1. Accounts Receivable
Date 1-Jun Cash Sales 10-Jun ba 15-Jun bo 20-Jun be 20-Jun Cash Sales 25-Jun bu
Cash Sales
Sales Discoun t
Net Cash
800
800
3200 6000 4800
64 120 96
3136 5880 4664 2400
10800
216
26-Jun bo 26-Jun be
4000 4000
240
1050 4 4000 1168 0
30-Jun bo 30-Jun ba
12000 3600 45200
2400
3600 3200
800 4746 4
936
The Following are the company's accounts receivable subsidiary ledgers. All the debits represent sales. The credit terms are 2/10, n/30. ba
bo
3-Jun 3200 10-Jun
3200
2-Jun
6000
4-Jun 4800 30-Jun
4800
9-Jun 15Jun
4000
bu 2-Jun
6000
10-Jun
4800
3600
15Jun 26Jun 30Jun
6000 4000 3600
be 25Jun
1080 0
15Jun 16Jun
4800 1200 0
20Jun 4800 26Jun 12000
1. How much is the correct cash receipts balance? Solution 1. Cash Receipts per book 47464 Under statement of Cash receipts by: Recording Sales discount for collections made beyond the discount period: 15-Jun 120 25-Jun 216 336 Overfooting the sales discount column (936-736) 200 Corrected Cash receipts 48000 2. Outstanding Checks, june 30 Customers NSF Check recorded in july but returned in june. Service Charges made by the bank in june and recorded in july Cash disbursements as of july 30 Checks and Charges from bank statement for december including a july service charge of 680 and NSF checks of 15000
How much is the Outstanding checks as of july,31? Solution: Bank Disbursement OC,jun e OC,jul y
19600 0 25000 29,38 (Squeez 0 e) 20038 0
25000 5000 500 190,20 0 196000
book disbursement DM,ju ne DM,jul y DM,jul y DM,ju ne
19020 0 -5000 680 15000 -500 20038 0
3. Outstanding Checks, june 30 Customers NSF Check not yet recorded in july but returned in june. Service Charges made by the bank in june and not yet recorded in july Cash disbursements as of july 30 Checks and Charges from bank statement for december including a july service charge of 680 and NSF checks of 15000
How much is the Outstanding checks as of july,31? Solution: bank Disbursement
19600 0 25000 34,88 (Squeez 0 e) 20588 0
book disbursement
19020 0
OC,ju ne OC, july
DM,jul y
680
25000 5000 500 190,20 0 196000
DM,jul y
15000
The cash receipt and cash payments of GAINZ company for april 2016 are 20588 as follows 0 Cash Receipts Date
Cash Debit
2-Apr 8 10 16 22 29 Date 30 Item total 1Balance Apr 30 30
Cash Payment Check No.
Cash Credit
208700 20350 27950 109350 CASH 92700 53000 Ref. 16850 Debit 528900
4113 4114 4115 4116 4117 4118 Credit 4119 Balance 4120 95550 4121 4122 Total 528900 624450 546200 78250
44550 7350 96500 33200 73600 50000 31600 83750 5000 120650 546200
CR 6 CP 11 The Cash account of Liezel Company shows the following information at April 30, 2016:
Liezel Company received the following bank statement on April 30, 2016: Bank Statement for April 2016 Beginning Balance Deposits and other Credits: 116300 EF Apr T 4 208700
95550
4.
9 12 17 22 23
20350 27950 109350 68400 BC 92700
543750
Checks and other Deposits: 7Apr 13 14 15 18 21 26 30 30
44550 69500 45150 US 7350 33200 10950 EF T 73600 50000 1000 SC
Ending Balance:
(335300.0 0) 304000
Explanation: EFT US BC SC
electronic fund transfer unauthorized signature bank collection service charge
Additional data for the bank reconciliation include the ff: a. The EFT deposit was a receipt of monthly rent. The EFT debit was a monthly insurance payment. b. The unauthorized signature check was received from Lester Soon. c. The 68400 bank collection of a note receivable on April 22 included 9250 interest revenue.
