CHAPTER 12 CASH AND CASH EQUIVALENTS Problem 12-1 (AICPA Adapted) Tranvia Company had the following balances on December 31, 2021: . 350,000 Cash in checking account y Cash in money market account 1,202 750,000 Treasury bill, purchased November |, maturing January 31,2022 ai 3,500,000 Time deposit purchased December I, maturing March 31,2022 4,000,000 *What amount should be reported as cash and cash equivalents on December 31, 2021? 1,100,000 3,850,000 4,600,000 8,600,000 poop Solution 12-1 Answer c Cash in checking account 350,000 Cash in money market account 750,000 Treasury bill purchased November 1, 2021 maturing January 31,2022 3,500,000 Total cash and cash equivalents 4,600,000 Under PAS 7, treasury bills, money market placement and time deposit normally qualify as cash equivalents only when they have a short maturity of three months or less from the date of acquisition. In the absence of specific term, money market account is short-term investment of three months or less. The treasury bill is classified as cash equivalent because the term is three months. The time deposit is not a cash equivalent because the term is four months. 148 Scanned with CamScannerproblem 12-2 (AICPA Adapted) pypmalion Company had the following balances on December 31,2021: sh in bank ~ current account sh jn bank — payroll account a0 Cash on hand ; “500,000 Cash in bank - restricted account for building , construction expected to be disbursed in 2022 3,000,000 * time deposit, purchased December 15, 2021 and a due March 15, 2022 + 2,000,000 The cash on hand included a P200,000 check payable t. alion, gated January 15, 2022 payableto yma What total amount should be reported as cash and cash equivalents on December 31, 20214 a. 6,300,000 b. 8,300,000 c. 6,500,000 d. 8,700,000 Solution 12-2 Answer b Cash in bank — current account 5,000,000 Cash in bank — payroll account 1,000,000 Cash on hand (500,000 - 200,000 postdated customer check) 300,000 Time deposit 2,000,000 Total cash and cash equivalents 8,300,000 Thecash in bank set aside for payroll is included in cash because itis for the payment of current liability. The cash on hand is reduced by the postdated check payable to Pygmalion. The postdated check should be reverted to accounts Reeivable. The time deposit is a cash equivalent because the termis three months. The cash in bank restricted for building construction is classified as a Xoncurrent investment because it is set aside for the acquisition of ‘noncurrent asset and not for the payment ofacurrent liability. 149 Scanned with CamScannerProblem 12-3 (AICPA Adapted) Thor Company provided the following data on December 31, 2021: Checkbook balance 4,000,000 Bank statement balance 5,000,000 Check drawn on Thor's account, payable to supplier, dated and recorded on December 31, 2021 but not mailed until January 15,2022 500,000 Sinking fund cash 2,000,000 On December 31, 2021, what amount should be reported as “cash” under current assets? a 4,500,000 b. 5,500,000 c. 3,500,000 d. 6,500,000 Solution 12-3 Answer a Checkbook balance 4,000,000 Undelivered check drawn on Thor’s account 500,000 Adjusted cash balance 4,500,000 The undelivered check is restored to the cash balance by debiting cash and crediting accounts payable. The sinking fund cash is a noncurrent investment because it is set aside for the payment of bond payable which is a noncurrent liability. 150 Scanned with CamScannerproblem 12-4 (4A) At year-end, Myra Company reported | Ay comprised the following: fed cash and cash equivalents Cash on hand Demand deposit 4 Heyer Certificate of deposit $0,000 postdated customer check pen 50,000 Petty cash fund Traveler's check. 200,000 Manager's check 100,000 Money order 150,000 What total amount should be reported as “cash” at year-end? a. 7,000,000 b. 4,800,000 c. 6,800,000 d. 5,000,000 Solution 12-4 Answer d Cash on hand 500,000 Demand deposit 4,000,000 Petty cash fund 50,000 Traveler’s check 200,000 Manager’s check 100,000 Money order 150,000 Total cash 5,000,000 Technically, the certificate of deposit is a cash equivalent. The postdated customer check is reverted to accounts receivable. 181 Scanned with CamScannerProblem 12-5 (IAA) / Everlast Company reported the following information at year-end: * Share investments of P1,000,000 that are very actively tradedn the stock market. t treasury bills of P2,000,000 with a 10-year te * potpmced an December 31 at which time they had two monte go until maturity. * Cash of P3,400,000 in the form of coin, currency, Saving acco and checking account. unt * Commercial papers of P1 500,000 with term of nine m purchased on December 31 at which time they had thi to go until maturity. 1, What total amount should be Teported as cash? 3,400,000 4,900,000 4,400,000 5,400,000 onths but ree months aggop Vv What total amount should be Teported as cash equivalents? 2,000,000 1,500,000 3,500,000 4,500,000 ae ge Solution 12-5 Question | Answer a Question 2. Answer c Cash ~ Coin, currency, saving and checking 3,400,000 Government treasury bills 2,000,000 Commercial papers 1,500,000 Total cash equivalents 3,500,000 The share investments cannot qualify as cash equivalents because although very actively traded the investments do not have amaturity. The commercial papers are actually money market placements. 152 Scanned with CamScannerproblem 12-6(AICPA Adapted) Burt Company had the following account balances at year-end: Cash in bank 2,250,000 Casn on hand “125,000 Cash restricted for addition to plant and ‘ expected to be disbursed next year 1,600,000 Cash in bank included P600,000 of compensating balance against short-term borrowing arrangement. The compensating balance is not legally restricted as to withdrawal. What total amount of cash should be reported under current assets at year-end? a. 1,775,000 b. 2,250,000 ¢. 2,375,000 d. 3,975,000 Solution 12-6 Answer ¢ Cash ii bank Cash on hand Total cash ‘A compensating balance isa minimum checking or demand deposit account balance that must be maintained in connection with a borrowing arrangement with a bank. The compensating balance is part of cash if itis not legally restricted as to withdrawal. , Otherwise, if it is legally restricted, the compensating balance is excluded from the amount shownas “cash”, and shown separately as current or noncurrent asset depending on the bank loan to which itis related. If the related bank loan is shor balance is a current asset. If the related bank loun is long-term, the restricted compensating balance is a noncurrent asset t-term, the restricted compensating 153 Scanned with CamScannerProblem 12-7 (AICPA Adapted) On December 31, 2021, West Company had the following cash balances: Cash in bank — current account oe Petty cash fund all funds were reimbursed at yearend = 400 Time deposit due February 1, 2022 1 000,000 Time deposit in bank closed by BSP _— Cash in bank included P600,000 of compensating oer pense short-term borrowing arrangement on December - al Ie compensating balance is legally restricted as to will é On December 31, 2021, what total amount should be reported as cash and cash equivalents? a. 2,500,000 b. 1,250,000 c. 2,100,000 d. 1,500,000 Solution 12-7 Answer d Cash in bank (1,800,000 — 600,000 compensating balance) 1,200,000 Petty cash fund 50,000 Time deposit 250,000 Total cash Since the compensating balance is legally restricted, it is excluded from the amount shown as cash. In this case, the compensating balance is shown as “cash held as compensating balance” as a current asset because the related loan is short-term. The problem is silent on the term of the time deposit. {t is assumed that the term is three months or less, this being the normal banking practice, : Accordingly, the time deposit is acash equivalent. The time deposit in bank closed by BSP is a noncurrent asset. 