CHRISTOPHER T.

ESPENILLA, CPA MBA

FACULTY – SAINT LOUIS UNIVERSITY, BAGUIO CITY
REVIEWER – REVIEW SCHOOL OF ACCOUNTANCY,
MANILA
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CHAPTER 1: THE AUDIT PROCESS

PROBLEM 1: CLIENT ACCEPTANCE AND CONITINUANCE

1
D 11
B
2
D 12
C
3 D
4 A
5 D
6 B
7 B
8 A
9 D
10 D

PROBLEM 2: UNDERSTANDING THE BUSINESS AND THE INDUSTRY

1
D 11
C
2
D 12
B
3
C 13
B
4
D 14
D
5
D 15
D
6
D 16
B
7 A
8 D
9 C
10 E

PROBLEM 3: INTERNAL CONTROL

C
1 11
E 21
B

D
2 12
B 22
A
C
3 13
D 23
C
C
4 14
C 24
B
A
5 15
C 25
C
D
6 16
C 26
A
7
C 17
C
8
D 18
D
9
D 19
D
10A 20A

PROBLEM 4: RISK BASED AUDIT PLANNING

1
D 11
C
2
C 12
B
3 D
4 B
5 B
6 B
7 C
8 A
9 D
10 C

CHAPTER 1: THE AUDIT PROCESS

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PROBLEM 5: SUBSTANTIVE TESTING

1
B 21
B
2
A 22
D
3
C 23
B
4
C 24
D
5
C 25
C
6
D 26
C
7
C 27
B
8
D 28
B
9
C 29
B
10C 30B

11A 31D
12B 32A
13B 33A
14 A
15 A
16 B
17 A
18 A
19 D
20 A

PROBLEM 6: AUDIT REPORTING

1 C
2 B
3 B
4 B
5 B
6 C
7 A
8 B
9 C
10 C
11 A
12 C

CHAPTER 1: THE AUDIT PROCESS

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CHAPTER 2: AUDIT OF CASH

DISCUSSION PROBLEMS
CHAPTER 2-PROBLEM 1
1 B
2 D
3 A
4 B
5 D
6 D
7 D
8 D
9 D
10 D
11 D
12 B
13 C
14 B
15 B

16 C
17 B
18 D
19 D
20 B
21 C
22 D
23 C
24 D
25 B

AP02-PROBLEM 2: MAPERA CORPORATION

1. Ans.
Ans. P3,445,000
CurrentaccountatMetrobank 3,250,000
Post-dated disbursement check - adjusted to AP 75,000
Undelivered disbursement check - adjusted to AP 120,000
Adju
Adjust
sted
ed curr
curren
entt acco
ac coun
untt at Metr
Metrob
oban
ankk 3,44
3,445,
5,00
0000

2. Ans. P2,250,000
Savings accountatRural Bank 2,750,000
Compensating balance - legally restricted (500,000)
Adju
Adjust
sted
ed savi
saving
ngss acc
accou
ount
nt at Rura
Rurall Ban
Bankk 2,25
2,250,
0,00
0000

3. Ans. Zero
The bank overdraft balance with BDO shall be presented as a current liability since there is no right of offset, that is the company
has no bank account with BDO.

4. Ans. P738,000.
Undeposited collections, unadjusted balance 1,278,000
Customer stale check - adjusted to AR (180,000)
Customer post-dated check - adjusted to AR (125,000)
Customer DAUD check - Adjusted to AR (155,000)
Officer's NSF check - Ad justed to AR-nontrade (80,000)
A dju s t e d un de po s it e d c olle ct io n s 73 8 , 0 0 0

5. Ans. P18,500
Bills
andcoins 7,000
Replenishmentcheck 11,500
Adj
Adjust
ust ed pett
ett y c ash
ash f und as of 1 2/31
2/31//14 18,
18 ,500
50 0

6. Ans. P613,500
Travel
fund 50,000
Interestanddividendfund 120,000
Payroll
fund 400,000
Changefund 25,000
Petty
cashfund 18,500
Adjust
Adjusteded cash
ca sh fun d - Cas h and c ash equiv
eq uivale
ale 613,50
613,5000

