PUP FLEXTEL MATERIALS

Cash and Cash Equivalents Comprehensive Problems

PROBLEM NO. 1 PROBLEM NO. 2

You were able to gather the following from the December In connection with the audit of the financial statements of
31, 2020 trial balance of Peso Corporation in connection Rupee Company for the year ended December 31, 2020,
with your audit of the company: you performed a surprise count of the petty cash fund and
undeposited collections under the custody of Ms. Jessie at
Cash on hand P 372,000
8:15 a.m. on January 3, 2021. Your count disclosed the
Petty cash fund 10,000
following:
BPI current account 950,000
Bills and Coins
Security Bank current account No. 01 1,280,000
Bills Coins
Security Bank current account No. 02 (40,000)
P100 10 pieces P1.00 410 pieces
PNB savings account 500,000
50 80 pieces 0.50 324 pieces
PNB time deposit 300,000
20 70 pieces 0.25 64 pieces
10 54 pieces
Cash on hand includes the following items:
a. Customer’s check for P60,000 returned by bank on Unused postage stamps – P730
December 26, 2020 due to insufficient fund but
subsequently redeposited and cleared by the bank on Checks
January 8, 2021. Date Payee Drawer Amount
b. Customer’s check for P30,000 dated January 2, 2021, Dec. 30 Cash Ms. Jessie P 2,400
received on December 29, 2020. Dec. 30 Rupee Company Robert 28,000
c. Postal money orders received from customers, Dec. 31 Rupee Company Jay Ar, sales
P36,000. manager 3,360
Dec. 31 Rupee Company Francis 35,600
The petty cash fund consisted of the following items as of Dec. 31 Rupee Company Ryan 16,600
December 31, 2020. Dec. 31 German Corp. Rupee
(not endorsed) Company 54,000
Currency and coins P 2,100
Employees’ vales 1,600 Expense Vouchers
Currency in an envelope marked “collections Date Payee Description Amount
for charity” with names attached 1,200 Dec. 23 Jay Ar, Cash advance for
Unreplenished petty cash vouchers 800 sales manager trip to Baguio
Check drawn by Peso Corporation, payable City P14,000
to the petty cashier 4,600 Dec. 27 Central Post Postage stamps
P10,300 Office 3,240
Dec. 29 Messengers Transportation 300
Included among the checks drawn by Peso Corporation Dec. 29 PC Express Computer repair 1,600
against the BPI current account and recorded in December
2020 are the following: Other items found inside the cash box:

a. Check written and dated December 29, 2020 and a) Two pay envelopes which had been opened and the
delivered to payee on January 2, 2021, P50,000. contents aggregating P15,000 representing unclaimed
b. Check written on December 27, 2020, dated January salaries had been removed.
2, 2021, delivered to payee on December 29, 2020, b) The sales manager’s liquidation report for his Baguio
P86,000. trip:
The credit balance in the Security Bank current account
Cash advance received on
No. 2 represents checks drawn in excess of the deposit
Dec. 23 P14,000
balance. These checks were still outstanding at December
Less: Hotel accommodation P9,000
31, 2020.
Bus fare for two 800
Cash given to Roy,
The savings account deposit in PNB has been set aside by
salesman 600 10,400
the board of directors for acquisition of new equipment.
Balance P 3,600
This account is expected to be disbursed in the next 3
months from the balance sheet date.
Accounted for as follows:
QUESTIONS: Cash returned by Roy to the sales
manager P 240
Based on the above and the result of your audit, compute
Personal check of sales
for the adjusted balances of following:
manager 3,360
1. Cash on hand Total P 3,600
a. P282,000 c. P408,000
Additional information:
b. P246,000 d. P342,000
a) The custodian is not authorized to cash checks.
2. Petty cash fund
a. P6,700 c. P 2,100 b) The last official receipt included in the deposit on
b. P9,100 d. P10,000 December 30 is No. 351 and the last official receipt
issued for the current year is No. 355. The following
3. BPI current account
official receipts are all dated December 31, 2020.
a. P1,086,000 c. P1,000,000
b. P 914,000 d. P 950,000 O.R. No. Amount Form of payment
352 P27,200 Cash
4. Cash and cash equivalents 353 35,600 Check
a. P2,914,700 c. P2,614,700 354 7,200 Cash
b. P2,954,700 d. P3,414,700 355 16,600 Check