154 Scanned with CamScannerI problem 12-8 (AICPA Adapted) Ral Company reported the checkbook balance on December 31 2021 1 P5,000,000and held the following itemsonsamedate: heck payable to Ral, dated Janu i payment of a sale made in Decraber 2021 not included in December 31 checkbook balance 2,000,000 Check payable to Ral, deposited December 15 —_ ‘and included in December 31 checkbook balance, but retumed by bank on December 30 stamped “NSF.” The check was redeposited on January 2, 2022 and cleared on January 9, 2022 500,000 Check drawn on Ral’s account, payable to a vendor, dated and recorded in Ral’s books on December 31, 2021 but not mailed until January 10, 2022 300,000 Certificate of time deposit 1,000,000 What amount should be reported as cash on December 31, 2021? a. 4,800,000 b. 5,300,000 c. 6,500,000 d. 5,800,000 Solution 12-8 Answer a Checkbook balance NSF customer check Undelivered company check Adjusted cash balance The customer check of P2,000,000 payable to Ral is properly not included in cash because it is postdated January 2, 2022. The NSF customer check of P500,000 should be reverted to accounts receivable on December 31, 2021 because it was redeposited after December 31, 2021. The check of P300,000 drawn by Ral is undelivered on December 31, 2021. Thus, the undelivered check is restored to cash by debiting cash and crediting accounts. ‘payable. The certificate of time deposit is technically a cash equivalent. 155 Scanned with CamScanner| Problem 12-9 PHILCPA Adapteed) . Starex Company provided the following information on December 3, 2021: Checking account ath Meabenk: 5eey 2 : ec a fae ‘Bank accoust tanrestrcted and in equivalent pesos 2,509) IOU fr 009 ‘om company president 700.009 NSF customer chec ins Pid 000 ‘000 Petty cash fund, expense receipts P40, 50,009 Postage stamps 10,009 Treasury bonds 500°000 Value added tax account 1,500,009 What amount should be reposted as Unrestricted cash on December 31, 2021? a. 7,050,000 b. 5,500/000 c. 7,010,000 d. 5,510,000 Solution 12-9 Answer ¢ Checking account at Metrobank a 3,000,000 Foreign bank account unrestricted 2,500,000 Petty cash fund (50,000 — 40,000) 10,000 Value added tax account 1,500,000 Total unrestricted cash 7,010,000 Problem 12-10 (PHILCPA Adapted) Timex C Ompany reported petty cash fund which Comprised: Coins and currencies 3300 Paid vouchers for expenses 3,000 Customer check retumed by bank marked “NSF” 1,000 Check drawn to the order of Petty cash cu: istodian 2,700 What amount should be Teported as petty cash fund ? a. 3,300 b. 7,000 c. 6,000 d. 9,000 Solution 12-10 Answer ¢ Coins and currencies Check drawn to the order of the petty cash custodian ie Petty cash fund to be reported 6,00 The check drawn to the order ally oft ‘ani 2 “splenishment check and therefore perro custodian is actually 156 Scanned with CamScanner" problem 12-11 (PHILCPA Adapted) Liwanag Company reported an imprest £P50,000 with the following details: rest petty cash fund o Currencies 20,000 Coins 2,000 petty cash vouchers: Gasoline payments for delivery equipment 3,000 Medical supplies for employees 1,000 Repairs of office equipment 1,500 Loans to employees 3,500 Acheck drawn by the entity payable to the order of Grace de la Cruz, petty cash custodian, representing her salary 15,000 An employee check returned by the bank for insufficiency of fund 3,000 A sheet of paper with names of several employees together with contribution for a birthday gift of a co-employee. Attached to the sheet of paper is a currency of 5,000 What amount of petty cash fund should be reported in the statement of financial position? a. 42,000 b. 27,000 c. 37,000 d. 22,000 Solution 12-11 Answer ¢ Currencies 20,000 Coins . 2,000 Check drawn to the order of the petty cash custodian 15,000 37,000 The check drawn payable to the order of the petty cash custodian representing her salary is actually an accommodation check. Thus, the amount is included as part of cash. 157 Scanned with CamScannerProblem 12-12 (PHILCPA Adapted) oN established a: Dec 1,2021, Hazel Company Cash ort 50,000, On December 31, 2021, the petty cash fund eon, fing * the following information: Coins and currencies 6,009 Petty cash vouchers for miscellaneous expenses 46,0, The Petty cash fiund was replenished on December 31, 202), What entry should Hazel make on December 3 1,2021 to TecoTd the replenishment of petty cash fund? @ Pettycash Cash “Cash short and over b. Miscellaneous expenses Cash Cash short and over ¢. Miscellaneous. expenses Cash short and over Cash d. Miscellaneous ‘expenses Petty cash Cash short and over Solution 12-12 Answer b Miscellaneous expenses Cash Cash short and over Composition Of petty cash fund Petty cash fund Cash over 158 46,000 . 44,000 2,000 46,000 44,000 2,000 44,000 2,000 46,000 46,000 44,000 2,000 46,000 son 2,000 000 si 2 Scanned with CamScannerproblem 12-13 (AICPA Adapted) bell Com 7 41,2021: pany had the following account balances on December etty cash fund ee on hand seo-000 Cash in bank — current account 4, (000,000 Cash in bank ~ payroll account 1,200,000 Cash in bank ~ sinking fund 200,000 Cash in bank — restricted account for plant addition . and expected to be disbursed in 2022 1,500,000 Treasury bills 1,000,000 The petty cash fund included unreplenished December 2021 petty cash expense vouchers P5,000 and employee [OU P5,000. The cash on hand included a P100,000 customer check payable to Campbell dated January 15, 2022. In exchange for a guaranteed line of credit, the entity has agreed to maintain a minimum balance of P200,000 in the unrestricted current bank account. The bond sinking fund is set aside to settle bonds payable due on December 31, 2022. e reported as cash and cash What total amount should bi equivalents on December 31, 2021? 8,640,000 7,440,000 7,640,000 5,640,000 eae sP 159 Scanned with CamScannerSolution 12-13 Answer a Petty cash fund 40,009 Cash on hand 400,09 Current account 4,000,009 Payroll account 1,200,009 Sinking fund 2,000,009 Treasury bills 1 rel cach id cash equivalents a otal cash and cash equivaler 8,640, 3.840.009 Petty cash fund 50,009 Unreplenished petty cash vouchers, (5 000) Employee IOU ( 5 000) Adjusted petty cash 40,000 Cash on hand 500,000 Customer check Postdated January 31, 2022 (100,000) , Adjusted cash on hand 400,000 The customer postdated check should be reverted to accounts Teceivable. The minimum balance of 200,000 to be maintained in the current account is included in cash because the current account is unrestricted. ‘The sinking fund is included in cash and cash equivalents because the related bond payable is already due within one year from the end of the reporting period. The classification of a cash fund should parallel the classification of the related liability. The cash in bank réstricted for Plant addition is classified 48 “oncurrent regardless of the expected year of disbursement. 