d. The correct amount of check number 4115 , a payment on account, is 69500. (Liezel's accountant mistakenly recorded the check for 69500. How much is the correct cash balance as of April 30? Book Unadjusted Balance, April 30 deposit in Transit Outstanding Checks Error in Check 4115(96,500-69500) EFT-Rent Bank Collection Unauthorized signature Check EFT- Insurance Service Charge Adjusted Balance, April 30
78250
Bank 304000 69850 -241000
27000 16300 68400 -45150 -10950 -1000 132850
132850
5. The auditor of Unova Company is examining the composition of the cash and cash equivalent line item on the financial statement prepared by the company’s accountant. The following items are considered: 1. Unova Company has maintained a cash balance of 80,000 at all time with Davao Bank to ensure future credibility. 2. Savings account and Current account amounting to 800,000 and 1,100,00 are currently held at the Davao Bank. 3. Undeposited curreny and coins amounting to 11,550 4. Two certificate of deposit, each has an amount of 575,000. Both are purchased 70days before maturity. 5. Unova received a check amounting to 180,000 dated February 28, 2017. 6. The company has a commercial paper due in 120 days at 3,000,000 7. On August 15, 2016, the company acquired marketable shares to be held as “trading” at the amount of 30,000. Fair value at the year-end at 20,000. 8. Travel advances of 50,000.
1. How much is the Cash? 2. How much is the Cash Equivalent?
Solution: 1. Saving account – Davao Bank
800,000
Checking Account – Davao Bank Undeposited currency and coins TOTAL CASH 2. Two certificates of deposit (575,000 x 2) TOTAL CASH EQUIVALENT
1,100,000 11,250 1,911,250 1,150,000 1,150,000
6. Hoenn Company is under the audit of Ruby audit firm. Part of the audit is to check the checkbook of Hoenn Company to look if the cash and cash equivalent of Hoenn in its financial stamen is stated correctly. The checkbook balance as at November 31, 2016, end of fiscal year, was 120,000. The following items are not recorded but held by the accounts receivable staffs in safe as of the date of audit. Amount 65,000
34,000
10,000
Description Check drawn on Hoenn account, payable to the supplier, dated November 25, but not yet mailed to the payee as of November 30. The check has not been recorded on the checkbook. Check payable to Hoenn company, dated November 3, 2016 for the sale of merchandise to Customer Misty, terms FOB Shipping point, shipped at November 29 and currently in transit. Check not included in the line item cash and cash equivalent. Check from a customer, marked by the bank as “DAUD”. The return of the Check was properly recorded.
Cash and cash equivalent on the unaudited statement of financial position of Hoenn Company as at November 30, 2016 is 354,000 which includes the checkbook balance above. The amount to be shown as Cash and cash equivalent on the statement of financial position of Hoenn Company as at November 30, 2016 is Solution: Cash and cash equivalent on the unaudited statement of financial position 120,000
Check payable to Hoenn by Customer Misty CASH AND CASH EQUIVALENT
34,000 154,000
7. Upon examination of the petty cash fund of Jotho Company on January 5, 2016 11:00 am, the audit found the following items on the petty cash drawer: a. Total Bills and coins - 7,567 b. Certified check of the general manager Dated December 1, 2015 - 1,500 c. An envelope containing contributions of employees for donation to victims of recent typhoon has amount written on envelope as 5,000 but the bills and coins inside only amounts to 3,800. d. Unused postage stamp – 550 e. Check payable to the petty cash custodian, representing cash to replenish the PCF – 4,500 f. Petty cash vouchers not yet replenished a. PCV # 007 Postage stamps 600 (Dated: January 4, 2016) b. PCV # 008 Supplies 450 (Dated: December 21, 2015) c. PCV # 009 Transportation 300 (Dated: December 30, 2015) It was noted by the auditor that there is a shortage on the petty cash fund in the amount of 4,285. The shortage will be charge as receivable from petty cash custodian. 1. How much is the adjusted Petty cash balance as of December 31, 2015? 2. How much is the established amount of PCF by Jotho Company? 3. How much is the net Adjustment on the PCF?
