441,380
d. P436,180

Q2. What is the correct amount for cash equivalents?

a. P35,000
b. P15,000
c. P20,000
d. P0

Q3. What is the total amount of cash and cash equivalents to be reported in the current asset section of
the 2018 statement of financial position?
a. P56,380
b. P76,380
c. P476,380
d. P456,380
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Q4. What would be the classification for the P400,000 savings account at East Bay Bank?
a. Current Asset, as cash
b. Noncurrent Asset, as long-term investment
c. Current Asset, as temporary investments
d. None of the choices given

Q5. What is the classification for the P20,000 7-month treasury bills?
a. Current Asset, as cash
b. Noncurrent Asset, as long-term investment
c. Current Asset, as temporary investments
d. None of the choices given

3. You were able to gather the following from the December 31, 2016 trial balance of JP Corporation in
connection with your audit of the company:

Cash on hand P 500,000

Petty cash fund 10,000
BPI current account 1,000,000
Security Bank current account No. 01 1,080,000
Security Bank current account No. 02 (80,000)
PNB savings account 1,200,000
PNB time deposit 500,000

Cash on hand includes the following items:

a. Customers check for P40,000 returned by bank on December 26, 2016 due to insufficient fund
but subsequently re-deposited and cleared by the bank on January 8, 2017.
b. Customers check for P20,000 dated January 2, 2017, received on December 29, 2016.
c. Postal money orders received from customers, P30,000.

The petty cash fund consisted of the following items as of December 31, 2016.

Currency and coins P 2,000

Employees vales 1,600
Currency in an envelope marked collections for charity
with names attached 1,200
Unreplenished petty cash vouchers 1,300
Check drawn by JP Corporation, payable to the petty
cashier 4,000
P10,100

Included among the checks drawn by JP Corporation against the BPI current account and recorded in
December 2016 are the following:

a. Check written and dated December 29, 2016 and delivered to payee on January 2, 2017,
P80,000.
b. Check written on December 27, 2016, dated January 2, 2017, delivered to payee on December
29, 2016, P40,000.

The credit balance in the Security Bank current account No. 2 represents checks drawn in excess of the
deposit balance. These checks were still outstanding at December 31, 2016.

The savings account deposit in PNB has been set aside by the board of directors for acquisition of new
equipment. This account is expected to be disbursed in the next 3 months after the end of the reporting
period.

Based on the above and the result of your audit, determine the adjusted balances of following:

1. Cash on hand
a. P410,000 c. P470,000
b. P530,000 d. P440,000
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2. Petty cash fund

a. P6,000 c. P2,000
b. P7,200 d. P4,900

3. BPI current account

a. P1,000,000 c. P1,080,000
b. P1,120,000 d. P1,040,000

4. Cash and cash equivalents

a. P2,917,200 c. P3,052,000
b. P3,074,900 d. P3,066,000

4. You are making an audit of the Angel Company for the year ended December 31, 2017. The balance of
the petty cash account on December 31, 2017 was P15,000. Your count of the imprest cash fund, made
at 9:00 a.m. on January 3, 2018, in the presence of Ms G. Gonzaga revealed:

Bills and Coins:

Denomination Quantity
1,000 2
500 4
100 14
50 16
20 10
10 19
5 17
1 25
0.50 21
0.25 28

Checks:
Date Maker Bank Amount
12-28-2017 Urquiola, employee PNB 3,000-
12-29-2017 Sta. Maria, employee Security Bank 1,500-
12-31-2017 L. Chua, customer Asia Trust 2,500-

01-02-2018 A. Bobadilla, customer FEBTC 3,200-

01-12-2018 C. German, employee Union Bank
(check received 12-28-2017) 1,500-

(These checks were all considered good when deposited after dates shown on the checks. The first four
checks were actually deposited January 3; the German check was deposited January 13; all five checks
proved to be good.)

