PROBLEM 1

1. The amount reported as "Cash" on a company's statement of financial position normally

should exclude
a. postdated checks that are payable to the company.
b. cash in a payroll account.
c. undelivered checks written and signed by the company.
d. petty cash.

2. Which of the following would not be classified as cash?

a. Personal checks
b. Travelers' checks
c. Cashiers' checks
d. Postdated checks

3. What is the proper accounting treatment for a stale check?

a. Revert back to cash and accounts payable.
b. Revert back to cash and a credit to gain.
c. Ignored
d. Either a or b

4. Which of the following is not a basic characteristic of a system of cash control?

a. Use of a voucher system
b. Combined responsibility for handling and recording cash
c. Daily deposit of all cash received
d. Internal audits at irregular intervals

5. The principal purpose of a voucher system is to provide assurance that

a. all cash receipts are deposited intact in the bank.
b. all cash disbursements are approved before a check is issued.
c. all cash receipts are recorded in the accounting records.
d. all purchase invoices are supported by debit memoranda.
6. Which of the following cash transfers would appear as a deposit in transit on the December 31, 20x1
bank reconciliation?

Bank Account A Bank Account B

Disbursing Date (Month/Day) Receiving Date (Month/Day)
Per Bank Per Books Per Bank Per Books
a. 12/31 12/30 12/31 12/30
b. 1/2 12/30 12/31 12/31
c. 1/3 12/31 1/2 12/31
d. 1/3 12/31 1/2 1/2

7. Which of the following transfers would not appear as an outstanding check on the December 31, 20x1
bank reconciliation?

Bank Account A Bank Account B

 Disbursing Date (Month/Day) Receiving Date (Month/Day)
Per Bank Per Books Per Bank Per Books
a. 1/3 12/31 1/2 1/2
b. 12/31 12/30 12/31 12/30
c. 1/2 12/30 12/31 12/31
d. 1/3 12/31 1/2 12/31

The information below was taken from the bank transfer schedule prepared during the audit of Khaye
Ting Company’s financial statements for the year ended December 31, 20x1. Assume all checks are
dated and issued on December 30, 20x1.

Check
No. From To Disbursements Receipts
Per Books Per Bank Per Books Per Bank
101 BDO PNB 12/30 1/4 12/30 1/3
102 METROBANK FCB 1/3 1/2 12/30 12/31
103 PNB PSBank 12/31 1/3 1/2 1/2
104 FCB PNB 1/2 1/2 1/2 12/31

8. Which of the following checks might indicate kiting?

a. Check Nos. 101 and 103 c. Check Nos. 102 and 104
b. Check Nos. 101 and 104 d. Check Nos. 102 and 103

9. Which of the following checks illustrate deposits/transfers in transit at December 31, 20x1?
a. Check Nos. 101 and 102 c. Check Nos. 103 and 104
b. Check Nos. 102 and 104 d. Check Nos. 101 and 103

10. Which of the following cash transfer results in a misstatement of cash at December 31, 20x1?

From To Amount Disbursements Receipts

Per Books Per Bank Per Books Per Bank
a. METROBANK FCB 20,000 1/420x2 1/520x2 12/3120x1 1/420x2
b. BDO PNB 30,000 12/3120x1 1/420x2 12/3120x1 12/3120x1
c. PNB PSBank 7,000 12/3120x1 1/520x2 12/3120x1 1/420x2
d. FCB PNB 6,000 1/420x2 1/1120x2 1/420x2 1/420x2
PROBLEM 2 – Short problems
11. Trans Co. had the following balances at December 31, 20x1:

Cash in checking account P 35,000

Cash in money market account 75,000
Treasury bill, purchased 11/1/20x1, maturing 1/31/20x2 350,000
Treasury bill, purchased 12/1/20x1, maturing 3/31/20x2 400,000

Tran’s policy is to treat as cash equivalents all highly liquid investments with a maturity of three months
or less when purchased. What amount should Trans report as cash and cash equivalents in its December
31, 20x1, balance sheet (statement of financial position)?
a. P110,000
b. P385,000
c. P460,000
d. P860,000

12. The cash balance of CAPSIZE OVERTURN Co. comprises the following:
Cash on hand 300,000
Cash in bank – savings – BPI 600,000
Cash in bank – current – BPI (240,000)
Cash in bank – deposit in escrow – Metrobank 300,000
Cash in bank – current – Metrobank (60,000)
Cash in bank – current – BDO (90,000)
Total 810,000

Additional information:
Cash on hand includes undeposited collections of P60,000.
The cash in bank – savings maintained at BPI includes a P150,000 compensating balance which is not
restricted.