Page 1 of 6
c) The Petty Cash balance per general ledger is P20,000. deposited on January 3, 2021. The balance, in currency
The last replenishment of the fund was made on and coins, represents petty cash.
December 22, 2020.
Additional information are as follows:
REQUIRED:
a. Accounts receivable subsidiary ledgers had a total
1. Computation of shortage or overage, if any balance of P70,000 at December 31, 2020. P5,000 of
2. Adjusting entries as of December 31, 2020 this was ascertained to be uncollectible.
b. Suppliers’ unpaid invoices for merchandise totaled
PROBLEM NO. 3
P15,000; while an account for store fixtures bought for
The bank statement for the account of Rial Company as P50,000 had an unpaid balance of P5,000.
of December 31, 2020 showed a credit balance of P20,000,
c. Merchandise inventory at December 31, 2020
while the company’s ledger balance of the cash account as
amounted to P30,000 but P5,000 of these were spoiled
of November 30, 2020 was a debit of P40,000. During
with no resale value.
December 2020, the ledger showed two postings; a debit
of P60,000 and a credit of P39,000 from the cash receipts d. The bank statement in October showed a bank credit
and cash disbursements journal, respectively. for P98,000, dated October 2, 2020. Inquiry from the
cashier disclosed that the amount represents proceeds
Your examination revealed that the cash column of the of a 90-day, discounted bank note. P80,000 of this
receipts book was under footed by P6,400. The receipts loan was paid by check in December, 2020.
book recorded only the collections from customers and did
not include a bank credit in December for P8,000, e. Operating expenses paid during the period totaled
representing loan proceeds of a P10,000 promissory note. P180,000; while merchandise purchases amounted to
P250,000.
An examination of the customers’ subsidiary ledgers f. The gross profit rate is 120% of cost.
showed total credits to individual accounts amounting to
P70,400. The December check disbursements journal REQUIRED:
which was over footed by P500, records only the checks
issued by the company. In the month of December, 2020, Compute for the cashier’s shortage at December 31, 2020.
the bank charged the company for P5,000 representing a
loan guaranteed by the client but was dishonored by the PROBLEM NO. 5
maker, the company vice president. The December bank You were able to obtain the following information during
service charges of P1,200 were erroneously charged by the your audit of Euro Company:
bank to the account of Saudi Company. The bank made
the correction in January, 2021. The outstanding checks Reconciling items:
as of December 31, 2020 amounted to P5,600.
Nov. 30 Dec. 31
On the following morning of January 2, 2021, a cash count Undeposited collections P200,000 P120,000
conducted produced the following: Outstanding checks 80,000 60,000
Customer’s notes collected by
Bills and coins P5,200 bank 100,000 120,000
Checks 2,900 Bank service charges 2,000 3,000
Three (3) duplicate copies of Rial official Erroneous bank debits 10,000 20,000
receipts, all dated Jan. 2, 2021 1,800 Erroneous bank credits 40,000 30,000
NSF checks not redeposited 5,000 7,000
REQUIRED: Customer's check deposited
a. Computation of the cash shortage as of December 31, December 10, returned by
2020. bank on December 16
b. Computation of maximum probable shortage as of marked NSF, and
December 31, 2020. redeposited immediately;
no entry made on books for
PROBLEM NO. 4 return or redeposit 10,000

You were engaged to audit the books of Dinar Company. Unadjusted balances:
From the records of the company, you gathered the
following information: Books ? 90,000
Bank 230,000 ?
Dinar Company started operations on October 2, 2020 with
the owners investing P150,000 cash. Monthly bank December Transactions:
reconciliation statements have not been prepared; Bank Books
however, bank statements for October, November, and Receipts P420,000 P270,000
December were made available to you. Your analysis of Disbursements 500,000 407,000
these bank statements showed total bank credits
(deposits) of P575,000 including the owners’ initial REQUIRED:
investment and a bank loan, details of which are in
additional data. The bank statement in December, 2020 1. Prepare a 4-column bank reconciliation for the month
showed an ending balance of P30,200. of December, using the form that reconciles both the
book and bank balances to a correct cash amount.
Examination of the paid checks disclosed that checks 2. Adjusting entries as of December 31, 2020.
totaling P4,500 were issued by the company in December,
2020, and were presented for payment only in January,
2021. Cash count of the cashier’s accountability amounted
to P6,300. You were told by the cashier that P5,000 of
these, in checks, were cash sales on December 29, 2020,

