Chapter 1: Cash and Cash Equivalents

Problem 1-2: ARGENTINA COMPANY

Requirement 1:
a. Accounts Receivable 150,000
Cash on Hand 150,000
#
b. Expenses 10,000
Receivable from Employees 5,000
Petty Cash Fund 15,000
Requirement 2:

Cash on Hand (1,000,000 - 150,000) 850,000.00

Petty Cash Fund (50,000 - 10,000 - 5,000) 35,000.00
SB Current Account 2,000,000.00
Sinking Fund for Bonds Payable 2,500,000.00
Total 5,385,000.00

Requirement 3:

 BDO (Overdraft) – Current Liability

 BPI (Time Deposit) – Noncurrent Investment – Purpose for Land Acquisition
Problem 1-4: KAYE COMPANY
Requirement 1:

Cash on Hand (200,000 - 35,000 - 15,000) 150,000.00

Petty Cash Fund (Cash Count) 5,000.00
PB Current Account (5,000,000 + 25,000 + 45,000) 5,070,000.00
CB No. 1 4,000,000.00
CB No. 2 (100,000.00)
AB Saving Account 250,000.00
Total 9,375,000.00

Requirement 2:
a. Accounts Receivable 50,000
Cash on Hand 50,000
#
b. Receivable from Officers 2,000
Expenses 12,000
Cash Short or Over 1,000
Petty Cash Fund 15,000
#
c. Cash in Bank – PB 70,000
Accounts Payable 70,000
#
d. Cash in Bank – CB 100,000
Bank Overdraft 100,000
Problem 1-7: LANTERN COMPANY
Imprest Fund System
11/02 Petty Cash Fund 20,000
Cash in Bank 20,000
#
11/29 Postage 2,000
Supplies 6,000
Transportation 5,000
Miscellaneous Expense 3,000
Cash in Bank 16,000
#
12/31 Supplies 4,000
Postage 2,000
Transportation 2,000
Petty Cash Fund 8,000
#
01/01 Petty Cash Fund 8,000
Supplies 4,000
Postage 2,000
Transportation 2,000
#
01/15 Petty Cash Fund 10,000
Supplies 7,000
Postage 3,000
Transportation ` 3,000
Miscellaneous Expense 1,000
Cash in Bank 24,000
Fluctuating Fund System
11/02 Petty Cash Fund 20,000
Cash in Bank 20,000
#
11/29 Postage 2,000
Supplies 6,000
Transportation 5,000
Miscellaneous Expense 3,000
Petty Cash Fund 16,000
#
Petty Cash Fund 16,000
Cash in Bank 16,000
#
12/31 Supplies 4,000
Postage 2,000
Transportation 2,000
Petty Cash Fund 8,000
#
01/15 Supplies 3,000
Postage 1,000
Transportation ` 1,000
Miscellaneous Expense 1,000
Petty Cash Fund 6,000
#
 Petty Cash Fund 24,000
Cash in Bank 24,000
Chapter 2: Bank Reconciliation
Problem 2-1: APATHY COMPANY
Requirement 1:

Unadjusted Book Balance 65,000.00

Add: Credit Memo (Proceeds of Notes Receiuvable) 30,000.00
Total 95,000.00
Less: Debit Memo (Bank Service Charge) (2,000.00)
Adjusted Book Balance 93,000.00

Unadjusted Bank Balance 108,000.00

Add: Deposit in Transit (12/31/2023) 80,000.00
Total 188,000.00
Less: Outstanding Checks (102,105,107) (95,000.00)
Adjusted Bank Balance 93,000.00

Requirement 2:
a. Cash in Bank 30,000
Notes Receivable 30,000
#
b. Bank Service Charge 2,000
Cash in Bank 2,000
Problem 2-5: ZODIAC COMPANY
Book-to-Bank

Unadjusted Book Balance 1,100,000.00

Add: Credit Memo (Proceeds of Notes Receivable) 60,000.00
Add: Outstanding Checks (Excl. 1333) 140,000.00 200,000.00
Total 1,300,000.00
Less: Debit Memo (Bank Service Charge and NSF Check) (30,000.00)
Less: Deposit in Transit (270,000.00) (300,000.00)
Unadjusted Bank Balance 1,000,000.00

Bank-to-Book

Unadjusted Bank Balance 1,000,000.00

Add: Debit Memo (Bank Service Charge and NSF Check) 30,000.00
Add: Deposit in Transit 270,000.00 300,000.00
Total 1,300,000.00
Less: Credit Memo (Proceeds of Notes Receivable) (60,000.00)
Less: Outstanding Checks (Excl. 1333) (140,000.00) (200,000.00)
Unadjsuted Book Balance 1,100,000.00

a. Cash in Bank 60,000

Notes Receivable 60,000
#
b. Bank Service Charge 5,000
Accounts Receivable 25,000
Cash in Bank 30,000
Note: Adjusted Balance = 1,130,000
Problem 2-7: BETA COMPANY
Requirement 1:

