NAME:__________________________________
SECTION:__________________________________ ANSWER SHEET – Quiz 1
I.
THEORIES (1.5 POINTS EACH)
II.
PROBLEMS (2.5 POINTS EACH)
1.
D
1.
11 610
2.
A
2.
3 390
3.
C
3.
190 shortage
4.
D
4.
430 000
5.
C
5.
350 000
6.
C
6.
11 350
7.
D
7.
836 350
8.
A
8.
836 350
9.
C
9.
196 425
10.
D
10.
194 900
11.
C
11.
196 050/196 075
12.
B
12.
152 075/152 100
13.
B
13.
165 350
14.
C
14.
152 450
15.
A
15.
63 820
16.
A
16.
12 450
17.
A
17.
242 450
18.
A
18.
545 000
19.
B
19.
65 800
20.
D
20.
19 500
21.
531 000
22.
460 100
23.
233 800
24.
304 700
25.
216 000
26.
2 510
27.
71 500
28.
441 010
I. Multiple Choice Theory: Select the best answer for each numbered item. Use capital letters only: (20 items @ 1.5% each) (30%) 1. Cash items are unrestricted if they are any of the following except a.
Could be withdrawn immediately
b. Available for the acquisition of current assets c.
Available for the payment of current obligations
d. Available for the acquisition of land 2. Which of the following instruments qualify to be classified as cash equivalents (the company adopts the policy of treating debt instruments with maturity of not mo re than 90 days from the date of acquisition as cash equivalent) a.
Treasury bills purchased on December 15, 2012 and maturing on March 15, 2013
b. Treasury bills purchased on August 15, 2012 and maturing on January 15, 2013 c.
Temporary investments in equity shares
d. Redeemable preference shares of ABC Corporation acquired on September 15, 2012 and with redemption date of January 15, 2013 3. The following are indicators of good cash management e xcept a.
Sufficient cash is maintained for use in current operations
b. Sufficient cash is available for payment of current obligations as they fall due c.
The company has excessive cash balance
d. Resources of the company are converted into productive resources to generate more inflow of resources 4. The following statements about voucher system of accounting are true except a.
A system used to control cash disbursements of the company
b. All disbursements of the company must be supported by a voucher approved by a responsible officer of the company c.
All payments are entered first in the voucher register, and actual payments are recorded in the check register
d. All of the foregoing statements are false 5. The following are sound practices of cash control exc ept a.
Segregation of the custodial and the recording functions
b. Imprest system of accounting must be in place c.
All payments must be supported by petty cash vouchers
d. Periodic preparation of bank reconciliation statement 6. Under the imprest fund system of accounting for petty cash, the following statements are true except a.
When the petty cash fund runs low, a check is drawn for an amount that will increase the amount of bills and coins on hand to its original amount
b. If the fund is found to be inadequate to meet the company’s needs, the petty cash fund balance is increased c.
If the total of bills and coins counted and e xpense vouchers is more than the o riginal balance of the petty cash fund at year-end, cash short and over is debited
d. If the end of the accounting period does not coincide with the replenishment date, petty cash fund is adjusted to bring the petty cash fund balance to the actual amount of cash items on hand in the petty cash fund
7. In a reconciliation statement that attempts to bring the unadjusted book balance of cash to the unadjusted bank balance of cash, the following statements are true except a.
Outstanding checks is added
b. Deposit in transit is deducted c.
Proceeds of note collected by the bank is added
d. Bank service charge is added 8. In a reconciliation statement that attempts to bring the unadjusted bank balance of cash to the unadjusted book balance of cash, the following are added except a.
Proceeds of bank loan
b. Bank service charge c.
Erroneous bank charge
d. Overstatement of receipt by the depositor 9. In a reconciliation statement that brings unadjusted book balance of cash to its correct cash balance, the following items are deducted except a.
Bank service charge
b. A check issued to a supplier on account for P475 was recorded in the cash disbursements book by the depositor as P457 c.