7. Ans. P900,000
Debt security investment due 3/31/15 purchased 12/31/14 600,000
Preference shares redeemable on 2/28/15 purchased 12/1/14 300,000
Debt
Debt and
and equ
e quit
ity
y sec
secur
urit
itie
ies
s - Cas
C ash
h and
an d cas
c ash
h equ
e quiv
ival
alen
entt 900,
900,00
000
0

8. Ans. P7,946,500
AdjustedcurrentaccountatMetrobank 3,445,000
Adjusted savings accountatRural Bank 2,250,000
Adjustedundepositedcollections 738,000
Adjusted cash fund - Cash and cash equivalent 613,500
Debt and equity securities - Cash and cash equivalent 900,000
C a s h a n d c a s h e qu i v a l e n t s , a dj u s t e d ba l a n c e 7, 94 6 , 5 0 0

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9. Ans. P1,874,500
Customerstalecheck-adjustedtoAR 180,000
Customer post-dated check - adjusted toAR 125,000
CustomerDAUDcheck-AdjustedtoAR 155,000
Officer's NSF check - Adjusted to AR-nontrade 80,000
Petty cash fund shortage - Adjusted to AR-custodian 1,500 *alternatively, this can be charged to other expense
Postagestamps-Officesupplies 3,000
IOUfromakeyofficer-AR-nontrade 30,000
Investment in debt security due 1/31/15 purchased 1/1/14 900,000 *classified as short-term investment
Ordinary shares - Trading securities/FA at FMV through P&L 400,000
Curren
Currentt assets
ass ets (oth
(other er than
th an cash
ca sh and
an d cash
cas h equiv
equivale
alents
nts)) 1,874,
1,874,500
500

10. Ans. P1,700,000

Rural bank - compensating balance - Adjusted to Other assets 500,000
Pensionfund-AdjustedtoLong-termInvestment 250,000
Bond sinking fund - Adjusted to Long-term Investment 500,000
Cash in closed bank at recoverable value - Adjusted to Other assets 150,000
Ordinary shares - Available-for-sale security/FA at FMV through OCI/L 300,000
Non-current assets 1,700,000

11. Ans. P495,000

CurrentaccountatBDO-Bankoverdraft 240,000
Post-dated disbursement check - adjusted to AP 75,000
Undelivered disbursement check - adjusted to AP 120,000
Credit memo for a purchase return - adjusted to AP 60,000
C u r r e nltia b ilit ie s 4 95 , 00 0

CHAPTER 2-PROBLEM 3: MANNY CO.

Accountability:
PettyCashFund,Imprestbalance 40,000
Returnofanexpenseadvance(a) 900
T ot aA l cc o un t ab ilit y 40 , 91.
0 0Ans.
Valid supporting items:
Bills
and coins 13,400
Unreplenishedpaidvouchers 3,700
Accomodated checks
Dated 12/30 2,000
Dated11/30-markedNSF 1,000
Replenishmentcheck 10,000 30,100
P e t t yc a s hf u n dsh o r t a ge 10 , 80 0
2. Ans.
(a) Should be subsequently deposited to the bank.

Cash items as of December 31, 2014

Bills
andcoins 13,400
Return of excess travel expense advance (a) (900)
Unreplenished paid voucher dated 1/2 1,000
Accomodatedcheck12/30 2,000
Replenishmentcheck 10,000
A dju s t e dpe t t yc a s hf un d 2 5 ,53.
0 0Ans.
(a) Should be subsequently deposited to the bank.

4. Adjusting entries:
1 Transportationexpense 500
Repairsandmaintenanceexpense 300
Entertainment, amusement and representation ex 900
Dueto
employees 1,000
Petty
cash
fund 2,700
To record unreplenished paid vouchers.

2 Receivablefromemployee 1,000
Petty
cash
fund 1,000
To record NSF accomodated check.

3 Receivablefromemployee 10,800
Petty
cash
fund 10,800
To record petty cash fund shortage.

Pettycashfund,imprestbalance 40,000
1.
AJE (2,700)
2.
AJE (1,000)
AJE
3. (10,800)
A dju s t e dpe t t yc a s hf un d 2 5 ,5 0 0

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CHAPTER 2-PROBLEM 4: MAKWARTA COMPANY

Ans. P1,630
Accountability:
Totalcollections,10/1-10/11(perOR) 28,840
Total bank credits, 10/1-10/11 (per bank statement) 16,550
Septemberdepositintransit (4,500)
September bank charge error (corrected in October) (1,400) 10,650
UndepositedcollectionsasofOctober11 18,190

Valid supporting items:

Currencyand
coins 12,310
Customer collection checks
9/30/14-BaguioCorp. 2,350
10/3/14L.
-Reyes 1,960
10/4/14-La.UnionCorp. 1,590 5,900
Unusedpostage(adjustedtosupplies) 110
Vouchers paid out of receipt (adjusted to expense) 1,500 19,820
O v e r a ge 1, 6 30

CHAPTER 2-PROBLEM 5: BETTY CO.