160 Scanned with CamScannerSo problem 12-14 (LAA) Hagges Compt Provide ie shoe Sitmnatonon Deceaer 3, pa li Petty cash fund Current account ~ First Bank 4, 000,000 Current account ~ Second Bank (overdraft) (_ 250,000) Money market placement ~ Third Bank 1,000,000 Time deposit - Fourth Bank 2,000,000 * A check for P100,000 was drawn against First Bank current account dated and recorded December 29, 2021 but delivered to payee on January 15, 2022. * a ED time deposit is set aside for land acquisition in What total amount should be reported h and cash equivalents on December 31, 2021? reportedas cash and cash equlv a. 5,050,000 b. 5,150,000 c. 4,900,000 d. 4,150,000 Solution 12-14 Answer b Petty cash fund Current account — First Bank (4,000,000 + 100,000) Money market placement Total cash and cash equivalents The undelivered check drawn against First Bank is restored to cash in bank by debiting cash in bank and crediting accounts payable. In the absence of specific term, money market placement is short-term investment of three months or less. The Fourth Bank time deposit is a noncurrent asset because it is set aside for the acquisition of a noncurrent asset. The bank overdraft is a current liability because it is ina different bank. Otherwise, the bank overdraft is netted ifit is in the same bank. 161 Scanned with CamScanneroN Problem 12-15 (PHILCPA Adapted) Kaye Company provided the following information on Decembe; 3, 2021: Cash on hand 200,009 PhilippineBank current account $,000,009 Manila Bank current account No.1 f (50000 Manila Bank current account No. 2 (bank overdra ) ,000) BDO saving account set aside for bond payable due 3,000, December 31, 2023 wit Jeo Asia Bank saving account for equipment acquisition 2 oe Asia Bank time deposit, 90 days 1,000,000 Treasury bills spate Paden Included among the checks drawn by the entity 9g hilippine Bank curerent account and recorded in December 2021 are: + Check written and dated December 23, 2021 and delivered to 100,000. » PRO amy ccember 23, 2021, dated January 30, 2072 delivered to payee on December 28, 2021, P150,000. . What total amount should be repoted as cash and cash equivalents on December 31, 2021? a. 11,950,000 b. 12,450,000 c. 14,950,000 d. 10,950,000 Solution 12-15 Answer a spies hand , Pailtppine Bank current account 5,250,000 Manila Bank current account, net of bank overdraft in same bank 3,500,000 Asia Bank time deposit 200,000 Treasury bills 1,000, 000 Total cash and cash equivalents 11,950,000 ilippine Bank current t pnlapeedtacm somng Postdated check delivered I '50,000 oe ‘Adjusted balance : 000 525008 The BDO saving account is not inci: i becai payable matures in more than one pene din cash use the te In the absence of . considered cash equivdet statement, the treasury bills 8 162 Scanned with CamScanner *r problem 12-16 (LAA) on December 31, 2021, Erika Company reported cash account pelance per ledger of P9,500,000 which included the following: | sh in bank — demand deposit Fine deposit - 30 days ae NSF check of customer 200,000 Money market placsment due on June 30, 2022 2,000,000 ° saving deposit 1,000,000 JOU from an employee 300,000 pension fund 1,500,000 Customer check dated January 31, 2022 600,000 Customer check outstanding for 18 months 400,000 9,500,000 * Check of P100,000 in payment of accounts payable was dated and recorded on December 31, 2021 but mailed to creditors on January 15, 2022. * Check of P300,000 dated January 31, 2022 in payment of accounts payable was recorded and mailed December 31, 2021. * The cash receipts journal was held open until January 15, 2022, during which time P200,000 was collected and recorded on December 31, 2021. What total amount should be reported as cash and cash equivalents on December 31, 2021? a 4,700,000 b. 6,700,000 & 4,900,000 4. 5,100,000 163 Scanned with CamScannerSolution 12-16 Answer a Cash in bank — demand deposit 3,200,009 Time deposit — 30 days $00,009 Saving deposit 1,000, \d cash equivalent: “4,700.9 Total cash and cas! ents iG AM Cash in bank — demand deposit 3,000,000 Undelivered check dated and recorded on December 31, 2021 but mailed on January 31, 2022 100,000 Check postdated January 31, 2022 recorded on December 31, 2021 300,000 Collections during January 2022 recorded on December 31, 2021 200,000) Adjusted cash in bank 3,200,000 The undelivered check and postdated check should be restored to cash by debiting cash in bank and crediting accounts payable. The window dressing of collections during January 2022 should be reversed by debiting accounts receivable and crediting cash in bank The NSF customer check, postdated customer check dated January 31, 2022 and the customer check outstanding for 18 months should be reverted to accounts receivable. The money market placement is not a cash equivalent because the term is more than 3 months. The IOU from an employee is classified as a receivable. ‘The pension fund is a noncurrent investment. 164° Scanned with CamScanner > }Problem 12-17 (IAA) On December 31, 2021, Roma Com, ted: ‘ enn i J f P9,950,000 hom following: any TPO cash of P9, Undeposited collections Cash in bank ~ BDO checking account 4 ow. o00 Undeposited NSF check received from customer, i dated December 1, 2021 , 150,000 Undeposited check from a customer, dated , January 15,2022 250,000 Cash in bank ~ BDO fund for payroll 1,000,000 Cash in bank — BDO money market instrument, 90 days 2,000,000 Cash in foreign bank restricted 1,500,000 Cash in bank — BDO value added tax account 450,000 Total . 2,950,000 On December 31, 2021, what total amount should be reported as cash and cash equivalents? a. 7,600,000 b. 8,200,000 c. 6,050,000 d. 8,050,000 Solution 12-17 Answerd Undeposited collections 600,000 BDO checking account 4,000,000 BDO payroll fund 1,000,000 BDO money market 2,000,000 BDO value added tax account 450,000 8,050,000 Total cash and cash equivalents The NSF customer check and the postdated customer check dated January 15, 2022 should be reverted to accounts receivable. The restricted cash in foreign bank is classified as noncurrent. The BDO money market instrument is a cash equivalent because the term is 90 days or three months. The BDO value added tax account is included in cash because it is for the payment of current liability. 165 Scanned with CamScannerProblem 12-18 (ACP) Love Company reported the following momationinteation yg onDecember 31,2021: , * Checkbook balance, P4,000,000. * Undeposited collections, P400,000, heck amounting to P200,000 dated , included int the December 31,202] checkbook ary 2, 2 balance, % * ther customer check for-P500,000 deposited on barca 901 was included in the checkbook balance the bank for insufficiency of fund, This check was redeposited on December 26, 2021 wvcie, two days later, * A P400,000 check Payable to Supplier dated and reco, December 30, 2021 was Mailed on January 16, 2022. * A petty cash: *n4ofPS0.0 comprised he eloning on Decay 31,2021: Coins and currencies ded oy 5,000 Petty cash vouchers 40,000 Refundable deposit for returnable containers 5,000 50,000 Acheck of P40,000 was drawn on December 31,2021 Payable to Petty C; What amount should be reported as adjusted cash in bank on ber 31, 20217 a. 4,600,000 b. 4,200,000 ¢. 4,400,000 4. 3,700,000 2. eae mate lb epee cthon Deemer, 201 a 4,645,000 b. 4,845,000 ©. 4,600,000 4. 