A customer’s check for P7,500 from a customer on account was recorded in the cash receipts books by the depositor as P5,700
d. A check in payment of cash purchase for P4,500 was not recorded in the cash disbursements book for the month 10. In a four column bank reconciliation that attempts to bring the unadjusted book and bank balances to correct book and bank balances of cash, which of the following statements is false? a.
Deposit in transit for the current month is added to the bank receipts as we ll as to the current month bank balance
b. Outstanding checks as of the previous month is deducted from the bank disbursements for the current month as well as from the previous month bank balance of c ash c.
A cash receipt for the current month that is not reflected in the bank balance of cash for the c urrent month is added to the bank receipt for the current month as well as to the bank balance of cash for t he current month
d. A customer’s check that was returned due to insufficiency of fund for the current month and re -deposited in the same month is added to the book disbursement for the current month and deducted from the book balance of cash for the current month (no e ntry was made by the depositor for the return and redeposit) 11. The following statements are true about c ompensating balances except a.
If not legally restricted is reported as part of the regular cash account
b. If legally restricted is shown separately from the regular cash account as cash held as compensating balance under current assets section of the statement of financial position provided the corresponding loan is short-term c.
If legally restricted is shown separately from the regular cash account as cash held as compensating balance either in the current or non-current assets section of the statement of financial position regardless of the term of the loan
d. Is the amount of deposit maintained in the current account to support the loan obtained from the bank by t he depositor
12. Which of the following statements is true regarding bank overdraft? a.
Is reported as a current liability even though there is another account in t he same bank that reports a positive balance and that the right of offset exists
b. Is netted against another account in the same bank with positive balance (the right of offset exists) and t he net positive balance is reported as cash c.
Is netted against another cash in bank account in another bank and the net positive balance is reported as part of cash
d. All of the foregoing statements are true 13. Which of the following is cash for financial reporting purposes? a.
Customer’s post-dated checks received on or before reporting date
b. Company’s post-dated checks issued on or before r eporting date and recorded as disbursements at year-end
Company’s undelivered checks at year-end but not recorded as disbursements at year -end d. Customers’ no sufficient fund checks c.
14. Unadjusted book balance of cash is less than the correct cash balance of cash due t o the following except a.
Proceeds of note collected by the bank
b. A customer’s check for P540 was recorded by the depositor in the cash receipts book as P450 c.
A check issued to a supplier on account for P760 was recorded in the cash disbursements book as P670
d. Interest earned 15. Unadjusted bank balance of cash is more than the correct cash balance o f cash due to the following except? a.
Deposit in transit
b. Outstanding checks c.
Erroneous bank credit
d. A customer’s deposit for P450 was recorded by the bank as P540 16. The following are deducted from the bank balance of cash in order to ar rive at the correct cash balance for financial reporting purposes except a.
Deposit in transit
b. Outstanding checks c.
Erroneous bank credit
d. A customer’s deposit for P275 was recorded by the bank as P725 17. Which of the following reconciling items would affect the book balance of cash but not the bank balance of cash? a.
Proceeds of bank loan obtained from the bank
b. Outstanding checks c.
Deposit in transit
d. Erroneous bank charge 18. Book receipts for the current month amounted to P425,000 including note collected by t he bank as of the previous
month of P5,400. A customer’s check for P540 was recorded by the depositor as P450 for the current month. If the previous and current month deposit in transit are P12,500 and P25,000, respectively, how much is the bank receipts for the current month? a.
P407,190
b. P407,010
c.
P432,190
d. P432,010 19. Bank disbursements for the current month amounted to P725 ,000 including bank service charge for the current month of P1,500. The erroneous bank cre dit of the previous month amounting to P4,500 was corrected by the bank in the current month. If the book disbursements for the current month is P724,000, how much is the previous month outstanding checks if outstanding checks of the curre nt month amounted to P42,500? a.
P46,500
b. P37,500 c.
P47,500
d. P38,500 20. Seldom does the book balance of cash is in agreement with the bank balance of cash due to any of the following except a.