Unadjusted Book Balance 2,700,000.00

Add: Proceeds of Bank Loan 940,000.00
Add: Proceeds of Notes Receivable 435,000.00 1,375,000.00
Total 4,075,000.00
Less: Customer Check Lacking Counter Signature (50,000.00)
Less: Bank Service Charge (10,000.00) (60,000.00)
Adjusted Book Balance 4,015,000.00

Unadjusted Bank Balance 4,000,000.00

Add: Deposit in Transit 475,000.00
Add: Bank Error 1 (Incorrect Amount of Deposit) 90,000.00
Add: Bank Error 2 (Incorrectly Charged Check of Beth) 150,000.00
Add: Bank Error 3 (Erroneous Debit Memo) 200,000.00 915,000.00
Total 4,915,000.00
Less: Outstanding Checks (600,000.00)
Less: Bank Error 4 (Incorrectly Credited Deposit of Beth) (300,000.00) (900,000.00)
Adjusted Bank Balance 4,015,000.00

Requirement 2:
a. Cash in Bank 940,000
Prepaid Interest Expense (1,000,000 * 6% * 5/6) 50,000
Interest Expense (1,000,000 * 6% * 1/6) 10,000
Loan Payable (940,000 / 94%) 1,000,000
#
b. Cash in Bank 435,000
Bank Service Charge 5,000
Notes Receivable 400,000
Interest Income 40,000
#
c. Accounts Receivable 50,000
Bank Service Charge 10,000
Cash in Bank 60,000
Chapter 3: Proof of Cash
Problem 3-2: POLLUX COMPANY
October 31:

Adjusted Book Balance 600,000.00

Unadjusted Bank Balance (930,000 + 1,970,000 - 2,500,000) 400,000.00

Add: Deposit in Transit 300,000.00
Total 700,000.00
Less: Outstanding Checks (100,000.00)
Adjusted Bank Balance 600,000.00
November 30:

Unadjusted Book Balance (600,000 + 2,200,000 - 1,800,000) 1,000,000.00

Add: Book Error 1 (Incorrect Amount of Cash Receipt) 90,000.00
Total 1,090,000.00
Less: Book Error 2 (Incorrect Amount of Cash Disbursement) (270,000.00)
Adjusted Book Balance 820,000.00

Unadjusted Bank Balance 930,000.00

Add: Deposit in Transit 190,000.00
Add: Bank Error 1 (Incorrectly Charged Check of Poland) 200,000.00 390,000.00
Total 1,320,000.00
Less: Outstanding Checks (400,000.00)
Less: Bank Error 2 (Incorrectly Credited Deposit of Poland) (100,000.00) (500,000.00)
Adjusted Bank Balance 820,000.00

Calculation of Deposit in Transit and Outstanding Checks:

Deposit in Transit, 10/31 300,000.00

Add: Cash Deposited in November
Book Receipts 2,200,000.00
Incorrect Amount of Cash Receipts 90,000.00 2,290,000.00
Total 2,590,000.00
Less: Deposits Credited by Bank in November
Bank Receipts (2,500,000.00)
Incorrectly Credited Deposit of Poland 100,000.00 (2,400,000.00)
Deposit in Transit, 11/30 190,000.00

Outstanding Checks, 10/31 (SQUEEZE) 100,000.00

Add: Checks Issued in November
Book Disbursements 1,800,000.00
Incorrect Amount of Cash Disbursements 270,000.00 2,070,000.00
Total 2,170,000.00
Less: Checks Paid By Bank in November
Bank Disbursements (1,970,000.00)
Incorrectly Charged Check of Poland 200,000.00 (1,770,000.00)
Outstanding Checks, 11/30 400,000.00

a. Cash in Bank 90,000

Accounts Receivable 90,000
#
b. Accounts Payable 270,000
Cash in Bank 270,000
Problem 3-5: CANTOR COMPANY
Requirement 1:

Unadjusted Book Balance, 11/30 (990,000 + 710,000 + 1,200,000) 500,000.00

Less: Debit Memo (Bank Service Charge and NSF Check) (60,000.00)
Less: Book Error 1 (Notes Receivable Collected in December) (100,000.00) (160,000.00)
Adjusted Book Balance, 11/30 340,000.00

Unadjusted Bank Balance. 11/30 (1,100,000 + 500,000 - 1,000,000) 600,000.00

Add: Deposit in Transit 120,000.00
Total 720,000.00
Less: Outstanding Checks (380,000.00)
Adjusted Bank Balance, 11/30 340,000.00
Calculation of Deposit in Transit and Outstanding Checks:

Deposit in Transit, 10/31 45,000.00

Add: Cash Deposited in November
Book Receipts 710,000.00
Unrecorded Collections in October (45,000.00)
Notes Receivable Collected in December (100,000.00) 565,000.00
Total 610,000.00
Less: Deposits Credited by Bank in November
Bank Receipts (500,000.00)
Incorrectly Charged Check in October 10,000.00 (490,000.00)
Deposit in Transit, 11/30 120,000.00

