CHAPTER 1

Problem 1 - 1 (IAA)

Required:
1. Adjusting Entries

Albania Company
Adjusting Entries
December 31, 2020

2020
Dec. 31 a. Accounts Receivable 200,000
Cash in Bank 200,000

31 b. Cash in Bank 250,000

Accounts Payable 250,000

31 c. Cash in Bank 100,000

Accounts Payable 100,000

31 d. Accounts Receivable 450,000

Cash in Bank 450,000

2. Total amount of cash and cash equivalent that should be reported on

December 31, 2020.

Cash in Bank ₱ 3,000,000

Stale Customer Check (200,000)
Undelivered creditor’s check 250,000
Post-dated creditor’s check 100,000
Collection for 2020 (450,000)
Total ₱ 2,700,000
Time Deposit- 30 days 1,000,000
Petty Cash Fund 20,000
Cash and Cash Equivalent ₱ 3,720,000

3. Presentation of items excluded from cash and cash equivalents

 EXCLUDED ITEMS Explanation

 Money market placement due on June 30,2021 - it is a short term investment

 Saving deposit in closed bank - it is classified as other non-

current asset

 Sinking fund for bond payable due June 30,2022 - it is a long term investment

Problem 1 - 3 (IAA)

Required:
1. Prepare adjusting entries on December 31, 2020

Armenia Company
Adjusting Entries
December 31, 2020

2020
Dec. 31 a. Accounts receivable 100,000
Cash on hand 100,000

31 b. Accounts receivable 150,000

Cash on hand 150,000

31 c. no entry needed

31 d. Cash in bank 30,000

Petty cash fund 30,000

31 e. no entry needed

31 f. no entry needed

2. Compute the total cash on December 31, 2020

Cash on hand 1,000,000
Returned check (100,000)
Advanced check (150,000)
Petty cash fund 50,000
Check drawn to pay petty cashier (33,000)
Cash in bank 4,000,000
Saving deposit 2,000,000
Total cash 6,767,000

Problem 1 - 5 (ACP)

Required:
Journal Entries
Fluctuating Fund System

Zealous Company
Journal Entries

Jan. 2 Petty cash fund 10,000

Cash in bank 10,000
The entity establish a petty cash fund of P10,000.

Jan. 2-30 Postage 1,500

Supplies 5,500
Transportation 1,200
Miscellaneous expense 800
Petty cash fund 9,000
Petty cash expenses amounted to 9,000

Feb. 1 Petty cash fund 14,000

Cash in bank 14,000
The fund is replenished and increased by 5,000

Imprest Fund System

Zealous Company
 Journal Entries

Jan. 2 Petty cash fund 10,000

Cash in bank 10,000
The entity establish a petty cash fund of P10,000.

Jan. 2-30 - Memo entry in the PC journal

Petty cash expenses amounted to 9,000

Feb. 1 Petty cash fund 5,000

Postage 1,500
Supplies 5,500
Transportation 1,200
Miscellaneous expense 800
Cash in bank 14,000
The fund is replenished and increased by 5,000

Problem 1 - 10 (AICPA Adapted)

What amount should be reported as cash and cash equivalents on December 31, 2020?

c. 4,600,000

Problem 1-12 (AICPA Adapted)

On December 31, 2020, what amount should be reported as cash under current assets?

a. 4,500,000

Problem 1 - 14 (AICPA Adapted)

What total amount should be reported as cash and cash equivalents?

b. 9,150,000

Problem 1 - 18 (AICPA Adapted)

1. What amount should be reported as cash on December 31, 2020?

b. 7,440,000

2. What total amount should be reported as cash equivalents on December 31, 2020?

c. 5,500,000

Problem 1 - 22 (ACP)

1. What is the adjusted cash in bank on December 31, 2020?

b. 4,200,000

2. What total amount should be reported as cash on December 31, 2020?

a. 4,645,000

Problem 1 – 23 Multiple choice (IAA)

1. d 6. c
2. b 7. b
3. a 8. d
4. b 9. a
5. c 10. c

Problem 1 – 25 Multiple choice (IAA)

1. d
2. b
3. c
4. c
5. b

CHAPTER 2
Problem 2 – 2 (IAA)
Required:
a. Prepare a bank reconciliation statement on December 31.

Sensible Company
Bank Reconciliation
December 31, 20xx

Book balance 110,000

Add: Credit memo (note collected) 45,000
Total 155,000
Less: Debit memo (service charge) (5,000)
NSF check (10,000)
Book error (52,000-25,000) (27,000)
(42,000)
Adjusted book balance 113,000

Bank balance 135,000

Add: Deposit in transit 60,000
Erroneous bank debit 8,000 68,000
Total 203,000
Less: Outstanding checks
Check no. 770 (20,000)
Check no. 775 (30,000)
Check no. 777 (40,000) (90,000)
Adjusted bank balance 113,000

b. Prepare adjusting entries on December 31.

Sensible Company
Adjusting entries
December 31, 20xx

Dec. 31 Cash in bank 45,000

Notes receivable 45,000

31 Bank service charge 5,000

Accounts receivable 10,000
Accounts payable 27,000
Cash in bank 42,000
Problem 2 – 4 (IAA)
Required:
a. Prepare the corrected bank reconciliation.
Chivalry Company
Bank Reconciliation
March 31, 20xx

Book Balance 1,405,000

Add: Collection of note 2,500,000
Interest on note 150,000
Error on check no. 175 (294,000 – 249,000) 45,000 2,695,000
Total 4,100,000
Less: Bank service charge (5,000)
NSF Check (220,000)
Preauthorized payment for
light and water (245,000) (470,000)
Adjusted book balance 3,630,000

Bank Balance 5,630,000

Add: March 31 deposit 750,000
Total 6,380,000
Less: Outstanding checks (1,650,000)
Cavalry Company’s deposit to
our account (1, 100,000) (2,750,000)
Adjusted bank balance 3,630,000

b. Prepare the adjusting entries on March 31.