Accountability
Pettycashfund,imprestbalance 10,000
Undeposited collections
Cash collections (per cash sales invoices) 1,670
Customer collection checks (depositable only) 2,500 4,170
To t aAl c c ou n t a bilit y 14 , 11.
7 0Ans.

Valid supporting items

Currenciesandcoins 5,980
Customer collection checks (depositable only)
12/30ErrolCorp.,Customer 1,300
1/2R.Rarr,Customer 1,200
Accomodated checks (whether depositable or not)
12/30D.Dong,VicePresident 1,220
1/2
Junior, Employee 312
UnreplenishedVouchers 850
EmployeeIOU's 700 11,562
P e t tC
ya sShh o r t a ge 2 , 60 82. Ans.

AJEs to the Petty Cash Fund:

(a) Expenses 730
Petty
Cash
Fund 730
To record unreplenished expense vouchers as of Dec. 31 only.

(b) Receivablefromemployee 700

Petty
Cash
fund 700
To record employee .

(c) Receivablefromemployee 2,608

Petty
Cash
fund 2,608
To record the petty cash fund shortage.

Imprestbalance 10,000
(a)
AJE (730)
(b)
AJE (700)
AJE
(c) (2,608) (4,038)
3. Ans.
A dj u s t e d P e t t y C a s h F u n d a s o f D e c . 3 1 5 , 964.
2 Ans.

CHAPTER 2-PROBLEM 6: DATUNG MANUFACTURING CO.

Bank Reconciliation Statement 10/31/2014
BANK BOOK
Unadjusted Balance, per Bank Statement 144,975 125,245Unadjusted Balance per Books
Undeposited collections, excluding missapprop. 10,770 8,000
Unrecorded Bank Credits
Oustandingchecks (50,550) (2,300)
Unrecorded Bank Debits: NSF Check
Bank error (unrecorded bank charge) (1,250) (1,250)Unrecorded Bank Debits: Bank Service Charge
C orre
orrect
ct cash
cash in bank
an k balan
alance
ce (2.
(2. Ans.
ns. ) 103,
03 ,945
94 5 129,695Adjusted balance per books
(25,750) Cash shortage (1. Ans. )
103,945Correct cash balance

CHAPTER 2: AUDIT OF CASH AND CASH EQUIVALENTS

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3 Adjustin
Adjusting
g Entries:
(a) Cash
bank
in 8,000
Accounts
receivables 8,000

(b) Accountsreceivables 2,300

Cash
bank
in 2,300

(c) Bank service charge/Other expenses 1,250

Cash
bank
in 1,250

CHAPTER 2-PROBLEM 7: JADE CORPORATION

Bank Reconciliation 12/31/2014
BANK BOOK
Unadjustedbalance 792,285 726,600
Unadjusted balance
Deposit in
transit 10,500 20,000
Unrecorded credit
Outstandingcheck (75,975) (5,000)
Unrecorded debit
Bank
error 2,250 31,500 Book errors (audit note a.)
C o r r e c t c a s h ba l a n c e ( 1 . A n s . ) 72 9 , 0 6 0 773,100
(44,040)Shortage (3. Ans. )

729,060
Adjusted balance
Unadjustedbalanceperbooks 726,600
Correctcashbalance 729,060
N e t a dj u s t e m e n t t o c a s h ( 1 2 / 3 1 ) ( 2,2.
46Ans.
0)

AccountabilityasofJanuary15 180,500
Unrecordedcreditasof12/31 (20,000)
Book errors in Janaury(auditnote bandc) 19,500
Adjustedaccountability 180,000

January deposits from January collections

Januraybankcredits 143,895
Correction of Dec. bank charge error (2,250)
Dec.depositintransit (10,500) 131,145
Cash
hand
on 10,125
Expense vouchers 1,125
CashshortagefromJan.2-Jan.15 37,605
Add:CashshortageasofDec.31 44,040
T o t a l c a s h s h o r t a ge a s o f J a n . 1 5 , 2 0 1 5 81 , 64
4.5 Ans.