4,650,000 Scanned with CamScannerSolution 12-18 Question J Answer b Checkbook balance ,000,000 Postdated customer check e: 7 4,000, Undelivered check rayuite croncously included (200,000) ‘Adjusted cash in bank 4,200,000 The NSF check is tedeposited and cleared before December 31, 2021. Thus, the same is not deducted anymore from the checkbook balance. The undelivered check payable to supplier should be restored to the cash balance by debifing cash in bank and crediting accounts payable. Question 2 Answer a Cash in bank * 4,200,000 Cash on hand — undeposited collections 400,000 Petty cash fund 45,000 Total cash 4,645,000 Coins and currencies 5,000 Replenishment check 40,000 Total petty cash 45,000 Therefundable deposit for retumable containers is classified as current asset. 167 Scanned with CamScannerCHAPTER 13 BANK RECONCILIATION Basic problems Problem 13-1(AICPA Adapted) In preparing the bank reconciliation for the month of August, Apex Company provided the following information: Balance per bank statement es Deposit in transit Q Return of customer check for insufficient fund anm Outstanding checks. a Bank service charge for August , ‘What amount should be reported as adjusted cash in bank? 1,855,000 b. 1,795,000 c. 1,785,000 d. 1,755,000 » Solution 13-1 Answer a Balance per bank 1,805,000 Deposit in transit 325,000- Total 2,130,000 Outstanding checks (275,000) Adjusted bank balance 1,855,000 wee The customer check which isreturned for insufficient fund and the bank Service charge are ignored because these are book reconciling items. 168 Scanned with CamScannery t problem 13-2(AICPA Adapted) Inpreparing the bank reconciliation for the month of December, Case | ' | Company provided the following data: | galance per bank statement 3,800,000 | Deposit in transit 520,000 |, Amount erroneously credited by bank to Case’s account 40,000 I Bank service charge for December 5,000 || NSF check 50,000 i Outstanding checks 675,000 1, What amount should be reported as adjusted cash in bank? a. 3,685,000 b. 3,645,000 c. 3,600,000 d. 3,605,000 2. What is the unadjusted cash in bank balance per book? a. 3,550,000 b. 3,660,000 c. 3,610,000 d. 3,655,000 Solution 13-2 Question 1 Answer d Question 2 Answer b Balance per bank statement Deposit in transit Outstanding checks Bank error — erroneous bank credit Adjusted bank balance Unadjusted book balance (SQUEEZE) Bank service charge NSF check Adjusted cash in bank balance 169 Scanned with CamScannerProblem 13-3 (IAA) vided the following data for the PUTPOSe op Gore Company cash balance per book with the balance Per bang statement on December 31: Balance per book 850,099 ank statement 2,000,009 Outmmadegchonks including certified check of P100,000 500,009 Deposit in transit . 200,009 December NSF checks, of which P50,000 had been redeposited and cleared on December 27 150,009 Erroneous credit to Core’s account, representing Proceeds of loan granted to another company 300,000 Proceeds of note collected by bank for Core, net of service charge of P20,000 750,009 What amount should be reported as cash in bank at year-end? a. 1,500,000 b. 1,400,000 c. 1,800,000 4. 1,450,000 Solution 13-3 Answer a Balance per bank 2,000,000 Deposit in transit 200,000 Outstanding checks (500,000 — 100,000) ( 400,000) Erroneous bank credit (_ 300,000) Adjusted bank balance 1,500,000 The certified check of P100,000 is no longer Outstanding for reconciliation purposes, Thus, the amount is deducted from the total Outstanding checks, Balance per book 850,000 NSF checks (150,000 — 50,000) (100,000) Proceeds of note collected 750,000 Adjusted book balance 1,500,000 Note that NSF checks of PS0,000 are already redeposited and cleared on December 27, Scanned with CamScannerproblem 13-4 (AICPA Adapted) Able Company received the bank ef However, the closing balance of tien on bed the month of Marsh Attempts to contact the bank afte " . i ematon hours did not secure the desired ebruary 28 book balance fate collected by bank a Interest earned on note 10,000 NSF check of customer 130,000 Bank service charge on NSF check 2,000 Other bank service charges 3,000 Outstanding checks 200,000 Deposit of February 28 placed in night depository 85,000 Check issued by Axle Company charged to Able’s account 20,000 What is the cash balance per bank statement? a. 1,435,000 b. 1,530,000 c. 1,340,000 d. 1,550,000 Solution 13-4 Answer b February 28 book balance 1,460,000 Note collected by bank “100,000 Interest earned on note 10,000 NSF check ! (130,000) Bank service charges (2,000 + 3,000) (__ 5,000) Adjusted book balance 1,435,000 Balance per bank statement (SQUEEZE) 1,530,000 Deposit in transit 85,000 Bank error — erroneous charge 20,000 Outstanding checks (__200,000) Adjusted bank balance 1,435,000 The bank statement balance is “squeezed” by working back from the adjusted balance. 171 Scanned with CamScannerProblem 13-5 (IAA) i for the mo; Stellar Company provided the bank statement nth December’ watch included the following information: of Ending balance, December 31 2,800,009 Bank service charge for December 12,009) Interest paid by bank to Stellar Company for December 10,000 In comparing the bank statement to its own cash records, the entity found the following: Deposits made but not yet recorded by the bank 350,000 Checks written and mailed but not yet recorded by the bank 650,000 In addition, the entity discovered that it had drawn and erroneous) recorded a check for P46,000 that should have been recorded for P64,000. What is the cash balance per ledger on December 31? a. 2,500,000 b. 2,520,000 c. 2,540,000 d. 2,800,000 Solution 13-5 Answer b Balance per bank 2,800,000 Deposits in transit 350,000 Outstanding checks (_ 650,000) Adjusted bank balance 2,500,000 Balance per ledger (SQUEEZE) 2,520,000 Interest income 10,000 Service charge (12,000) Book error (64,000 - 46,000) (18,000) Adjusted book balance 2,500,000 The cash balance per ledger is “s jueezed” b: i from mea ance P sq y working back 172 Scanned with CamScannerproblem 13-6 (IAA) Letty Company provided th i Uichincluded the following le bank Statement for the month of April Bank service charge for April 15,000 Check deposited by Letty during Apri ig April was not collectible and has been marked “NSF” by the bank and returned 40,000 In comparing the bank statement to it i thefollowing: 0 its own records, the entity found Deposits made but not yet recorded hy bank 130,000 Checks written and mailed but not yet recorded by bank 100,000 All deposits in transit and outstanding checks have been properly recorded in the entity’s books. Acustomer check for P35,000 payable to Letty Company had not yet been deposited and had not been recorded by the entity. The cash in bank account balance per ledger is P920,000. What amount should be reported as adjusted cash in bank on April 30? a. 900,000 b. 865,000 c. 930,000 d. 965,000 Solution 13-6 Answer a Balance per ledger 920,000 Unrecorded customer check 35,000 Bank service charge (15,000) NSF check (40,000) Adjusted book balance 300,000 The deposits in transit and checks outstanding are ignored because these are bank reconciling items. 