Deposit in transit
b. Outstanding checks c.
Bank charges and credits recognized by the bank during the month
d. Bank secrecy requirements
II. Problems: Answer the requirements for each numbered items. (28 items @ 2.5% each) (70%) A. Upon examination of the petty cash fund of K pops Company on January 3, 2012, the following items we re found: Bills and coins counted 1pc @ 1,000 4pcs @ 500 5pcs @ 100 3pcs @ 20 10pcs @5 Check payable to petty custodian representing her salary Check payable to an employee dated January 15, 2013 Certified check of comptroller IOUs of employees not supported by petty cash vouchers Petty cash vouchers not yet replenished PCV # 345 dated December 14, 2012 for postage stamps 350 PCV # 346 dated December 23, 2012 for supplies 500 PCV # 347 dated January 3, 2013 for freight 250 Unused supplies Currency in an envelope marked collections for Chr istmas gift for company president with employees’ name attached (content intact)
5,250 1,300 2,500 1,050
1,100 200 5,000
The petty cash fund was established for an amount of P15,000. Q1. The correct petty cash fund balance to be reported in the current assets section of the statement of financial position at December 31, 2012. Q2. Net adjustment to the petty cash fund balance at year-end. Q3. Cash shortage or overage. Indicate whether shortage or overage.
B. Won Company’s general ledger showed a balance of P1,602,500 in its “Cash” account on December 31, 2012 which consisted of the following items: (The company adopts the policy of classifying as cash equivalents investment instruments with maturity of not more than 90 days) Checking account with Security Bank, General Account Checking account with Security Bank, Payroll Account, overdraft Certificate of deposit with BPI, term 180 days placed on December 1, 2012 Checking account with BPI Sinking fund cash Savings account with May Bank (closed) Petty cash fund Two year treasury bonds issued on March 1, 2011 but acquired on March 1, 2012 and maturing on February 28, 2013 Cash surrender value of life insurance contracts Travel advances of salesmen Undeposited receipts Customers checks dated January 20, 2013 Customers checks dated December 12, 2012 but returned due to insufficiency of fund Savings deposit with BDO earmarked for the acquisition of equipment which is expected To be disbursed in March, 2013 Total
P475,000 (25,000) 125,000 350,000 250,000 120,000 25,000 75,000 22,500 20,000 45,000 15,000 5,000 100,000 P1,602,500
The following information were gathered at year -end that pertains to the above: a. Included among the checks drawn against Security Bank general account during December and reco rded also in December are: Check # 1245 written for P12,500 payable to ABC Trading was delivered on January 5, 2013 Check # 1320 written for P24,000 payable to Dac Trading was cer tified by the bank but this check remained outstanding at reporting date. Check # 2100 written for p7,500 payable to Rev Trading dated January 26, 2013 Included among the December receipts recorded in the Security Bank general account are as follows: Customers checks for P15,000 dated January 30, 2013 Customers check for P25,000 dated December 14, 2012 but returned by the bank due to insufficiency of fund Money orders for P1,000
Travellers’ check for $2,000 converted to peso value of P84,000
b. The company has an overdraft line with Sec urity Bank hence the right of offset exists. c. Included in the checking account with BPI is compensating balances amounting to P150,000 against long-term borrowing. The compensating balances are not legally restricted. d. Petty cash fund consists of currencies and coins of P11,350; unreplenished vouchers for expenses, P10,200; cash advances of employees, P3,450. Q4. Correct cash balance of the checking account with Security Bank at December 31, 2012 Q5. Correct cash balance of the checking account with BPI at December 31, 2012 Q6. Correct petty cash fund balance at December 31, 2012 Q7. Correct cash balance at December 31, 2012 Q8. Correct cash and cash equivalents at December 31, 2012 C. The bank statement of Bib Corporation for June, 2012 showed an ending balance of P210, 350. Deposit in transit for June was P15,300 while outstanding checks for June amounted to P30,750. During the month of J une, the bank charged back NSF checks in the amount of P15,250 but of this amount P3,250 was redeposited in June and cleared the bank also in June. The depositor made no entry for the return and for the redeposit of the checks. On June 12, the bank collected on behalf of the depositor cash proceeds of note left for collection including interest of P100 for P5,100 but the bank charged the depositor service charge for this service of P25.