Page 2 of 6
SOLUTION GUIDE: report must be accepted by the bank before the
company is credited. Sales reports are forwarded by
Bank the company to the bank on the first day following the
date of sale. The bank allocates each deposit 80% to
(B) (R) (D) (E) the payment of the loan, and 20% to the company
11/30 Dec. Dec. 12/31 account. Thus, only 80% of each day’s sales and 20%
Unadjusted bal. of each collection deposits are entered on the bank
DIT – 11/30 statement. The company accountant records the
- 12/31 hypothecation of new accounts receivable (80% of
OC – 11/30 sales) as a debit to Cash and a credit to the bank loan
- 12/31 as of the date of sales. One hundred percent of the
Error, Dr.–11/30 collection on accounts receivable is recorded as a cash
- 12/31 receipt; 80% of the collection is recorded in the cash
Error, Cr.–11/30 disbursements books as a payment on the loan. In
- 12/31 connection with the hypothecation, the following facts
NSF check red. were determined:
Adjusted bal. • Included in the undeposited collections is cash
from the hypothecation of accounts receivable.
Books Sales were P162,000 on November 30, and
P169,000 at December 31, the balance was made
(B) (R) (D) (E) up of from collections of P128,440 which was
11/30 Dec. Dec. 12/31 entered on the books in the manner indicated
Unadjusted bal. above.
Note coll.– 11/30 • Collections on accounts receivable deposited in
- 12/31 December, other than deposits in transit, totaled
BSC – 11/30 P4,800,000.
- 12/31
j. Interest on the bank loan for the month of December
NSF check–11/30
charged by the bank but not recorded in the books,
- 12/31
amounted to P24,560.
NSF check red.
Adjusted bal. QUESTIONS:
Based on the above and the result of your audit, answer
PROBLEM NO. 6 the following:

You were able to obtain the following information in 1. How much is the adjusted cash balance as of
connection with your audit of the Cash account of the Piso November 30, 2020?
Company as of December 31, 2020: a. P618,304 c. P514,624
b. P488,704 d. P359,104
November 30 December 31
a. Balances per bank P742,800 P774,696 2. How much is the adjusted book receipts for December,
b. Balances per books 619,304 670,392 2020?
c. Outstanding checks 254,096 300,184 a. P5,427,488 c. P9,370,240
b. P9,505,440 d. P9,350,260
d. The bank statement for the month of December
showed total credits of P5,401,800 while the cash 3. How much is the adjusted book disbursements for
receipts per books totaled P9,341,780. December, 2020?
a. P9,255,992 c. P9,246,700
e. NSF checks are recorded as a reduction of cash
b. P9,349,452 d. P5,406,700
receipts. NSF checks which are later redeposited are
then recorded as regular receipts. Data regarding NSF 4. How much is the adjusted cash balance as of
checks are as follows: December 31, 2020?
1. Returned by the bank in Nov. and recorded by the a. P509,492 c. P612,244
company in Dec., P1,000. b. P602,952 d. P636,804
2. Returned by the bank in Dec. and recorded by the
company in Dec., P25,000.
3. Returned by the bank in Dec. and recorded by the
company in Jan., P9,200.
f. Check of Sopi Company amounting to P9,292 was
SOLUTION GUIDE:
charged to the company account by the bank in error
on December 31.
Bank
g. A bank memo stated that the company’s account was (B) (R) (D) (E)
credited for the net proceeds of TM’s note for P8,060. 11/30 Dec. Dec. 12/31
This is not yet recorded on the books. Unadjusted bal.
h. The company has hypothecated its accounts receivable OC – 11/30
with the bank under an agreement whereby the bank - 12/31
lends the company 80% of the hypothecated accounts Error, Dr.– Dec.
receivable. The company performs accounting and Deposits with
collection of the accounts. Adjustments of the loan are loan payment
made from daily sales reports and deposits. DIT – 12/31
Adjusted bal.
i. The bank credits the company account and increases
the amount of the loan for 80% of the reported sales.
The loan agreement states specifically that the sales