Solution: Count I (composition: Bills and coins, Employees’ good check and replenishment check) Bills and coins 7,565 Certified check of the general manager 1,500 Replenishment Check 4,500 Commingled cash from the opened envelop (5,000 – 3,800) (1,200) PCV # 007 (Dated: January 4, 2016) 600 ADJUSTED PETTY CASH FUND BALANCE 12,965 (1)
Count II (composition: Supporting documents representing valid disbursement from PCF) PCV # 008 (Dated: December 21, 2015) PCV # 009 (Dated: December 30, 2015) TOTAL Count I Count II
450 300 750 12,965 750
Total Established PCF balance (SQUEEZE) Shortage Established PCF balance Adjusted PCF balance Net Adjustment on the PCF
13,715 (18,000) (2) 4,285 18,000 (12,965) 5,035 Debit (3)
8. You are auditing general cash for Pichu Company for the fiscal year ended July 31, 2014. The client has not prepared the July 31 bank reconciliation. After a brief discussion with the owner you agree to prepare the reconciliation, with assistance from one of the Pichu Company’s clerk. You obtain the following information: General ledger 41,110
Beginning balance Deposits Cash receipts journal Checks cleared Cash Disbursement journal July bank service charge Note paid directly NSF check Ending balance
Bank statement 57,530 250,560
254,560 (236,150) (218,110) (870) (61,000) (3,110) 82,560
6,960
June 30 Bank reconciliation Information from General ledger and bank statement Balance per bank Deposit in Transit Outstanding checks Balance per books
57,530 6,000 (17,420) 46,110
Additional information: a. Checks clearing that were outstanding on June 30 totaled 16,920. b. Checks clearing that were recorded in the July disbursement journal totaled 204,670. c. A check for 10,600 cleared in the bank, but had not been recorded in the cash disbursement journal. It was for an acquisition of inventory. Mew used the periodic inventory method. d. A check for 3,960 was charged to Mew Company but had been written on different company’s bank account. e. Deposits included 6,000 from June and 244,560 for July. f. The bank charge Mew Company’s account for a NSF check totaling 3,110. The credit manager concluded that the customer intentionally closed its account and the owner left the city. The check was turned over to a collection agency. g. A note for 58,000, plus interest, was paid directly to the bank under an arrangement signed 4 months ago. The note payable was recorded at 58,000 on mew company’s books.
1. How much is the outstanding check on July 31? 2. How much is the deposit in transit on July 31? 3. The adjusted cash balance on July 31 is Solution: 1. Outstanding checks, June 30 Checks issued in July Cash disbursement journal Unrecorded check Checks paid in bank in July Erroneous check charge by bank OUTSTANDING CHECK, JULY 31
17,420 218,110 10,600 236,150 (3,960)
2. Deposit in Transit, June 30 July deposit per cash receipts journal Deposit credited by the bank in July DEPOSIT IN TRANSIT, JULY 31 3.
(232,190) 13,940 6,000 254,560 (250,560) 10,000
Book Unadjusted balances Outstanding checks (solution 1) Deposit in Transit (solution 2) Bank service charge Unrecorded check Check erroneously charge to Pichu NSF check Note payable (58,000 + 3,000) Adjusted Balances
228,710
Bank 82,560
6,960 (13,940) 10,000
(870) (10,600) 3,960 (3,110) (61,000) 6,980 6,980
9. The auditor of Celebi Company gathered the following information: a) The March 31 bank statement balance include bank service charge of 2,000. b) The March 31 cash balance in the Books was 244,500. c) Undeposited receipsy were 36,000 while outstanding checks (all not cleared) were 63,000. d) The bank statement shows a bank service charge amounting to 3,000. e) The April 30 cash balance in the books was 319,750, which recognizes 482,750 for April receipts and 405,500 for checks written in April. In transit to the bank were receipts of 28,750. Check of 15,000 written prior to April and checks of 60,500 written in April had not yet cleared by the bank. 1. 2. 3. 4.
What What What What
is is is is
the the the the
total book disbursement for April? March 31 bank balance? total bank receipts in April? total bank disbursement in April?
