MAVIS PINERA

PROBLEM #1

The accountant of SANTIAGO Company is in the process of preparing the company’s financial
statements for the year ended December 31, 2012. He is trying to determine the correct
balance of cash and cash equivalents to be reported as a current asset on the statement of
financial position. The following items are being considered:

 Balances in the company’s accounts at the Metropolitan Bank:

Current account
P81,000
Savings account
P132,600

 Undeposited customer checks of P22,200 (including a customer check dated January 2,

2013 for ₱3,000)

 Currency and coins on hand P3,480

 Savings account at the Northern Philippines Bank with a balance of P2,400,000. This
account is being used to accumulate cash for future plant expansion (in 2013)

 Petty cash of P4,000 (currency of P1,200 and unreplenished vouchers P2,800)

 P120,000 in a current account at the Northern Philippines Bank. This represents a 20%
compensating balance for P600,000 loan with the bank. SANTIAGO Company is legally
restricted to withdraw the funds until the loan is due in 2015.

 Treasury bills:

Two−month maturity bills

P90,000

Seven−month bills
120,000

Time deposit
P100,000

1.) What is the correct balance of cash and cash equivalents to be reported in the current assets
section of the statement of financial position?

PROBLEM #2

The auditor for MELANIE, INC. examined the petty cash fund immediately after the close of
business, July 31, 2012, the end of the company’s natural business year. The petty cash
custodian presented the following during the count:

Currency P1,650

Petty cash vouchers:

Postage 420
Office supplies expense 900
Transportation expense 340
Computer repairs 800
Advances to office staf 1,500
A check drawn by MELANIE, Inc., payable to the
petty cash custodian 7,200
Postage stamps 300
An employee’s check, returned by bank, marked NSF 1,000
An envelope containing currency of ₱1,890 for a gift for
retiring employee 1,890
TOTAL P16,000

The general ledger shows an imprest petty cash fund balance of ₱16,000.

1.) How much is the petty cash shortage overage?

PROBLEM #3

The following information pertains to a checking account of a company at June 30, 2012.
Balance per bank statement P200, 000
Interest earned for the second quarter 500
Outstanding checks 15, 000
Customer’s checks returned for insufficient funds 5, 000
Deposit in transit 25, 000

1.)What is the adjusted cash balance at June 30, 2012

PROBLEM #4

You obtained the following information on the current account of Bonifacio Company
during your examination of its financial statements for the year ended December 31, 2006.
The bank statement on November 30, 2006 showed a balance of P114,750. Among the
bank credits in November was customer’s note for P37,500 collected for the account of the
company which the company recognized in December among its receipts. Included in the
bank debits were cost of checkbooks amounting to P450 and a P15,000 check which was
charged by the bank in error against Bonifacio Co. account. Also in November you
ascertained that there were deposits in transit amounting to P30,000 and outstanding
checks totaling P63,750.
The bank statement for the month of December showed total credits of P156,000 and total
charges of P76,500. The company’s books for December showed total receipts of
P275,850, disbursements of P152,700 and a balance of P182,100. Bank debit memos for
December were: No. 245 for service charges, P600 and No. 246 on a customer’s returned
check marked “DAIF” for P9,000.
On December 31, 2006 the company placed with the bank a customer’s promissory note
with a face value of P45,000 for collection. The company treated this note as part of its
receipts although the bank was able to collect on the note only in January, 2007.
A check for P1,485 was recorded in the company cash payments books in December as
P14,850.
QUESTIONS:
Based on the application of the necessary audit procedures and appreciation of the above
data, you are to provide the answers to the following:

1.) How much is the undeposited collections as of December 31, 2006?

PROBLEM #5

The bank statement for the current account of IAN Co. showed a December 31, 2012, balance
of P585,284. Information that might be useful in preparing bank reconciliation is as follows:

a)Outstanding checks were P52,810

b)The December 31, 2012, cash receipts of P23,000 were not deposited in the bank until
January 2, 2013.

c)One check written in payment of rent P8,940 was correctly recorded by the bank but
was recorded by IAN Co. as a P9,840 disbursement

d)In a accordance with prior authorization, the bank withdrew P18,000 directly from the
current account as payment on a mortgage not payable. The interest portion of that
payment was P14,000. Ian Co. has made no entry to record the automatic payment.

e)Bank service charges of P740 were listed on the bank statement

f)A deposit of P35,000 was recorded by the bank on December 12, but it did not belong to
Ian Co.

g)The bank statement included a charge of P3,400 for a not-sufficient-fund check. The
company will seek payment from the customer.
h)Ian Co. maintains an P8,000 petty cash fund that was appropriately reimbursed at the
end of December.

i)According to instructions from Ian Co. on December 31, the bank withdrew P40,000 from
the account and purchased Treasury bills for Ian Co. the company recorded the
transaction in its books on December 31 when it received notice from the bank. Half of
the treasury bills mature in 3 months and the other half in 6 months

1.)What amount would Ian Co. report as cash and cash equivalents in the current asset
section of the December 31, 2012, statement of financial position?

GODBLESS AND GOODLUCK MGA SIS

FIGHTING!!!! CPA FOR CHRIST!