Vouchers:
Date Voucher No. Particulars Amount
12-13-2017 151 Freight out P 500-
12-28-2017 183 Supplies 300-
12-29-2017 184 Freight In 394.20
12-31-2017 189 Freight on cabinet 741.10
01-02-2018 001 Freight in 244.70
IOUs:
12-21-2017 S. Dechavez, employee 300-

Sales Invoices (for cash sales; collections handled by Ms. G. Gonzaga)

Inv. # 118 December 30 1,000.40
# 129 December 31 2,500-
# 133 January 2 3,200-

(As a general rule, the petty cashier endeavoured to turn over the proceeds of cash sales to the general
cashier every Friday. Proceeds on these sales were recorded and deposited by the general cashier.)

Unused office supplies 40-

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1. What is the cash shortage?

a. 750.40 b. 802.90 c. 910.40 d. 850.90

2. Adjusting entries for the petty cash fund includes a credit to:

a. Cash Shortage 802.90 b. Petty Cash Fund 4,738.20

c. Petty Cash Fund 4,538.20 d. Cash Shortage 850.90

5. You are making an audit of the Kings Company for the year ended December 31, 2017. The balance of
the petty cash fund account on December 31, 2017 was P10,000.00. Your count of the imprest cash
fund, made at 10:00 am on January 5, 2018 in the presence of Ms. Leviste, the petty cash custodian
disclosed the following fund composition:
Bills and Coins:
Denomination Quantity
P 500.00 1
100.00 8
50.00 3
10.00 4
5.00 2
1.00 3
Checks:
Date Maker Amount
12-29-17 M. Roxas, employee 2,000.00
12-30-17 J. Madrigal Company 1,500.00
01-02-18 J. Estrada Junk Shop 2,450.00
01-15-18 F. Chavez, employee 1,800.00
(check received 12-27-17)
(These checks were considered good when deposited after dates shown on the checks.)
Vouchers:
Date Voucher Particulars Amount
#
12-16-17 145 Freight on merchandise bought ?500.00
12-26-17 164 Postage 200.00
12-29-17 165 Transportation of messenger 50.00
01-02-18 166 Cost of labour cost for repairs done on office cabinets. 1,500.00
Repair was completed on Dec. 29, 2017
IOU:
Ed Gil, employee 1,200.00
Postage Stamps:
10 pieces of 12.00 stamps purchased on voucher # 164 120.00

Duplicate copies of provisional receipts:

Date PR # Issued to Particulars Amount
12-30- 2204 J. Madrigal Refund for merchandise 1,500.00
17 Company returned
01-02- 2205 J. Estrada Junk Sale of junk and scrap items 2,450.00
18 Shop

You verified that Ms. Leviste handles miscellaneous receipts and issues provisional receipts. These
miscellaneous collections are periodically turned over to the general cashier who issues official receipts.
1. How much is the cash shortage or overage?
a. 1,247.00 b. 2,174.00
c. 1,472.00 d. 0
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2. What is the correct petty cash fund balance as of December 31?

a. 10,000.00 b. 4,997.00
c. 5,003.00 d. 20,000.00

6. On April 1, 2018, Mark Company established an imprest petty cash fund for P10,000 by writing a check
drawn against its checking account. On April 30, 2018, the fund contained the following:
Currency and coins 3,000
Receipts for office supplies 4,000
Receipts for postage still unused 3,000
Receipts for transportation 800

On April 30, 2018, the entity wrote a check to replenish the fund. What is the amount of replenishment
under the imprest fund system?
a. 8,200
b. 6,600
c. 7,000
d. 3,000

7. Mark Company provided the following data for the purpose of reconciling the cash balance per book with
the balance per bank statement on December 31, 2018:
Balance per bank statement 2,000,000
Balance per book 850,000
Outstanding checks (including certified check of P100,000) 500,000
Deposit in transit 200,000
December NSF checks (of which P50,000 had been re-deposited
and cleared by December 27) 150,000
Erroneous credit to Marks account, representing proceeds of loan
granted to another company 300,000
Proceeds of note collected by bank for Mark, net of service charge of
P20,000 750,000

The cash in bank balance to be shown on Marks December 31, 2018 balance sheet is
a. 1,500,000 c. 1,400,000
b. 1,800,000 d. 1,450,000

8. The Jostine Company had a weak internal control structure over its cash transactions. Facts about its
cash position at November 30, 2018 were as follows:

The cash books showed a balance of P 1,890,162, which included undeposited receipts. A credit of P
10,000 on the banks records did not appear on the books of the company. The balance per bank
statement was P 1,555,000. Outstanding checks were no. 62 for P 11,625, no. 183 for P 15,000, no. 284
for P 25,325, no. 8621 for P 19,071, no. 8622 for P 20,680, and no. 8632 for P 14,528.