Outstanding Checks, 10/31 125,000.00

Add: Checks Issued in November
Book Disbursements 1,200,000.00
Bank service Charge in October (5,000.00) 1,195,000.00
Total 1,320,000.00
Less: Checks Paid By Bank in November
Bank Disbursements (1,000,000.00)
Bank service Charge in November 10,000.00
NSF Check in November 50,000.00 (940,000.00)
Outstanding Checks, 11/30 380,000.00

Requirement 2:
Bank service Charge 10,000
Accounts Receivable 50,000
Notes Receivable 100,000
Cash in Bank 160,000
Note: Adjusted Balance, 10/31 = 1,030,000
Problem 3-7: PRINCE COMPANY
Book-to-Bank

07/31 Receipts Disbursements 08/31

Unadjusted Book Balance 1,200,000.00 4,400,000.00 3,600,000.00 2,000,000.00
Add: Book Error 1 (Incorrect Amount of Cash Receipt) 180,000.00 180,000.00
Add: Bank Error 1 (Incorrectly Credited Deposit of Princess) 200,000.00 200,000.00
Add: Credit Memo (Proceeds of Notes Receivable)
July 200,000.00 (200,000.00)
August 300,000.00 300,000.00
Add: Outstanding Checks
July 100,000.00 100,000.00
August (650,000.00) 650,000.00
Total 1,500,000.00 4,880,000.00 3,050,000.00 3,330,000.00
Less: Book Error 2 (Incorrect Amount fo Cash Disbursement) 540,000.00 (540,000.00)
Less: Bank Error 2 (Incorrectly Charged Check of Princess) 400,000.00 (400,000.00)
Less: Debit Memo (NSF Check)
July (100,000.00) (100,000.00)
August 50,000.00 (50,000.00)
Less: Deposit in Transit
July (600,000.00) 600,000.00
August (480,000.00) (480,000.00)
Unadjusted Bank Balance 800,000.00 5,000,000.00 3,940,000.00 1,860,000.00
Bank-to-Book

07/31 Receipts Disbursements 08/31

Unadjusted Bank Balance 800,000.00 5,000,000.00 3,940,000.00 1,860,000.00
Add: Book Error 2 (Incorrect Amount fo Cash Disbursement) (540,000.00) 540,000.00
Add: Bank Error 2 (Incorrectly Charged Check of Princess) (400,000.00) 400,000.00
Add: Debit Memo (NSF Check)
July 100,000.00 100,000.00
August (50,000.00) 50,000.00
Add: Deposit in Transit
July 600,000.00 (600,000.00)
August 480,000.00 480,000.00
Total 1,500,000.00 4,880,000.00 3,050,000.00 3,330,000.00
Less: Book Error 1 (Incorrect Amount of Cash Receipt) (180,000.00) (180,000.00)
Less: Bank Error 1 (Incorrectly Credited Deposit of Princess) (200,000.00) (200,000.00)
Less: Credit Memo (Proceeds of Notes Receivable)
July (200,000.00) 200,000.00
August (300,000.00) (300,000.00)
Less: Outstanding Checks
July (100,000.00) (100,000.00)
August 650,000.00 (650,000.00)
Unadjusted Book Balance 1,200,000.00 4,400,000.00 3,600,000.00 2,000,000.00

Adjusted Balance Method

07/31 Receipts Disbursements 08/31

Unadjusted Book Balance 1,200,000.00 4,400,000.00 3,600,000.00 2,000,000.00
Add: Book Error 1 (Incorrect Amount of Cash Receipt) 180,000.00 180,000.00
Add: Credit Memo (Proceeds of Notes Receivable)
July 200,000.00 (200,000.00)
August 300,000.00 300,000.00
Total 1,400,000.00 4,680,000.00 3,600,000.00 2,480,000.00
Less: Book Error 2 (Incorrect Amount fo Cash Disbursement) 540,000.00 (540,000.00)
Less: Debit Memo (NSF Check)
July (100,000.00) (100,000.00)
August 50,000.00 (50,000.00)
Adjusted Book Balance 1,300,000.00 4,680,000.00 4,090,000.00 1,890,000.00

Unadjusted Bank Balance 800,000.00 5,000,000.00 3,940,000.00 1,860,000.00

Add: Bank Error 2 (Incorrectly Charged Check of Princess) (400,000.00) 400,000.00
Add: Deposit in Transit
July 600,000.00 (600,000.00)
August 480,000.00 480,000.00
Total 1,400,000.00 4,880,000.00 3,540,000.00 2,740,000.00
Less: Bank Error 1 (Incorrectly Credited Deposit of Princess) (200,000.00) (200,000.00)
Less: Outstanding Checks
July (100,000.00) (100,000.00)
August 650,000.00 (650,000.00)
Adjusted Bank Balance 1,300,000.00 4,680,000.00 4,090,000.00 1,890,000.00