173 Scanned with CamScannerNy Problem 13-7 (IAA) Gallant Company showed a cash account balance of pq the month-end. 500,009 a The bank statement did not include a deposit of P2309 last day of the month. :000 made the The bank statement showed a collection of a -. bank of P94,000 for the depositor and a cust omen -pecivable bY the returned because it was NSF. for P32,099 A customer check for P45,000 was recorded 54,000 and acheck written for P79,000 was by the depositor as Tecorded as P97,009 What amount should be reported as cash in bank? , a. 4,765,000 b. 4:571,000 c. 4,819,000 d. 4,801,000 Solution 13-7 Answer 4 Balance per book . 4,500,000 Collection by bank of note receivable on 000 NSF customer check (32,000) Book error — customer check overstated ( 9,000) Book error — check written overstated 18,000 Adjusted book balance 4,571,000 Customer check 45,000 Recorded by depositor 54,000 Book error — overstatement of a collection 9,000 Company check 79,000 Recorded by depositor 97,000 Book error — overstatement of payment 18,000 ‘The deposit in transit of P230,000 is a bank reconciling item. » ™ SF. Scanned with CamScannera problem 13-8 (IAA) Grass Company provided the following information: Balance per bank statement J : Balance per ledger, July 31 mya Ccoen Deposit of July 30 not recorded x Debit memo — service charges by bank 70 000 Credit memo — collection of x Outstanding checks mote by bank for Grass 350-000 Ananalysis of the canceled chi . revealed the following: checks returned with the bank statement * Check for purchase of suppli Pen pplies was drawn for P60,000 but was * The manager wrote a check for traveling expenses of P100,000 while out of town. The check was not recorded. What amount of cash in bank should be reported on July 31? a. 970,000 b. 270,000 c. 550,000 d. 610,000 Solution 13-8 Answer a Balance per ledger 750,000 Debit memo — service charges (10,000) Credit memo — collection of note 300,000 Book error in recording check (90,000 ~ 60,000) 30,000 Unrecorded check for traveling expenses (100,000) Adjusted book balance 220,000 Balance per bank 1,240,000 Deposit in transit 280,000 Outstanding checks ($50,000) ' 970,000 Adjusted bank balance 175 Scanned with CamScanner| Problem 13-9 (IAA) Aries Company kept all cash in a checking account. An examination of the accounting records and bank statement for the month of June revealed the following information: * The cash balance per book on June 30 was P8,500,000. * A deposit of P1,000,000 that was placed in the bank’s night depository on June 30 did not appear on the bank statement. * The bank statement showed that on June 30 the bank collected note for the entity and credited the proceeds of P950,000 to the entity's account, net of collection charge P50,000. ; , * ° Checks outstanding on June 30 amounted to P300,000 including certified check of P100,000. * The entity discovered that a check written in June for 200,000 in payment of an account payable had been recorded in the entity's records as P20,000. Included with the June bank statement was NSF check for P250,000 received from a customer on June 26. * The bank statement showed a P20,000 service charge for June, . What amount should be reported as cash in bank on June 30? a. 9,000,000 b. 8,300,000 c. 9,360,000 d. 9,180,000 N What is the balance per bank statement on June 30? a. 8,300,000 b. 9,700,000 c. 8,660,000 d. 8,200,000 3 Whatis the net adjustment to cash in bank on June 30? ‘a. Netdebit P950,000 b. Netcredit 450,000 c. Netdebit P500,000 d. Net debit P860,000 176 Scanned with CamScannernN Solution 13-9 Question 1 Answer a Balance per book Note collected by bank Total Book error (200,000 - 20,000) NSF check Service charge Adjusted book balance Question 2 Answer d Balance per bank (SQUEEZE) 8,200,000 Deposit in transit 1,000,000 Outstanding checks (300,000 — 100,000 certified check 200,000) Adjusted bank balance 9,000,000 The certified check is no longer considered outstanding check for bank reconciliation purposes. Question 3 Answer c Cash in bank 950,000 Service charge 50,000 Note receivable 1,000,000 Accounts payable 180,000 Accounts receivable 250,000 Service charge 20,000 450,000 Cash in bank The two entries can be compounded and the net effect is a debit to cash in bank of P500,000. 177 Scanned with CamScannerProblem 13-10 (PHILCPA Adapted) Boracay Company keptall cash ina checking account. An of the bank statement for the month of December revealed a bang statement balance of P8,470,000. A deposit of P950,000 placed in the bank’s night depository on December 29 does not appear on the bank statement. Checks outstanding on December 31 amount to P270,000. The bank statement showed that on December 25 the bank collecteg note for Boracay Company and credited the proceeds of P935,000 tp the entity’s account net of P1 5,000 service charge. acheck written in December for had been recorded as P138,000, Boracay Company discovered that P183,000 in payment of an account Included with the December 31 bank statement was an NSF check for P250,000 that Boracay Company had received from a customer on December 20. The bank statement showed a P15,000 service charge for December, 1. What is the adjusted cash in bank on December 31? 9,150,000 9,240,000 9,195,000 9,215,000 ac oP 2. What is the unadjusted balance per book on December 31? a. 8,480,000 b. 8,525,000 c. 8,435,000 4. 8,510,000 What is the net adjustment to cash in bank on December 31? @ Net debit 935,000 b. Netcredit 310,000 ¢. Netdebit 625,000 4. Netcredit 625'000 178 Scanned with CamScannerSolution 13-10 Question 1 Answer a Balance per bank Deposit in transit Checks outstanding Adjusted bank balance Question 2 Answer b Balance per book (SQUEEZE) Note collected by bank for the depositor Book error in recording check NSF check Service charge Adjusted book balance Check written in December Recorded by entity Book error in recording check Question 3 Answer c Cash in bank Service charge Note receivable Accounts payable Accounts receivable Service charge Cash in bank 8,470,000 950,000 (_ 270,000) 9,150,000 8,525,000 935,000 (45,000) ( 250,000) (15,000) 9,150,000 183,000 (138,000) 45,000 935,000 15,000 950,000 45,000 250,000 15,000 310,000 The two entries can be compounded and the net effect is adebit to cash in bank of P625,000. 179 Scanned with CamScanner\ Problem 13-11 (AICPA Adapted) Pearl Company maintains a checking account at the City Bank, The bank provides a bank statement along with canceled c On the lag day of each month. The July bank statement included the follow, information: Balance, July 1 Eee Deposits Checks processed 750,00 Service charge \ ,000 NSF check 50,009 Monthly loan payment deducted by bank from account 500,009 Deposits outstanding totaled P400,000 and all checks written by the entity were processed by the bank except for check of P500,000, A P200,000 July deposit from a credit customer was recorded as P20,000 debit to cash and credit to accounts receivable. A check correctly recorded by Pearl Compeny as P30,000 disbursement was incorrectly processed by the bank as P300,000 disbursement. 1. What is the balance per bank on July 31? a. 3,600,000 b. 4,100,000 c. 4,300,000 d. 3,800,000 2. be bd should be reported as adjusted cash in bank on 500,000 770,000 230,000 a. 3. b. 3 c. 3 4. 