The cashier stole all undeposited receipts in excess of P 379,441 and prepared the following
reconciliation:

Balance per books, November 30, 2018 P1,890,162

Add: outstanding checks
8621 P 19,071
8622 20,680
8632 14,528 44,279
P 1,934,441
Less: undeposited receipts 379,441
Balance per bank, November 30, 2018 P 1,555,000
Deduct unrecorded credit (10,000)
True cash, November 30, 2018 P 1,545,000

1. How much did the cashier stole?

a. P71,000 c. P81,110
b. P71,950 d. P 94,650
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2.. What is the correct amount of cash to be shown on the statement of financial position on November
30, 2018?
a. P 1,882,612 c. P 1,862,212
b. P 1,828,212 d. P 1,682,612

9. The Sunshine Corporation engaged your services to audit its accounts. In your examination of cash, you
find that the Cash account represents both cash on hand and cash in bank. You further noted that there
is very poor internal control over cash.
Your audit covers the period ended December 31, 2017. You made a cash count on January 15, 2018,
and cash on hand on this date was determined to be P52,000. Examination of the cashbooks and other
evidences of transaction disclosed the following:
1. January 1 through 15, 2018 collections per duplicate receipts, P199,000.

2. Total of duplicate deposit slips, all dated January 2 through 15, P110,000, includes a deposit
representing collections of December 31.

3. Cash book balance on December 31, 2017 is P465,000, representing both cash on hand and
cash in bank.

4. Bank statement for December shows a balance of P424,000.

5. Outstanding checks at December 31:

November checks: Number 183 P 4,500

198 12,500
December check: Number 252 6,000
254 4,000
280 52,000
301 9,000
319 25,000
6. Undeposited collections at December 31, P48,000.

7. An amount of P19,000 representing proceeds of a customers note was credited by bank, but is
not yet taken up in the companys books.

8. Bank service charge for December, P1,500.

The company cashier presented to you the following reconciliation statement at December 2017, which
he prepared:
Balance per books, December 31, 2017 456,000
Add: outstanding checks Number 252 P 6,000
254 4,000
280 25,000
301 900
319 15,000 50,900
Total P 506,900
Bank charges (1,500)
Undeposited collections (51,000)
Balance per bank P 454,400
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1. How much is the amount of Cash shortage as of December 31, 2017?

a) 121,500 b) 123,500 c) 132,500 d) none of the above
2. How much is the additional shortage in January 2018?
a) 102,400 b) 85,000 c) 58,000 d) none of the above
3. Which is to be included in the audit adjusting entries at December 31, 2017?
a) Dr: Cash 1,600 b) Cr: Cash 106,000 c) Cr: Loss 123,500 d) none of the above
10. Teresa Company had the following bank reconciliation on June 30, 2018:
Balance per bank statement, June 30 3,000,000
Add: Deposit in transit 400,000
Total 3,400,000
Less: Outstanding checks 900,000
Balance per book, June 30 2,500,000
The bank statement for the month of July showed the following:
Deposits (including P200,000 note collected for Teresa) P9,000,00
Disbursement (including P140,000 NSF check and
P10,000 service charge) 7,000,000

All reconciling items on June 30 cleared through the bank in July. The outstanding checks totaled
P600,000 and the deposit in transit amounted to P1,000,000 on July 31.

Q1. What is the cash balance per book on July 31, 2018?
a. 5,400,000
b. 5,350,000
c. 5,550,000
d. 4,500,000

Q2. What is the amount of cash receipts per book in July 2018?
a. 9,400,000
b. 9,600,000
c. 8,600,000
d. 9,800,000

Q3. What is the amount of cash disbursements per book in July 2018?
a. 6,550,000
b. 6,700,000
c. 7,300,000
d. 6,850,000

11. Your client, Angel Company, presented you with the following data:

Bank balances
November 30 P 2,500,000
December 31 3,100,000

Bank receipts in December 2,300,000

Book balances
November 30 P 2,390,000
December 31 3,047,000

Book receipts in December 2,206,000

Deposits in transit
November 30 58,000
December 31 47,000

Outstanding checks
November 30 97,000
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December 31 46,000