CHAPTER 2-PROBLEM 8: PIRA CO.

Proof of Cash, 6/30/2014
May3 1, Receipt Disbursement June3 0,
Unadjusted balances per bank statement 1,836,000 2,496,000 1,224,000 3,108,000
Depositintransit,May 480,000 (480,000)
Deposit in transit, June (SQUEEZE) 4. Ans. 1,317,600 1,317,600
Outstandingchecks,May (1,020,000) (1,020,000)
Outstanding checks, June (SQUEEZE) 5. Ans. 2,171,760 (2,171,760)
Bank error, May Overstated disbursement 240,000 (240,000)
Adjusted balances 1,536,000 3,093,600 2,375,760 2,253,840
2. Ans. 6. Ans.

May3 1, Receipt Disbursement June3 0,

Unad
Un adju
just
sted
ed bala
balanc
nces
es per
per book
book (1.
(1. Ans
Ans.. ) 538,
538,20 0 4,818,600
200 2,443,200 2,913,600
Unrecordedbankcredit:May 600,000 (600,000)
Unrecorded bank debits: BSC, May (7,200) (7,200)
Unrecordedbankdebits:BSC,June 9,600 (9,600)
Unrecordedbankdebits:NSFCheckJune 144,000 (144,000)
Bank error, May Overstated disbursement 405,000 (405,000)
Bookerror,June O verstatedcollection (720,000) (720,000)
Bookerror,June Overstateddisbursement (213,840) 213,840
Adjustedbalances 1,536,000 3,093,600 2,375,760 2,253,840

3. Ans. No shortage.

CHAPTER 2-PROBLEM 9: KRAME INC.

Proof of Cash
Augsut 31: Receipt Disbursemen September 30:
Unadjustedbalances,perbank 485,000 1,955,000 1,655,000 785,000
Undepositedcollections-Aug 450,000 (450,000)
U n de po sit e dc o lle c t io ns-S e pt 2 40 , 00 0 240,000
2. Ans.
Outstandingchecks-Aug (180,000) (180,000)
O u t s t a n di n g
c h e c ks
S
- e pt 2 2 0, 0 00 (220,000)
3. Ans.
Bank error Aug
- (80,000) (80,000)
675,000 1,745,000 1,615,000 805,000
A
1n. s. A4n
. s.
June 30: Receipt Disbursemen July 31:
Unadjustedbalances,perbook 640,000 1,795,000 1,800,000 635,000
Unrecordedcredit-Aug 200,000 (200,000)
Unrecordedcredit-Sept 250,000 250,000
Unrecordeddebit-Aug (120,000) (120,000)
Unrecorded
debit
Sept
- 80,000 (80,000)
Book
Error
Aug
- (45,000) (45,000)
BookError-Sept/Correction-Sept (100,000) (100,000)
675,000 1,745,000 1,615,000 805,000
Shortage/Overage -

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CHAPTER 2-PROBLEM 10: MANGO COMPANY

Proof of Cash, 4/30/2014
March 31, Receipt Disbursement April 30,
Unadjusted balances per bank statement 21,560 220,450 218,970 23,040
Undepositedreceipts,March 9,060 (9,060)
Undepositedreceipts,April 10,120 10,120
Outstandingchecks,March (2,675) (2,675)
Outstandingchecks,April (excludingcertifiedcheck) 1,430 (1,430)
Bankerror,AprilOverstateddisbursement (950) 950
Adjusted balances 27,945 221,510 216,775 32,680

March 31, Receipt Disbursement April 30,

Unadjustedbalancesperbook 16,545 222,190 216,055 22,680
Book receipts usedtopaycreditors in cash (1,210) (1,210)
Unrecordedbankcredit:March 12,150 (12,150)
Unrecordedbankcredit:April 11,640 11,640
Unrecorded bank debits:
NSF check, returned in April recorded in April 1,040 1,040

NSFcheck,returnedinAprilnotyetrecorded 860 (860)

Unrecorded bank debits: BSC, March (750) (750)
Unrecordedbankdebits:BSC,April 420 (420)
Bankerror,AprilUnderstateddisbursement 360 (360)
Adjusted balances 27,945 221,510 216,775 32,680
1. Ans.
Ans. 2. Ans.
ns. 3. Ans.
ns. 4. Ans.
Ans.