Chivalry Company
Adjusting Entries
March 31, 20xx

a) Cash in bank 2,695,000

Notes Receivable 2,500,000
Interest Income 150,000
Accounts payable 45,000

b) Bank Service charge 5,000

Accounts receivable 220,000
Light and water 245,000
Cash in Bank 470,000
Problem 2 – 6 (IAA)
Required: Compute the balance in the cash account before corrections and prepare
adjusting entries.

Radiant Company
Bank Reconciliation
January 31, 20xx

Bank balance 3,500,000

Add: Deposit in transit 550,000
NSF check 50,000
Debit memo 5,000
Unrecorded check 125,000 730,000
Total 4,230,000
Less: Outstanding checks (650,000)
Overstatement of check (270,000)
Understatement of check (180,000) (1,100,000)
Book balance 3,130,000

Radiant Company
Adjusting Entries
January 31, 20xx

Jan. 31 Cash in bank 450,000

Accounts Payable 270,000
Accounts Receivable 180,000

31 Accounts Receivable 50,000

Bank Service charge 5,000
Accounts Payable 125,000
Cash in bank 180,000

Problem 2 – 11 (IAA)

a. 1,500,000

Problem 2 – 13 (AICPA Adapted)

b. 1,530,000
Problem 2 – 15 (IAA)

b. 2,520,000
Problem 2 – 17 (IAA)

1.) a. 2,120,000
2.) b. 3,070,000

Problem 2 – 18 (IAA)

1. a. 7,750,000
2. a. 7,070,000
3. a. 8,700,000

Problem 2 – 19 (IAA)

1. a. 700,000
2. b. 920,000
3. c. 990,000

Problem 2 – 20 Multiple choice (IAA)

1. d
2. a
3. c
4. b
5. c
6. a
7. b
8. d
9. a
10. b

CHAPTER 3

Problem 3 – 1 (ACP)
Required:
Bank Reconciliation on June 30

Sassy Company
Bank reconciliation
June 30 20xx

Book balance 1,000,000

Add: Notes collected for June 300,000

Total 1,300,000
Less: NSF for June (100,000)
Service charge for June (4,000) (104,000)
Adjusted book balance 1,196,000

Bank balance 1,650,000

Add: Deposit in transit for June 400,000
Total 2,050,000
Less: Outstanding checks for June (854,000)
Adjusted bank balance 1,196,000

Bank reconciliation on July 31

Sassy Company
Bank reconciliation
July 31 20xx

Book balance 1,400,000

Add: Notes collected for July 500,000
Total 1,900,000
Less: Service charge for July (1,000)
Adjusted book balance 1,899,000

Bank balance 2,650,000

Add: Deposit in transit for July 1,100,000
Total 3,750,000
Less: Outstanding checks for July (1,851,000)
Adjusted bank balance 1,899,000
Adjusting entries for July 31
Sassy Company
Adjusting Entries
July 31 20xx
July 31 Cash in bank 500,000
Notes receivable 500,000

31 Bank Service Charge 1,000

Cash in bank 1,000

Problem 3 – 3 (IAA)

Required:
a. Prepare bank Reconciliation on July 1 and July 31

Fabulous Company
Bank Reconciliation
Statement July 1, 20xx

Adjusted book balance 1,270,000

Balance per bank, 1,720,000

Add: Deposit in transit 500,000
Total 2,220,000
Less: Outstanding checks (950,000)
Adjusted bank balance 1,270,000

Fabulous Company
Bank Reconciliation
Statement July 31, 20xx

Balance per book 470,000

Add: Credit memo (notes collected) 1,500,000
Total 1,970,000
Less: Debit memo (Service charge) (20,000)
Adjusted book balance 1,950,000

Balance per bank 2,700,000

Add: Deposit in transit 400,000
Total 3,100,000
Less: Outstanding checks (1,150,000)
Adjusted cash balance 1,950,000
b. Prepare adjusting entries on July 31

Fabulous Company
Adjusting Entries
July 31, 20xx

July 31 Cash in bank 1,500,000

Notes receivable 1,500,000

31 Bank Service Charge 20,000

Cash in bank 20,000

Problem 3 – 5 (ACP)
Required:
Prepare a proof of cash for the month of April following the “book to bank” method.

Efficient Company
Proof of Cash
For the month of April 2020

BEG RECEIPTS DISBURSEMENTS END

Balance per book 200,000 800,000 720,000 280,000
Note collected:
March 60,000 (60,000)
April 100,000 100,000
NSF Check:
March (20,000) (20,000)
April 30,000 (30,000)
Service Charge:
March (8,000) (8,000)
April 2,000 (2,000)
Deposits in transit:
March (80,000) 80,000
April (220,000) (220,000)
Outstanding checks:
March 178,000 178,000
April _ ________ (372,000) 372,000
Balance per bank 330,000 700,000 530,000 500,000
Problem 3 – 9 (PHILCPA Adapted)

1. b. 400,000
2. d. 500,000
3. a. 2,500,000

Problem 3 – 11 (PHILCPA Adapted)

1. d. 5,400,000
2. b. 5,350,000
3. a. 9,400,000
4. a. 6,550,000

Problem 3 – 13 (AICPA Adapted)

1. a. 5,650,000
2. a. 6,400,000
3. b. 6,500,000
4. c. 4,500,000