3,800,000 180 Scanned with CamScannersolution 13-11 Question 1 Answera palance per bi Deposits checks processed service charge iF check Monthly loan payment Balance per bank — July 31 ank — July 1 Question 2 Answer b Balance per bank — July 31 Deposit in transit Outstanding check Bank error — overstatement of disbursement Adjusted bank balance Correct amount of disbursement Recorded by bank Bank error — overstatement of disbursement Question 3 Answer c Balance per ledger - July 31 (SQUEEZE) Service charge NSF check Monthly loan payment Book error - understatement of collection Adjusted book balance Correct amount of accounts receivable collected Recorded by depositor Book error — understatement of collection 181 Scanned with CamScannerCHAPTER 14 BANK RECONCILIATION Comprehensive problems Problem 14-1 (PHILCPA Adapted) Divine Company prepared the following bank reconciliation 4 December 31: Balance per bank statement 2,800 05, Add: Deposit in transit 195,000 Checkbook printing charge 5,000 Error made by Divine in recording chéck issued in December rion NSF check 34504 Total 3,145 0 Less: Outstanding check 100,000 Note collected by bank including P15,000 interest 215,000 315 —_—_— SO Balance per book 2.83000 The entity had cash on hand P500,000 and petty cash fund P5000) on December 31. 1. What amount should be reported as cash in bank at year-en!’ a. 2,930,000 b. 3,095,000 c. 2,895,000 d. 3,130,000 2. What total amount of cash should be reported at year-end? a. 3,395,000 b. 3,350,000 c. 3,445,000 d. 3,380,000 182 Scanned with CamScannera Solution 14-1 Question | Answer c Balance per bank Deposit in transit Outstanding check Adjusted cash in bank Balance per book Note collected by bank NSF check Book error Checkbook printing charge Adjusted cash in bank Question 2 Answer c Adjusted cash in bank Cash on hand Petty cash fund Total cash 183 2,800,000 195,000 (_100,000) 2,895,000 2,830,000 215,000 (110,000) (35,000) (_ 5,000 2,895,000 2,895,000 500,000 50,000 3,445,000 Scanned with CamScannerNY Problem 14-2 (IAA) Ron Company provided the following data for the month of January, Balance per book, January 31 300 Balance per bank statement, January 31 Sse Collections on January 31 but undeposited 2.000 NSF check received from a customer returned by the bank on February 5 with the January bank statement 50,000 Checks outstanding on January 31 650,000 Bank debit memo for'safety deposit box rental not recorded by depositor 5,000 A creditor check for P30,000 was incorrectly recorded in' the depositor’s book as 300,000 A customer check for P200,000 was recorded by the depositor as 20,000 ‘The depositor neglected to make an entry for a check drawn in payment of an account payable 125,000 What amount should be reported as adjusted cash in bank on January 31? a. 3,130,000 b. 3,500,000 c. 3,400,000 d. 2,950,000 Solution 14-2 Answer c Balance per book 3,130,000 Overstatement of creditor check 270,000 Understatement of customer check 180,000 NSF check (50,000) Bank debit memo for safety deposit box (5,000) Unrecorded check (125,000) Adjusted book balance 3,400,000 Balance per bank 3,500,000 Undeposited collections 550,000 Checks outstanding Adjusted bank balance 3,400,000 184 Scanned with CamScannerproblem 14-3 (LAA) Inreconciling the cash balance on December 31 with that shown in the bank staternent, Sam Company provided the following information: Balance per bank statement 4,000,000 Balance per book 2,700,000 Outstanding checks “600,000 Deposit in transit 475,000 Service charge 10,000 Proceeds of bank loan, December |, discounted for 6 months at 12%, not recorded on Sam Company’s books 940,000 Customer check charged back by bank for absence of counter signature 50,000 Deposit of P100,000 incorrectly recorded by bank as 10,000 Check of Sim Company charged by bank against Sam account 150,000 Customer note collected by bank in favor of Sam Company. Face 400,000 Interest 40,000 Total 440,000 Collection fee 5,000 435,000 Erroneous debit memo of December 28, to charge Sam account with settlement of bank loan 200,000 Deposit of Sim Company credited to Sam account 300,000 What amount should be reported as adjusted cash in bank on December 31? as 4,315,000 b. 3,925,000 c. 3,075,000 d. 4,015,000 195 Scanned with CamScannerAy Solution 14-3 Answer d Balance per book Add: Proceeds of bank loan 940,000 Customer note collected by bank __435,000 1,375,099 Total 4,075,009 2,700,009 Less: Service charge 10,000 Customer check charged back __50,000 — $0,009 Adjusted book balance 4,015,009 == Balance per bank 4,000,009 Add: Deposit in transit 475,000 Incorrect deposit 90,000 Erroneous bank charge 150,000 Erroneous debit memo 200,000 915,000 r—[ Total 4,915,000 Less: Outstanding checks 600,000 Erroneous bank credit 300,000 900,000 | ——_s oo Adjusted bank balance 4,015,000 === 186 Scanned with CamScannerJ problem 14-4 (IAA) susan Company showed the following information on August 31: Balance of cash in bank account Balance of bank statement 100000 Outstanding checks, August 31: Number 555 761 53,00 162 40,000 763 25,000 764 65,000 765 70,000 Receipts of August 31, deposited September 1 275,000 Service charge for August 5,000 NSF check received from a customer 85,000 The cashier-bookkeeper had misappropriated P30,000 and an additional P10,000 by charging sales discounts and crediting accounts receivable. The stub for check number 765 and the invoice relating thereto showed that it was for P50,000. It was recorded incorrectly in the cash disbursements journal as P70,000. This check was drawn in payment ofan account payable. Payment has been stopped on check number 555 which was drawn in payment of an account payable. The payee cannot be located. What amount should be reported as adjusted cash in bank on August 31? a. 1,240,000 b. 1,230,000 c. 1,210,000 d. 1,200,000 187 Scanned with CamScannerSolution 14-4 Answer @ kK nt of check nul Balance per boo Check numbs Total Less: Service charge NSF check Adjusted book balance Company check number 765 Recorded by depositor Overstatement of payment Balance per bank ‘Add: Undeposited collections Total Less: Outstanding checks: Number 761 762 763 764 765 Adjusted bank balance 188 : mber 765 Add: Overstatement of heer or payment RB i s Scanned with CamScannerproblem 14-5 (PHILCPA Adapted) Mcbride Company provided the follow; pertaining € following data pertaining to the cash transactions and bank account for the month of May: Cash balance per accounting record 1,719,000 Cash balance per bank statem Bank service charge ent 3,195,000 Debit memo for the cost of printed checks delivered rene by the bank; the charge has not been recorded in the accounting record 12,000 Outstanding, checks 685,000 Deposit of May 30 not recorded by bank until June | 500,000 Proceeds of a bank loan on May 30, not recorded in the accounting record, net of interest of P30,000 570,000 Proceeds from a customer promissory note, principal amount P800,000 collected by the bank not taken up in the accounting record with interest 810,000 Check No. 1086 issued to a supplier entered in the accounting record as P210,000 but deducted in the bank statement at an erroneous amount of 120,000 Stolen check lacking an authorized signature deducted from Mcbride’s account by the bank in error 80,000 Customer check returned by the bank marked NSF, indicating that the customer balance was not adequate to cover the check; no entry has been made in the accounting record to record the returned check What amount should be reported as adjusted cash in bank? 3,000,000 2,910,000 3,080,000 2,990,000 77,000 aes 129 Scanned with CamScannerSolution 14-5 Answer a Balance per book Service charge Debit memo for printed checks Proceeds of bank loan Proceeds of customer note NSF customer check Adjusted book balance Balance per bank Outstanding checks Deposit in transit Bank error in recording check Stolen check deducted by bank in error Adjusted bank balance 190 1,719,000 (10,000) (12,000) . 