NSF checks returned by bank (recorded by client in the

month following the return)
November 15,000
December 25,000

Bank service charges (recorded by client in the month following

the month the charge)
November 10,000
December 18,000

Note collected by bank (recorded by the client in the following month)

November 76,000
December 84,000

Erroneous bank charges (corrected by the bank in the following month)

November 30 25,000
December 31 37,000

Erroneous bank credits (corrected by the bank in the following month)

November 45,000
December 50,000

1) How much is the audit adjusted balance of receipts as of December 31?

a) 2,241,000 b) 2,214,000 c) 2,421,000 d) 2,124,000 e) none of the above

2) How much is the audit adjusted balance of disbursements as of December 31?

a) 1,576,000 b) 1,657,000 c) 1,765,000 d) 1,567,000 e) none of the above

3) Which is to be included in the audit adjusting entries for December 31?

a) Cr: Cash in Bank 19,000 b) Dr: Cash in Bank 83,000
c) Dr: Accounts Receivable 19,000 d) none of the above

12. You are auditing the cash in bank account of Rose V Manufacturing Company as of December 31,
2018. Your examination revealed the following:

From the bank statement:

Balance, December 1, 2018 P 876,750
Deposits (20) 9,153,760
Check (64) plus debit memos (8,524,300)
Service charges for new checks ( 2,250)
Balance, December 31, 2018 P 1,503,960
From the companys records:
CASH
Nov. 1 652,070 Nov. 30 CD 6,654,410
Nov. 30 CR 6,824,290 Dec. 1 Bank reconciliation 38,400
Dec. 31 CR 9,198,720 Dec. 31 CD 8,574,610
CD Cash disbursements
CR Cash receipts

Your review of last months bank reconciliation and the current bank statement reveals the following.

1. Outstanding checks: November 30, 2018 P254,720

December 31, 2018 335,610
2. Deposit in transit: November 30, 2018 164,220
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December 31, 2018 209,180

3. Check no 359 for Office Repairs was written for P6,950 but recorded in the cash disbursements
journal as P9,650. The bank deducted the check as P6,950. The error happened in November and is not
yet recorded as of December 31.
4. A check written on the account of the Pamplona Company for P5,830 was deducted by the bank from
the Rose Vs account.
5. Included with the bank statement was debit memorandum dated December 31 for P24,750 for interest
on a note taken out by the Rose V Manufacturing Company on November 30.
6. The service charge for the new checks has not been recorded.
7. The November 30 bank reconciliation showed as reconciling items a service charge of P3,500 and a
customers DAIF check for P34,900.
1. How much is the audit adjusted balance of Receipts as of December 31?
a) 9,198,720 b) 9,918,270 c) 9,891,720 d) 9,189,270 e) none of the above
2. How much is the audit adjusted balance of Disbursements as of December 31?
a) 8,601,610 b) 8,610,601 c) 8,601,601 d) 8,610,610 e) none of the above
3. Which is to be included in the audit adjusting entries?
a) Dr: Cash in Bank 2,700 b) Cr: Cash in bank 2,200 c) Dr: Interest expense 20,000
d) None of the above

13. Your audit senior instructed you to prepare a four column proof of cash receipts and disbursements for
the month of December, 2016.

The bank reconciliation prepared by Joshtine Company at November 30 is reproduced below:

Unadjusted bank Unadjusted book

balance P96,800 balance P58,640
Add: CM - Note
Add: deposit in transit 18,000 collected 40,320
Total 114,800 Total 98,960
Less outstanding Less: DM bank
checks: charges 160
No. 276 P2,400
282 7,200
284 4,800
285 1,600 16,000 .
Adjusted balance P98,800 Adjusted balance P98,800

The December bank statement, which has a beginning balance of P96,800, is reproduced below:

May Bank
Account Name: Joshtine Company
Date Debits Credits
December 01 P18,000
December 02 P7,200 40,000
December 04 24,000
December 06 48,000
December 08 400,000 CM83
December 10 40,000 DM97
December 11 56,000
December 16 20,000
December 18 64,000
December 21 72,400
December 28 36,000 80,000
December 31 4,000 DM98 64,000 CM84
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Totals P131,200 P842,400