Page 3 of 6
Books Co. A P3,270 12/6/10 No entries 12/8/10
Co. B 6,730 12/27/10 1/3/11 1/15/11
(B) (R) (D) (E)
11/30 Dec. Dec. 12/31 d) Two payroll checks for employee’s vacations totaling
Unadjusted bal. P5,500 were drawn on January 3, 2021, and cleared
NSF checks (1) the bank on January 8, 2021. These checks were not
(2) entered in the clients records because semi-monthly
(3) payroll summaries are entered only on the 15th and the
Note coll.– Dec. last day of each month.
Anticipated loan
proceeds: QUESTIONS:
- 11/30 Based on the above and the result of your audit, compute
- 12/31 for the following:
Anticipated loan
payment: 1. Deposits in transit as of December 31, 2020
- 12/31 a. P40,570 c. P37,220
b. P40,490 d. P57,220
DM(Interest)Dec.
2. Outstanding checks as of December 31, 2020
Adjusted bal.
a. P93,960 c. P97,230
b. P86,310 d. P97,310
PROBLEM NO. 7 3. Adjusted cash balance as of December 31, 2020
a. P219,280 c. P218,280
The client, Yen Corporation, obtained bank statements
b. P217,280 d. P246,930
for November 30 and December 31, 2020 and reconciled
the balances. You obtained directly the statements of 4. Deposits in transit as of January 12, 2021
January 12, 2021 and obtained the necessary a. P19,310 c. P19,230
confirmation. You have found that there are no errors in b. P15,960 d. P12,500
addition or subtraction in the client’s books.
5. Outstanding checks as of January 12, 2021
11/30/10 12/31/10 a. P46,850 c. P33,700
Balance, bank statement P344,420 P275,020 b. P56,850 d. P50,120
Balance, company records 271,260 226,010
Deposits in transit 35,000 ? SOLUTION GUIDE:
Outstanding checks 88,240 ?
12/1-31/10 1/1-12/11 Computation of deposits in transit at period end
Receipts, cash records P 963,230 P 292,500 12/31/10 1/12/11
Credits, bank statement 941,010 321,490 Deposits in transit, beg
Disbursements, cash records 1,008,480 177,570 Collections this period
Charges, bank statement 1,010,410 230,180 Total
Deposits credited by
The following information also was obtained: bank this period
a) Check no. 804 for P340 cleared by the bank in Deposits in transit, end
December as P1,340. This was found in proving the
bank statement. The bank made the correction on Computation of outstanding checks at period end
January 8, 2021. 12/31/10 1/12/11
b) A note of P20,000, sent to the bank for collection on Outstanding checks, beg
November 15, 2020, was collected and credited to the Checks issued this period
account on November 28, 2020, net of a collection fee Total
of P80. The note was recorded in the cash receipts on Checks paid by
December 21, 2020, at which date the collection fee bank this period
was entered as a disbursement. Outstanding checks, end

c) The client records returned checks in red in the cash

receipts journal. The checks listed in the table were
returned by the bank. - now do the DIY drill -
Amount Returned Recorded Redeposited

GRADED OBJECTIVE ASSESSMENT OF KNOWLEDGE

Instruction: Solve each of the following problems. Show computation in a separate sheet.
Solution should be handwritten and submitted in either pdf or jpeg format. Email summary
answer to gloria.perennial2020@gmail.com on or before October
PROBLEM NO. 1
The bank statement for the month of July 2020 showed
GML Company had the following bank reconciliation on
the following:
June 30, 2020:
Deposits (including P200,000 note collected
Balance per bank statement, June 30, 2020 P3,000,000
for GML) P9,000,000
Add: Deposit in transit 400,000
Disbursements (including P140,000 NSF
Total 3,400,000
check and P10,000 service charge) 7,000,000
Less: Outstanding checks 900,000
Balance per book, , June 30, 2020 P2,500,000