570,000 810,000 (77,000) 3,000,000 3,195,000 (685,000) 500,000 (90,000) 80,000 000 { » ? A Scanned with CamScannerProblem 14-6 (AICPA Adapted) Carefree Company prepared the following bank reconciliation on March 31: Book balance 1,405,000 Add: Deposit in transit 750,000 Collection of note 2,500,000 Interest on note 150,000 3,400,000 Total 4,805,000 Less: Careless Company deposit credited to our account 1,100,000 Bank service charge 45,000 1,145,000 Adjusted book balance 3,660,000 Bank balance 5,630,000 Add: Error by depositor on recording check 45,000 Total 5,675,000 Less: Preauthorized payments for water bills 205,000 NSF customer check 220,000 Outstanding checks 1,650,000 2,075,000 Adjusted bank balance 3,600,000 The check erroneously recorded by the depositor was made for the proper amount of P249,000 in payment of account. However it was entered in the cash payments journal as P294,000. The entity authorized the bank to automatically pay its water bills as submitted directly to the bank. What amount should be reported as cash in bank on March 31? 3,660,000 3,600,000 3,630,000 2,880,000 aoop 191 Scanned with CamScannerSolution 14-6 Answer c Book balance Collection of note Interest on note Book error on recording check Bank service charge Water bills paid directly by bank NSF customer check Adjusted book balance Company check Recorded by depositor Book error — overstatement of a payment Bank balance Deposit in transit Outstanding checks Bank error — Careless Company deposit erroneously credited Adjusted bank balance 192 1,405,000 2,500,009 150,009 45,000 (45,000) (205,000) (220,000) 3,630 3,830,000 249,000 294,000 45,000 5,630,000 750,000 (1,650,000) 1,100,000) 3,630,000 Scanned with CamScannerCHAPTER 15 pROOF OF CASH problem 15-1 (IAA) ay Company provided the following: information on December 31: Credit memo for November recorded in December 600,000 Credit memo for December not yet recorded 800,000 Deposit in transit — November 30 700,000 Erroneous bank charge in December corrected by bank in December 200,000 Erroneous receipt by Bay Company in December not corrected until the following year 100,000 Total company receipts for December 8,500,000 Total bank credits in December 8,000,000 What is the deposit in transit on December 31? a. 1.600,000 b. 1,300,000 c. 1,500,000 d. 1,200,000 Soluton 15-1 Answer ¢ Deposit in transit — ‘November 30 700,000 Deposits made by entity during December 7,800,000 Total deposits to be acknowledged by bank 8,500,000 Deposits acknowledged by bank in December (7,000,000) Deposit in transit - December 31 1,500,090 Total company receipts during December 8,500,000 Credit memo in November recorded in December ( 600,000) Erroneous receipt by entity in December not corrected — (_ 100,000) Deposits made by entity in December 7,800,000 Total bank credits in December . 8,000,000 Credit memo in December 800,000) Erroneous bank charge corrected’ by bank December (200,000) Deposits acknowledged by bank in December : 193 Scanned with CamScannerProblem 15-2 (IAA) Gray Company provided the following information for October any November. bank in November, Checks and charges recorded by bank in NED Tog including a November service cl 550 and NSF check of P20,000 000 Service charge made by bank in Octol fons depositor in Novem! . ( Total eds © cash in all journals during November 620,000 Customer NSF check retuned in October and b redeposited in November but no entry nade ry im itor in either October or November K outstanding ‘cheeks ‘on October 31 that cleared in November 230,000 What amount was reported as outstanding checks on November 30? ber and recorded a. 275,000 b. 300,000 ¢. 315,000 d. 290,000 Solution 15-2 Answer c Outstanding checks - October 31 230,000 Checks issued by depositor in November 610,000 Total checks to be paid by bank 840,000 Checks paid by bank in November (525,000) Outstanding checks — November 30 315,000 Total: credits to cash in all journal during November 620,000 Service charge in October recorded in November (10,000) Checks issued by depositor in November 610,000 Checks and charges by bank in November November service charge 7) November NSF check {2to) Checks paid by bank in November 525,000 525,000 The customer NSF check of ae P40,000 i eee ved in Novemberis ignored because med tn saute oy Sitor in either October or November. nny was made ty 194 Scanned with CamScannerproblem 15-3 (AICPA Adapted) ser Company had the following bank reconciliation on June 30: ce per bank statement, Bost in transit at June. 30 3,000,000 f Ae foal. 3,400,000 outstanding hes ; (900,000) lance per bock, June 30 Bal 2,500,000 The bank statement for the month of July showed the following: Deposits, including P200,000 note collected for Lazer 9,000,000 Disbursements, including P140,000 NSF customer check and P10,000 service charge 7,000,000 Allreconciling 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. 1. What is the adjusted cash in bank on July 31? a. 2,500,000 b. 5,400,000 c. 2,900,000 d. 5,000,000 2. What is the cash balance per book on July 31? a. 5,400,000 b. 5,350,000 c. 5,550,000 d. 4,500,000 3, What is the amount of cash receipts per book in July? a. 9,400,000 b. 9,600,000 c. 8,600,000 d, 9,800,000 4. What is the amount of cash disbursements per book in July? 6,550,000 6,700,000 7,300,000 6,850,000 Be oP 195 Scanned with CamScannerSolution 15-3 Question I Answer b 3,000,009 Balance per bank — June 30 9,000,000 July bank deposits ( 7,000,009) July bank disbursements 5,000, 000 Balance per bank - July 31 1,000'000 July deposit in transit (_600,000) July outstanding checks "5,400,000 Adjusted bank balance —> £00,009 Question 2 Answer b 535 Balance per book - July 31 (SQUEEZE) S008 Note collected by bank in July (140,000 NSF customer check in July ( 10°000) Service charge in July Nt) Adjusted book balance 5,400,000 The balance per book on July 31 is “squeezed” by working back from the adjusted balance. Question 3 Answer a Deposits per bank statement for July 9,000,000 Note collected by bank in July (200,000) Deposit in transit - June 30 (400,000) Deposit in transit - July 31 1,000,000 Cash receipts per book for July 3,400,000 Question 4 Answer a Disbursements per bank statement for July 7,000,000 NSF check in July ( 140,000) Service charge in July (10,000) Outstanding checks — June 30 ( 900,000) Outstanding checks — July 31 600,000 Cash disbursements per book for July 6,550,000 Proof of the cash balance per book — July 31 Balance per book - June 30 2,500,000 Book receipts for Jul 9,400,000 Book disbursements for July 6,550,000) Balance book - Jul; € per book ~ July 31 5,350,000 196 Scanned with CamScanner_ problem 15-4 (AICPA Adapted) is Company present . Cnthof November, ted the following bank reconciliation for the palance per bank statement, November 30 Add: Deposit in transit 3,600,000 ' 800,000 Less: Outstanding checks 1,200,000 “aon.0e Bank credit recorded in error "200,000 1,400,000 Balance per book, November 30 3,000,000 3,000,000 Data per bank statement for the month of December follow: December deposits, including note collected ofP 1,000,000 for Chris 5,500,000 December disbursements, including N: 350,000 and service charge P5000 check 4,400,000 Allitems that were outstanding on N the ee er akan an Novernber 30 cleared through In addition, checks amounting to P500,000 were outstanding and deposits of P700,000 were in transit on December 31. 