What amount of cash is reported in the financial statements?

a. 660,000
b. 810,000
c. 900,000
d. 960,000

13. The bookkeeper of Calumpit Company recently prepared the following bank reconciliation
on December 31, 20x1:

Balance per bank statement 20,000,000

Add: Deposit in transit 1,500,000
Checkbook and other bank charge 50,000
Error made by Calumpit in recording check No.
1005 (issued in December) 150,000
Customer check marked DAIF 500,000 2,200,000
Total 22,200,000
Deduct: Outstanding checks 1,900,000
Note collected by bank (includes P200,000 interest) 2,300,000 4,200,000
Balance per book 18,000,000
 Calumpit has P1,000,000 cash on hand on December 31, 20x1. The amount to be reported as
cash on the balance sheet as of December 31, 20x1 should be
a. P19,600,000 c. P20,600,000
b. P18,600,000 d. P19,750,000

14. The C Products, Inc. had poor internal control over its cash transactions. Data pertaining to its cash
position at October 31, 2017 were as follows:
 The cash book showed a balance of P65,684.88 which included undeposited receipts. A credit
of P800.00 on the bank records for a deposit made did not appear on the books of the
company.
 The bank statement had a balance of P57,966.00. The outstanding checks were as follows:
Check no. Amount
0210667 472.80
0210671 520.00
0210693 1,013.00
0210734 762.84
0210737 1,627.20
0210749 661.16

 The cashier misappropriated all undeposited receipts in excess of P10,770.08 and prepared
the following reconciliation:
Balance per books, Oct 31 65,684.88
Add: Outstanding checks
No. 0210734 762.84
No. 0210737 1,627.20
No. 0210749 661.16 3,051.20
Total 68,736.08
Less: Undeposited receipts 10,770.08
Balance per bank, October 31 57,966.00
Unrecorded credit 800.00
Correct cash balance, October 31 57,166.00

How much did the cashier misappropriate?

a. 5,057.00 b. 3,051.20 c. 2,805.80 d. 800.00

15. Your audit of the December 31, 20x1, financial statements of

DIONISIO CORP. reveals the following:

Current account at Prime Bank (30,000)
Current account at Prudent Bank 135,000
Treasury bills (acquired 3 months before maturity) 300,000
Treasury bills (maturity date is Dec. 31, 20x2) 1,500,000
Payroll account 390,000
Foreign bank account – restricted (translated using the December 31, 20x1, exchange rate) 2,000,000
Postage stamps 1,250
Employee’s postdated check 4,500
IOU from the vice-president 8,000
 Credit memo from a supplier for a purchase return 8,100
Traveler’s check 21,000
Money order 12,900
Petty cash fund (3,000 in currency and expense receipts for P12,000) 15,000

What amount would be reported as “cash and cash equivalents” on the statement of financial
position on December 31, 20x1?
a. P840,050
b. P849,400
c. P873,900
d. P861,900

16. The bank reconciliation for December for DONNIE CO. included the following information:
Checks and debit memos recorded by bank in December, including a December service P24,320
charge of P1,000
November bank service charge recorded on the books in December 2,000
Cash disbursements per books during December 34,658
Customer’s NSF check returned by bank in December (no entry on company books) 16,000
Customer’s NSF check returned by bank in December(no entry on company book in either 7,600
November or December)
Deposit in transit, December 31 5,421
Outstanding checks, December 31 37,450

The outstanding checks at November 30 totaled

a. P12,112
b. P27,112
c. P13,112
d. P10,112

17. A company is reconciling its bank statement with internal records. The cash balance per the
company's books is P 45,000. There are P 5,000 of bank charges not yet recorded, P 7,500 of
outstanding checks, P 12,500 of deposits in transit, and P 15,000 of bank credits and collections not
yet taken up in the company's books.
What is the cash balance per bank? {=50,000}

E Company reported the following information at year-end:

 Share investments of P1,000,000 that are very actively traded in the stock market.
 Government treasury bills of P2,000,000 with a 10-year term but purchased on December 31 at
which time they had two months to go until maturity.
 Cash of P3,400,000 in the form of coin, currency, saving account and checking account.
 Commercial papers of P1,500,000 with term of nine months but purchased on December 31 at
which time they had three months to go until maturity.
Questions:
18. What total amount should be reported as cash? {=3,400,000}
19. What total amount should be reported as cash equivalents? {=3,500,000}