June receipt amounting to P5,400 was entered in the cash receipts book by the depositor as P4,500 in error while June disbursements amounting to P2,700 was entered in t he cash disbursements book as P7,200 in er ror. The May bank reconciliation shows deposit in transit of P30,000, outstanding checks of P37, 500 and an erroneous bank credit of P5,400. All items that were outstanding as of May 31 cleared the bank including the erroneous bank credit. Q9. Unadjusted cash balance per book for June Q10. Correct cash balance for June Q11. If bank receipts for June is P220,000, how much is book receipts for June? Q12. If bank disbursements for June is P175,000, how much is book disbursements for June? Q13. Based on the assumed amount o f receipts and disbursements per bank in Q11 and Q12, how much is the unadjusted balance per bank for May? Q14. Based on your answer in Q13, how much is the unadjusted cash balance per book for May? D. At April 30, 2012, book debits and book credits per general ledger Cash in Bank of Tinamaan Company are P345,000 and P225,000, respectively. Included in the book debits for April is proceeds of note collecte d by the bank in March amounting to P5,500. The bank statement for the same month indicates bank credits of P355,000 and bank debits of P195,000. Included in the bank credits for April is erroneous bank credit for P4, 500 while the bank debits for the same month includes service charge of P750 . Customers check deposit for April for P3,750 was recorded by the bank as P3,570. The March 31, 2012 bank reconciliation showed deposits in transit of P75,000. Outstanding check at April 30, 2012 were P45,000. A check written in April for P7,500 was recorded by the depositor as P5,700.
Q15. Deposit in transit, April 30 Q16. Outstanding checks, March 31 E.
Xfactor Enterprise is making a four co lumn bank reconciliation at August 31 from the fo llowing data:
Balance per book Balance per bank Book receipts Bank receipts Book disbursements Bank disbursements Deposit in transit Outstanding checks Erroneous bank credit corrected in the following month Bank service charge NSF checks Customers’ check deposit for July for P2,850 was recorded by the depositor as P8,250 in error* Cash deposit for August for P4,500 was recorded by the depositor as P5,400 in error* *corrected in the following month
July 31 ? P275,000
30,000 ? 5,400 750 2,500
August 31 P308,300 333,700 531,900 ? 466,050 486,300 ? 45,000 3,500 1,500 1,200
Q17. Unadjusted cash balance per book for July Q18. Bank receipts for August Q19. Outstanding checks for July Q20. Deposit in transit for August Q21. Corrected cash receipts for August Q22. Corrected cash disbursements for August Q23. Corrected cash balance for July Q24. Corrected cash balance for August F.
The statement of financial position of Weh Company shows cash of P860,000. The following items were found to comprise the total amount: Checking account balance in Metrobank per bank statement (outstanding checks of P34,000; deposit in transit of P25,000; service charge, P1500; NSF checks, P2,450) Petty cash fund (currencies and coins, P2,510; expense receipts, P2,100; IOUs, P380)
P225,000 5,000
Undeposited collections (of which P5,000 is in money orders, P3,000 in traveller’s check and postdated checks of customers for P3,500) Bond sinking fund cash Treasury bills with original maturity of 6 months and acquired 2 months prior to maturity Postdated checks received from customers at reporting date Trust fund account, 30 days term Travel advances Savings account restricted for the payment of long term obligations Total Q25. Correct cash balance of the checking account with Metrobank Q26. Correct petty cash fund balance Q27. What amount of the undeposited collections is to be reported as cash? Q28. Correct cash and cash equivalents
75,000 125,000 50,000 25,000 100,000 5,000 250,000 P860,000