5. What is the bank balance on April 30? Solution: 1. Checks written during April November bank service charge recorded on the Company book in April Total Book disbursement
Balance per books Undeposited receipts: March 31 April 30 Oustanding checks: March 31 April 30 Bank service charge: March 31 April 30 Balance per bank
Balance March 31
April receipts
244,500
482,750
(36,000)
36,000 (28.750)
63,000
(2,000) 269,500 (2)
490,000 (3)
April Disbursemen t 407,500
405,500 2,000 407,500 Balance April 30 319,750
(28,750)
63,000 (75,500)
75,500
(2,000) 3,000 396,000 (4)
(3,000) 363,500 (5)
10 . The bookkeeper-cashier of the Lugia absconded on the evening of July 16, 2016, apparently with a large portion of the company’s cash. He had taken with him certain accounting record, including the cahs journal and the general ledger. You are called upon to look if shortages are existing on which the missing employee is accountable for. You obtained the following information from the available records. Balances at the close of business, July 16, 2016: Accounts receivable Accounts payable Cash in Bank, less checks outstanding
442,550 207,300 98,830
Transactions, January 1 to July 16, 2016: Sales, per receivable clerk 5,876,170 Cash sales none Sales allowance in customer’s account 18,330 Cash purchase of furniture, per dealer’s invoice 3,000 Total merchandise purchases 3,615,260 Cash dividends declared, 50,000 (of which 10,000 remains unpaid) 1,865,830 A check for 100,000 had been cashed by the bookkeeper shortly before his departure. Although the signature on the check had been obviously forged, it was paid by the bank and retuned with other canceled checks. Lugia Company Statement of Financial Position December 31, 2015 Assets Cash Accounts receivable Inventory (at cost) Furniture Accumulated depreciation Total assets
32,670 226,230 440,350 74,560 (31,800) 42,760 742,010 Liabilities and Shareholders’ equity
Accounts payable Share capital Retained earnings Total Liabilities and Shareholders’ equity
114,720 500,000 127,290 742,010
1. What is the total amount paid for merchandise purchases?
2. What is the cashier’s accountability (correct cash balance before shortage) on July 16, 2016? 3. What is the amount of cash shortage chargeable against the cashier? Solution: 1. Accounts payable, December 31, 2015 Purchases Accounts payable, July 16, 2016 Payment for merchandise purchases 2. Cash Balance, December 31, 2015 Collections Disbursement Cash Balance, July 16, 2016 3. Cash accountability (solution 2) Cash accounted Total shortage Shortage chargeable against the bank Shortage chargeable against the cahier
114,720 3,615,260 (207,300) 3,522,680 32,670 5,641,520 (5,431,510) 242,680 242,680 (98,830) 143,850 (100,000) 43,850
CORRECTION OF ERROR In the Past, Bea5tmode Company has depreciated its computer hardware using the straight line method. The computer hardware has a 0% salvage value and an estimated usefil life pf 5 years. AS a resilt of the rapid advancement in information technology, management of the company determined that it receives most of the benefits from its computer facilities in the first few years of ownership. Hence, as of January 1, 2016 the company proposes changing tto the sum of the years digits method for depreciating its computer hardware. The following computer purchases were made by the company at the beginning of each year.
2013 2014 2015
90000 50000 60000
1. How much depreciation expense that should be recognized for the years 2013,2014,2015?
Solution : 2013 acquisition: Cost:
90000
Less: Accum. Depreciation, Dec. 31 2015 (16,200 x 3) Book Value: Jan 1, 2016
48600 41400
Less: Salvage Value (10% x 90,000) Remaining Depreciable Cost SYD RATE 2014 acquisition: Cost: Less: Accum. Depreciation, Dec. 31 2015 (9000 x 2) Book Value: Jan 1, 2016 Less: Salvage Value (10% x 90,000) Remaining Depreciable Cost SYD RATE
9000 32400 x 2/3
2160 0
50000 18000 32000 5000 27000 x 3/6
1350
0
2015 acquisition: Cost: Less: Accum. Depreciation, Dec. 31 2015 Book Value: Jan 1, 2016 Less: Salvage Value (10% x 60,000) Remaining Depreciable Cost SYD RATE Total Depreciation
60000
10800 49200 6000 43200 x 4/10
17280 52380
2. The audited income statement of GAINZ BRUH, Co. shows a net income of 175000 for the year ended December 31, 2016. Adjustments were made for the following errors: a. December 31, 2015, inventory overstated by 22500 b. December 31, 2016, inventory was understated by 37500 What is the adjusted net income for the year ended Dec, 31 2016? Solution: Unadjusted net income(squeeze) December 31,2015 - inventory overstated December 31,2016 - inventory understated Adjusted Net income
1150 00 22500 37500 17500 0
3. The audited income statement of GAINZ BRUH, Co. shows a net income of 175000 for the year ended December 31, 2016. Adjustments were made for the following errors: a. December 31, 2015, inventory understated by 22500 b. December 31, 2016, inventory was overrstated by 37500 What is the adjusted net income for the year ended Dec, 31 2016? Solution: Unadjusted net income(squeeze)
2350 00
December 31,2015 - inventory overstated December 31,2016 - inventory understated Adjusted Net income 4.
(2250 0) (3750 0) 17500 0