DM97 Customers DAIF check CM83 Note collected by the bank
DM98 Service Charges CM84 Account collected by the bank

The companys cash receipts and cash disbursements journals for the month of December 2016 are
provided below:

Cash Receipts Journal Cash Disbursements Journal

Date OR No. Amount Date Check No. Amount
Dec. 01 415 P40,000 Dec. 01 286 P16,000
05 416 48,000 03 287 24,000
10 417 56,000 10 288 32,000
17 418 64,000 14 289 20,000
20 419 72,000 20 290 28,000
27 420 80,000 23 291 36,000
31 421 88,800 26 292 40,000
28 293 44,000
. 31 294 48,000
Total P440,800 Total P304,000

The companys Cash in Bank ledger appears below:

Cash in Bank
Balance P58,640 12/31/2016 CDJ P304,000
12/01/2016 GJ 40,320
12/2016/2016 GJ 400,000
(CM83)
12/31/2016 CRJ 440,800

Based on the application of the necessary audit procedures and appreciation of the above data, you are
to provide the answers to the following:

1. How much is the outstanding checks as of December 31, 2016?

a. P208,000 c. P216,800
b. P232,800 d. P224,000

2. How much is the adjusted book receipts for December, 2016?

a. P913,200 c. P904,800
b. P985,200 d. P771,600

3. How much is the adjusted book disbursements for December, 2016?

a. P347,840 c. P348,000
b P332,000 d. P339,200

4. How much is the adjusted cash balance as of December 31, 2016

a. P664,000 c. P688,800
b. P680,000 d. P672,800

5. How much is the cash shortage as of December 31, 2016?

a. P24,240 c. P23,840
b. P15,840 d. P 0

14. The Jerome Corporation was organized on January 15, 2018 and started operation soon thereafter.
The Company cashier who acted also as the bookkeeper had kept the accounting records very
haphazardly. The manager suspects him of defalcation and engaged you to audit his account to find out
the extent of the fraud, if there is any.

On November 15, when you started the examination of the accounts, you find the cash on hand to be
P25,700. From inquiry at the bank, it was ascertained that the balance of the Companys bank deposit
in current account on the same date was P131,640. Verification revealed that the check issued for
P9,260 is not yet paid by the bank. The corporation sells at 40% above cost.
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Your examination of the available records disclosed the following information:

Share capital issued at par for cash P1,600,000

Real state purchased and paid in full 1,000,000
Mortgage liability secured by real state 400,000
Furniture and fixtures (gross) bought on which
there is still balance unpaid of P30,000 145,000
Outstanding notes due to bank 160,000
Total amount owed to creditors on open account 231,420
Total sales 1,615,040
Total amount still due from customers 426,900
Inventory of merchandise on November 15 at cost 469,600
Expenses paid excluding purchases 303,780

Based on the above and the result of your audit, compute for the following as of November 15, 2018:

1. Collections from sales

a. P1,188,140 c. P1,615,040
b. P1,153,600 d. P2,041,940

2. Payments for purchases

a. P1,854,620 c. P1,207,204
b. P1,391,780 d. P 922,180

3. Total cash disbursements

a. P2,340,960 c. P2,810,560
b. P3,273,400 d. P2,625,984

4. Unadjusted cash balance

a. P 74,740 c. P1,007,180
b. P722,156 d. P 537,580

5. Cash shortage
a. P574,076 c. P859,100
b. P389,500 d. P 0

15. The following information is shown in the accounting records of a company:

Balances as of January 1, 2018

Cash P93,000
Merchandise inventory 129,000
Accounts Receivable 100,500
Accounts payable 79,500
Balances as of December 31, 2018
Merchandise Inventory P117,000
Accounts receivable 136,500
Accounts payable 72,000

Total sales and cost of goods sold for 2018 were P1,197,000 and P874,500, respectively. All sales and
all merchandise purchases were made on credit. Various operating expenses of P160,500 were paid in
cash. Assume that there were no other pertinent transactions. The cash balance on December 31, 2018
would be
a. 162,500
b. 223,500
c. 384,000
d. 457,500