MULTIPLE CHOICE EXERCISES

CHAPTER 2-EXERCISE 1: ILANG-ILANG COMPANY
Unadjustedcashbalance 105,600
1. January 5 collection recorded in December (15,000)
2. Undelivered check disbursements 9,300
3. Post-dated customer collection check (7,800)
4.NSFcustomercollectioncheck (1,500)
5. Cash fund for non-current purpose (40,000) *classifed as LT Fund Investment
A dju s t e d ca s h ba
b a la nc e - c ur r e n t a s s e t 5 0Ans.
,6 0 0 B.

CHAPTER 2-EXERCISE 2: BIG BROTHER CORP.

Equivalent Asset
Current account at Bank of the Philippine Islands 6,000,000 6,000,000
Current account at Equitable PCI Bank (300,000) *noright of off-set, classified as current liabi
Payroll account 1,500,000 1,500,000
Foreign bank account – restricted (in USD) ** 60,000 3,000,000*Other Asset at current exchang price
Postage stamps 3,000 *prepaid expense
Employee’s post dated check 12,000 *other receivables
IOU from a key officer 30,000 *other receivables
Credit memo from a vendor for a purchase return 60,000 *debited to accounts payable
Traveler’s check 150,000 150,000
Customer’s not-sufficient-funds check 45,000 *accounts receivable
Money orders 90,000 90,000
Petty cash fund, currencies only 12,000 12,000
Treasury bills, due 3/31/15 (purchased 12/31/14) 600,000 600,000
Treasury bills, due 1/31/15 (purchased 1/1/14) 900,000 *current investment
Change fund 10,000 10,000
Bond sinking fund 1,000,000 1,000,000
*LT fund investment
8,36
8,362,
2,00
000 0 4,00
4,000,
0,00
0000
1. Ans
Ans .C.
.C. 2. Ans.
ns. B.

CHAPTER 2-EXERCISE 3: UHAWSAIYO COMPANY

Accountability:
Pettycashfund,imprestbalance 15,000
Undeposited collections
Cash sales invoices (17903-18112) 100,500
Official receipts 39,537
Customer collection check, not yet included 5,707 145,744
Othercollections:Returnofexpenseadvance 260
Other collections: Contribution for Christmas Party 9,500
To t aA
l c c o u n t a bi l i t y 1 70 , 50 4

Valid supporting items:

Bills
and coins 105,174
Customer collection checks
12/30Otis
T. 11,920
12/26R.
Eyes 12,505
1/2
O.
Liever 5,707
12/21 F.
Rancisco 13,350
Accomodated check 310
12/29 O. Camp (return of expense advance) 260
ExpensevouchersandIOUs 6,775 156,001
P e t tc
ya sshh or t a ge 14 , 50 3 1. Ans. B.

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Cash on hand as of January 5, 2015

Bills
andcoins 105,174
Customercollectionchecks 43,482
Accomodated check 310
Returnofexpenseadvancecheck 260 149,226
Cash that does not belong to the petty cash fund
Undeposited collections:
Collection checks 43,482
Cash collections (100,500+560+1,202) 102,262 (145,744)
Return of
expense advance (260)
Excess collection from Christmas Party (9,500-6,290) (3,210)
Cash on hand as of January 5, belonging to the Petty Cash 12
VoucherspaidafterDecember31:1/2/15,PNR 35
P e t t yc a s hf u n daso fDe c e mbe r3 1,20 1 5 4 7 3. Ans. B.

AJEs:
(a) Officesuppliesexpense(150-80) 70
Unused office
supplies 80
Receivablefromemployee 300
Petty
cash
fund 450

To record unreplensihed expense vouchers as of December

31.
(b) Receivablefromemployee 14,503
Petty
cash
fund 14,503
To record petty cash shortage

Reconciliation:
Pettycashfund,imprestbalance 15,000
(a)
AJE (450)
AJE
(b) (14,503) (14,953)
2. ans. B.
P e t t yc a s hf u n d,a d ju st e dba lan c e 4 7 3. Ans. B.