8 1. What amount should be reported as adjusted cash in bank on December 31? d. 3,200,000 2. What is the cash balance per ledger on December 31? a. 4,100,000 b. 4,900,000 700,000 300,000 is the amount of cash receipts per book in December? rerrgee SeEeE Be: sg 3s. of cash disbursements per book in December? peop : | 197 Scanned with CamScannerSolution 15-4 Question 1 Answer b 3,600,009 30 Balance per bank - November 4,500,099 December deposits 9,100,009 Total (4400009 December disbursements 4,700,009 Balance per bank ; December 31 700,009 eposit in transit - December ( (_500,099) Outstanding checks - December 4.900.000 Adjusted bank balance — December 31 =_—s Question 2 Answer d 4,300, Balance per book ~ December 31-(SQUEEZE) ooo.) Note collected by bank . ( 350,000) F customer chec i Service charge ($0,000) Adjusted book balance 4,900,000 Question 3 Answer b December bank deposits 5,500,000 Note collected by bank in December (1,000,000) Deposit in transit — November 30 ( 800,000) Deposit in transit - December 3] 700,000 December book receipts 4,400,000 Question 4 Answer ¢ December bank disbursements 4,400,000 NSF check in December ( 350,000) Service charge in December (50,000) Outstanding checks — November 30 (1,200,000) Erroneous bank credit in November ( 200,000) Outstanding checks — December 31 500,000 December book disbursements 3,100,000 Proof of cash balance Per book ~ December 31 Balance per book — November 30 ,000 December book receipts sets December book disbursements G,100,000) Balance per book — December 31 4,300,000 198 Scanned with CamScannerProblem 15-5 (AICPA Adapted) Lira Company prepared the following bank reconciliation on June 30: Balance per bank 9,800,000 Deposits in transit 400,000 Outstanding checks 1,400,000) Balance per book 8,800,000 There were total deposits of P6,500,000 and charges for disbursements of P9,000,000 for July per bank statement. All reconciliation items on June 30 cleared the bank on July 31. Checks outstanding amounted to P1 000,000 and deposits in transit totaled P1,200,000 on July 31. 1. What is the amount of cash receipts per book in July? a, 6,500,000 b. 7,300,000 c. 5,700,000 d. 7,900,000 2. What is the amount of cash disbursements per book in July? 8,600,000 7,600,000 9,400,000 8,400,000 aoge 3. What amount should be reported as adjusted cash in bank on July 31? 7,300,000 6,300,000 7,500,000 6,500,000 aege 4. What is the cash balance per ledger on July 31? a. 8,800,000 b. 8,500,000 c. 6,300,000 d. 7,500,000 199 Scanned with CamScannerSolution 15-5 Question 1 Answer b Bank receipts for July Deposits in transit — June 30 Deposits in transit — July 31 Book receipts in July Question 2 Answer a Bank disbursements for July Outstanding checks — June 30 Outstanding checks - July 31 Book disbursements for July Question 3 Answer c Balance per bank - June 30 Bank receipts for July Bank disbursements for July Balance per bank - July 31 Deposits in transit — July 31 Outstanding checks — July 31 Adjusted bank balance - July 31 Question 4 Answer d Balance per book — June 30 Book receipts for July Book disbursements for July Balance per book — July 31 6,500,000 : 400,009) 1 2:300,009 9,000,000 (1,400,000) The balance per book on July 31 is also the adjusted book balance because there are no book reconciling items. 200 ad Scanned with CamScanner— a Problem 15-6 (AICPA Adapted) Oro Company had the following bank reconciliation on March 31: Balance per bank statement, March 31 4,650,000 Add: Deposits in transit 1,030,000 Total 5,680,000 Less: Outstanding checks 1,260,000 Balance per book, March 31 4,420,000 Data per bank statement for the month of April: Deposits 5,840,000 Disbursements 4,970,000 Allreconciliation items on March 31 cleared through the bank in April. Outstanding checks on April 30 totaled P700,000 and there were no deposits in transit on April 30. What is the cash balance per book on April 30? a. 4,820,000 b. 5,290,000 ce. 5,520,000 d. 5,850,000 Solution 15-6 Answer a Balance per bank - March 31 4,650,000 Bank deposits — April 5,840,000 Bank disbursements — April 4,970,000) Balance per bank ~ April 30 5,520,000 Outstanding checks - April 30 (700,000) Adjusted cash in bank — April 30 The adjusted cash in bank on April 30 is also the cash balance per book on April 30 because there are no book reconciling items. 201 Scanned with CamScannerAN Problem 15-7 (AICPA Adapted) Queen Company reported the following month of November: bank reconciliation fo, the 30 2,000, Balance per bank statement November 41500 Deposit in transit ( £30,009) Outstanding checks C 5,00 Bank credit recorded in error Free Balance per book November 30 ht ember: Data per bank statement for the month of Dec 2,600, December deposits 22m on December disbursements i. All items that were outstanding on November 30 cleared through the bank in December, including the bank credit. Inaddition, checks of P250,000 were outstanding on December 3]. What is the balance of cash per book on December 31? a. 2,150,000 b. 2,650,000 ¢. 2,400,000 d. 1,780,000 Solution 15-7 Answer a Balance per bank — November 30 2,000,000 December bank deposits 2,600,000 December bank disbursements (2,200,000) Balance per bank - December 31 2,400,000 Outstanding checks — December 31 250,000) Adjusted cash in bank - December 31 2,150,000 The adjusted cash in bank on December 31 is also the cash balance pert ook on December 31 because there are no book reconciling 202 Scanned with CamScannerniin 15-6 (PHILCPA Adapted) 0 COMPANY provided the following bank reconciliation on May 31: ce per bank statement ae its outstanding . 7100.0 standing ,( checks outs! (50,000) correct cash balance. 2,350,000 glance per book 2,360,000 pank service charge 10,000) Correct cash balance 2,350,000 ata for the month of June: Bank Book Checks recorded 2,300,000 . 2,400,000 Deposits recorded 1,700,000 1,800,000 Collection by bank, P500,000 note plus interest 550,000 - NSF check returned with June 30 statement 100,000 Balances 1,950,000 1,750,000 1. Whatis the amount of checks outstanding on June 30? a. 200,000 b. 150,000 c. 100,000 d. 0 2. What is the amount of deposits in transit on June 30? a. 400,000 b. 100,000 c. 200,000 d. 0 3. What amount should be reported as adjusted cash in bank on June 30? a. 1,760,000 b. 2,200,000 . 1,950,000 d. 2,250,000 203 Scanned with CamScannerSolution 15-8 Question 1 Answer b Checks outstanding - May 3! Checks recorded by book in June Total checks to be paid by bank Checks recorded by bank in June Checks outstanding — June 30 Question 2 Answer a Deposits in transit - May 3! Deposits recorded by book - June Total deposits to be acknowledged by bank Deposits recorded by bank — June Deposits in transit - June 30 Question 3 Answer b Balance per bank — June 30 Deposits in transit - June 30 Outstanding checks - June 30 Adjusted bank balance Balance per book Note collected by bank plus interest NSF check Adjusted book balance y} Scanned with CamScanner