Page 4 of 6
All reconciling items on June 30, 2020 cleared through the i) Bank service charges not entered in company’s books
bank in July. The outstanding checks totaled P600,000 were: November 30, P7,500 and December 31,
and the deposits in transit amounted to P1,000,000 on July P4,200.
31, 2020.
j) A check for P9,500 of QMQ Company was charged to
MQM Company in error.
QUESTIONS:
k) A check drawn for P8,400 was erroneously entered in
Based on the above and the result of your audit, you are
the books as P4,800.
to provide the answers to the following:
1. What is the amount of cash receipts per books in July QUESTIONS:
2020?
Based on the above and the result of your audit, answer
a. P9,600,000 c. P9,800,000
the following:
b. P9,400,000 d. P8,400,000
6. How much is the adjusted cash balance as of
2. What is the amount of cash disbursement per books in
November 30, 2020?
July
a. P215,600 c. P279,450
a. P6,550,000 c. P7,450,000
b. P151,750 d. P274,450
b. P6,700,000 d. P5,950,000
7. How much is the adjusted book receipts for December,
3. What is the cash balance per books on July 31, 2020?
2020?
a. P5,400,000 c. P4,950,000
a. P2,204,700 c. P2,227,200
b. P5,350,000 d. P4,850,000
b. P2,113,900 d. P2,216,800
4. What is the adjusted cash balance on July 31, 2020?
8. How much is the adjusted book disbursements for
a. P5,400,000 c. P4,900,000
December, 2020?
b. P5,350,000 d. P5,000,000
a. P2,169,450 c. P2,157,350
5. Which of the following describes the most effective b. P2,179,850 d. P2,169,450
preventive control to ensure proper handling of cash
9. How much is the adjusted cash balance as of
receipt transactions?
December 31, 2020?
a. Bank reconciliations are prepared by an employee
a. P317,300 c. P307,800
not involved with cash collections and then are
b. P330,400 d. P326,800
reviewed by a supervisor.
b. One employee issues a prenumbered receipt for all 10. A proof of cash is used by an auditor to
cash collections; another employee reconciles the a. Prove the correctness of the cash balance in the
daily total of prenumbered receipts to the bank client's year-end statement of financial position.
deposits. b. Prove that the client's bank did not make an error
c. Predetermined totals (hash totals) of cash receipts during the period under examination.
are used to control posting routines. c. Determine if there were any unauthorized
d. The employee who receives customer mail receipts disbursements or unrecorded deposits during the
prepares the daily bank deposit, which is then reconciliation period.
deposited by another employee. d. Comply with Philippine Auditing Practice
Statements.

PROBLEM NO. 2
In connection with your examination, the MQM Company
presented to you the following information regarding its
Cash in Bank account for the month of December, 2020:
a) Balances per bank statements: November 30,
P215,600, and December 31, P230,400.
b) Balances of cash in bank account in company’s books:
November 30, P165,450, and December 31, P226,800.
c) Total receipts per books were P2,221,900 of which
P12,100 was paid in cash to a creditor on December
24.
d) Total charges in the bank statement during December
were P2,189,700.
e) Undeposited receipts were: November 30, P90,600
and December 31, P101,200.
f) Outstanding checks were: November 30, P26,750,
and December 31, P19,300, of which a check for
P5,000 was certified by the bank on December 26.
g) NSF checks returned, recorded as reduction of cash
receipts, were:
• Returned by bank on December, recorded also in
December, P10,400.
• Returned by bank on December but recorded in
January, P8,600
h) Collections by bank not recorded by Company were
P121,500 in November and P116,400 in December.
PROBLEM NO. 3
You obtained the following information on the current
account of Baht Company during your examination of its
financial statements for the year ended December 31,
2020.
The bank statement on November 30, 2020 showed a
balance of P76,500. Among the bank credits in November
was customer’s note for P25,000 collected for the account
of the company which the company recognized in
December among its receipts. Included in the bank debits
were cost of checkbooks amounting to P300 and a P10,000
check which was charged by the bank in error against Baht
Co. account. Also in November you ascertained that there
were deposits in transit amounting to P20,000 and
outstanding checks totaling P42,500.
The bank statement for the month of December showed
total credits of P104,000 and total charges of P51,000.
The company’s books for December showed total receipts
of P183,900, disbursements of P101,800 and a balance of
P121,400. Bank debit memos for December were: No.
143 for service charges, P400 and No. 145 on a customer’s
returned check marked “DAIF” for P6,000.
On December 31, 2020 the company placed with the bank
a customer’s promissory note with a face value of P30,000
for collection. The company treated this note as part of its
receipts although the bank was able to collect on the note
only in January, 2021.

Page 5 of 6
 b. P99,400 d. P90,790
A check for P990 was recorded in the company cash
13. How much is the adjusted bank receipts for December?
payments books in December as P9,900.
a. P158,900 c. P128,900
b. P118,900 d. P108,900
QUESTIONS:
14. How much is the adjusted book disbursements for
Based on the application of the necessary audit procedures
December?
and appreciation of the above data, you are to provide the
a. P 56,490 c. P98,990
answers to the following:
b. P107,900 d. P99,290
11. How much is the undeposited collections as of
15. How much is the adjusted cash balance as of
December 31, 2020?
December 31, 2020?
a. P84,900 c. P54,900
a. P156,410 c. P93,910
b. P44,900 d. P34,900
b. P 55,000 d. P48,910
12. How much is the outstanding checks as of December
31, 2020?
a. P47,990 c. P90,490 ☺ - end of Assessment- ☺

Page 6 of 6