Notes:
1. The unused portion of the collection from the Christmas Party does not belong to the company and should not be
reflected in the books of the company. Should it be recorded as part of the cash of the company, the same shall be
regarded as a payable to whoever owes the excess collectoins (e.g. the employees who made the contribution).
2. The unreplenished voucher dated 1/2/15 shall still be considered as valid cash as of December 31, 2014 since the disbursement
was made only on 1/2, thus the same was not included among the adjustments to petty cash as of December 31.
3. The return of expense advance amounting to P260 shall be included as part of accountability, and since it is still in check
the same was also part of the valid supporting items. As an additional audit procedure,return of expense advance shall
be traced to eventual deposit to the bank after the count date since the amount no longer belongs to the fund and should be
returned backto the general cash of the company.

CHAPTER 2-EXERCISE 4: SILVER COMPANY

Bank Reonciliation Statement 12/31/2014
BANK BOOK
Unadjusted balance per Bank Statement 12,300 15,000Unadjusted balance per books
Undeposited collections (as being reported) 3,000 150
Unrecorded bank credit
Outstanding checks (as per complete list) (850)
Corr
Correc
ectt c ash
ash bal
b alan
ance
ce per
per au dit
dit ( 4. Ans.
Ans. B .) 14,4
14 ,450
50 15,150Unadjusted balance per books
(700)Shortage 1. Ans. D.
14,450Adjusted balance per books

2. Ans. D.
Undeposited collections (as being reported) 3,000
Shortage 700
A cc o un t a b ilit y f o r c a sh o n h a n d 3 , 7 00

3. Ans. B.
Correctcashbalanceperaudit 14,450
Cash on hand/Undeposited collection (3,000)
C a s h in
i n B a nk ( e x c lu din g C a s h o n Ha
H a n d) 1 1 ,4 5 0

CHAPTER 2-EXERCISE 5: HOME CORP.

Bank Reconciliation 12/31/2014
BANK BOOK
Unadjustedbalance 1,548,570 1,239,200
Unadjusted balance
Deposit in
transit 21,000 200,000
Unrecorded credit
Outstandingcheck (151,950) (10,000)
Unrecorded debit
Bank
error 4,500 63,000Book errors (audit note)
C o r r e c t c as h ba
b a la n ce ( 16 . A ns . D ) 1 , 4 2 2, 1 20 1,492,200
(70,080) Shortage (17. Ans. C )
1,422,
1,422,120
120 Adjus
Adjusted
ted balanc
balance e

AccountabilityasofJanuary10 521,000
Unrecordedcreditasof12/31 (200,000)
Book errors in Janaury(auditnote aandb) 39,000
A dju s t e da cc o u nt a bilit y 3 60 , 00(18.
0 Ans. B.)

January deposits from January collections

Januraybankcredits 322,790
Correction of Dec. bank charge error (4,500)
Dec.depositintransit (21,000) 297,290
CashandChecksonhand(Depositable) 23,475
Expense vouchers 22,250
C a s hs ho r t ag ef r o mJ a n.2-J a n.10 16 , 98 5 (19. Ans. B)

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CHAPTER 2-EXERCISE 6: CARRERA INC.

Proof of Cash, July 31, 2014
June 30, Receipt Disbursement July 31,
Unadjusted b alances p er bank s tatement 172,590 751,680 903,390 20,880
Depositintransit,June 18,000 (18,000)
D e p os itint r a n s it ,Ju ly( S QU EE Z E) 30 , 00 0 30,000
2. Ans. B.
Outstandingchecks,June (52,260) (52,260)
Ou t s t a n dingc h e c ks ,J u ly( S QU E EZ E ) 4 1, 8 20 (41,820)
1. Ans. C.
Bankerror,JulyOverstateddisbursement (11,880) 11,880
Adjusted balances 138,330 763,680 881,070 20,940
3. Ans. A.

March 31, Receipt Disbursement April 30,

Unadjustedbalancesperbook 140,330 763,680 654,330 249,680
Unrecorded bank debits, July Payment of AP 31,800 (31,800)
Unrecorded bank debits, July BSC 2,610 (2,610)
Unrecorded bank debits, July Payment of NP 183,000 (183,000)
Unrecordedbankdebits,JulyNSF 9,330 (9,330)
Adjusted balances 140,330 763,680 881,070 22,940

C a s h i n ba n k , s h o r t a ge J u n e 3 0 2 ,0 004. Ans. C.