B Company kept all cash in a checking account. An examination of the bank statement for the month of
December revealed a bank 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 collected a note for B Company and
credited the proceeds of P935,000 to the entity’s account which included P35,000 interest.
 B Company discovered that a check written in December for P183,000 in payment of an account
had been recorded as P138,000.
 Included with the December 31 bank statements was an NSF Check of P250,000 that B Company
had received from a customer on December 20.
 The bank statement showed a P15,000 service charge for December.
Questions:
20. What is the unadjusted balance per book on December 31? {=8,525,000}
 Mater Dei College
Cabulijan, Tubigon, Bohol

APRE 102 – MIDTERM EXAM PART 2

General instructions:
1. Answer the following problems. You have 30 minutes to answer this exam.
2. Show solutions in good form.
3. Do not forget to write your name on the paper.
4. Upload a clear photo of your hand-written solutions here or at Google classroom.
PROBLEM 1

In connection with the audit of the financial statements of Rupee Company for the year ended December
31, 20x1, you performed a surprise count of the petty cash fund and undeposited collections under the
custody of Ms. Au at 8:15 a.m. on January 3, 20x2. Your count disclosed the following:
Bills and Coins
Bills Coins
P100 10 pieces P1.00 410 pieces
50 80 pieces 0.50 324 pieces
20 70 pieces 0.25 64 pieces
10 54 pieces

Unused postage stamps – P730

Checks
Date Payee Drawer Amount
Dec. 30 Cash Ms. Au P 2,400
Dec. 30 Rupee Company Emong De Leon 28,000
Dec. 31 Rupee Company Apol Boba, sales manager 3,360
Dec. 31 Rupee Company Datu Macmod 35,600
Dec. 31 Rupee Company Tom Guts 16,600
Dec. 31 German Corp. Rupee Company 54,000
(not endorsed)
Expense Vouchers
Date Payee Description Amount
Dec. 23 Apol Boba, Cash advance for trip to Baguio P14,000
sales manager City
Dec. 27 Central Post Office Postage stamps 3,240
Dec. 29 Messengers Transportation 300
Dec. 29 PC Express Computer repair 1,600

Other items found inside the cash box:

a) Two pay envelopes which had been opened and the contents aggregating P15,000 representing
unclaimed salaries had been removed.
b) The sales manager’s liquidation report for his Baguio trip:

Cash advance received on Dec. 23 P14,000

Less: Hotel accommodation P9,000
Bus fare for two 800
Cash given to Pedro, salesman 600 10,400
Balance P 3,600

Accounted for as follows:

Cash returned by Pedro to the sales manager P 240
Personal check of sales manager 3,360
Total P 3,600

Additional information:
a) The custodian is not authorized to cash checks.
b) The last official receipt included in the deposit on December 30 is No. 351 and the last official
receipt issued for the current year is No. 355. The following official receipts are all dated
December 31, 20x1.
 O.R. No. Amount Form of payment
352 P27,200 Cash
353 35,600 Check
354 7,200 Cash
355 16,600 Check

c) The Petty Cash balance per general ledger is P20,000. The last replenishment of the fund was
made on December 22, 20x1.

Required: Compute the cash shortage/overage, if any. {=40,332}

PROBLEM 3
You were able to obtain the following information during your audit of Emperor Company:

Reconciling items Nov. 30 Dec. 31

Undeposited collections 200,000 120,000
Outstanding checks 80,000 60,000
Customer’s notes collected by bank 100,000 120,000
Bank service charges 2,000 3,000
Erroneous bank debits 10,000 20,000
Erroneous bank credits 40,000 30,000
NSF check not redeposited 5,000 7,000
Customer’s check deposited December 10, returned by bank on 10,000
December 16 marked NSF, and redeposited immediately; no entry
made on books for return or redeposit
Unadjusted balances
Books ? 90,000
Bank 230,000 ?

December transactions Bank Book

Receipts 420,000 270,000
Disbursements 500,000 407,000

Required:
1) Prepare a 4-column bank reconciliation for the month of December using the adjusted
balance method.
Adjusted November 30 cash balance {=320,000}
Adjusted December receipts {=290,000}
Adjusted December disbursement {=410,000}
Adjusted December 31 cash balance {=200,000}

2) Prepare the adjusting journal entries