CHAPTER 2-EXERCISE 7: EDILBERTO INC.

Proof of Cash, December 31, 2014
November 30, Receipt Disbursement December 31,
Unadjusted b alances p er bank s tatement 535,410 1,245,540 1,091,865 689,085
Undepositedcollections,Nov. 41,005 (41,005)
Undepositedcollections,Dec. 64,400 64,400
Outstandingchecks,Nov. (138,590) (138,590)
Outstanding
checks,Dec. 150,560 (150,560)
Adjusted balances 1437,825
, 26 8 , 9 3 5 1 , 1 03 , 83 5 6 0 2, 9 25
4. A n s . A . 5 . An s . B . 6. A n s . B .

November 30, Receipt Disbursement December 31,

Unadjustedbalancesperbook 82,350 1,18
1,182,2,26
260 0 1,06
1,063,
3,18
185 5 201,425 1. Ans
An s. B . 2. Ans
A ns.. B .
Unrecorded bank credit: Note Col., Nov. 359,075 (359,075)
Unrecordedbankcredit:NoteCol.,Dec. 404,500 404,500
Unrecorded bank debits: BSC, Nov. (3,600) (3,600)
Unrecordedbankdebits:BSC,Dec. 3,000 (3,000)
NSF Check, return and redeposit, same month* 41,250 41,250
Adjusted balances 1437,825
, 26 8 , 9 3 5 1 , 1 03 , 83 5 6 0 2, 9 25
3. Ans. B.

CHAPTER 2-EXERCISE 8: HALALAN CORP.

Proof of Cash, June 30, 2014
May3 1, Receipt Disbursement June3 0,
Unadjusted b alances p er bank s tatement 652,000 88,000 63,200 676,8003. Ans. A.
Depositintransit,May 10,000 (10,000)
Deposit
in transit,
June 70,000 70,000
Outstandingchecks,May (20,000) (20,000)
Outstandingchecks,
June 17,600 (17,600)
Bank error,June correctedalsoin June(a) (1,000) (1,000)
Adjustedbalances 642,000 148,000 60,800 729,200
1. Ans
Ans.. B. 2. Ans.
ns. D.

May3 1, Receipt Disbursement June3 0,

Unadjustedbalancesperbook 570,800 219,000 57,400 732,4006. Ans. C.
Unrecordedbankcredit:May 72,000 (72,000)
Unrecordedbankdebits:BSC,May (800) (800)
Unrecorded bankdebits:
BSC,June 200 (200)
Unrecordedbankdebits:NSF,June13(b) 1,000 1,000
Unrecordedbankdebits:NSF,June30 3,000 (3,000)
Adjustedbalances 642,000 148,000 60,800 729,200
4. Ans
A ns.. D.
D. 5. Ans.
ns. B.
B.
Notes:
(a) the error committed by the bank in June was also corrected in June, thus both receipts and disbursements per bank shall be in excess
by P1,000 if compared to receipts and disbursements per books. Toreconcile, the same had been deductedfrom both receipt and disbursements.
(b) the NSF check on June 13 had been redeposited immediately. No entry had been made by the company to reflect the receipt and redeposit
while on the bank side, theNSF check had beenrecorded both as disbursement (upon learning that it is NSF) and receipt
as (upon redeposit).
Thus, to reconcile, the same has been
added to both receipts anddisbursements per books.

CHAPTER 2-EXERCISE 9: SALUYOT CORP.

Proof of Cash, September 30, 2014
August 31, Receipt Disbursement September 30,
Unadjusted b alances p er bank s tatement 156,000 76,020 29,220 202,800
1. Ans. D.
Depositintransit,August 2,700 (2,700)
Depositintransit,September 28,200 28,200
Outstandingchecks,August (12,000) (12,000)
Outstandingchecks,September 10,800 (10,800)
Bankerror,Sept.correctedalsoinSept. (300) (300)
Bankerror,Sept.,Overstatedreceipt (600) (600)
Adjustedbalances 146,700 100,620 27,720 219,600
5. Ans. B.

CHAPTER 2: AUDIT OF CASH AND CASH EQUIVALENTS