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INTERMEDIATE ACCOUNTING Vol.1 (2021 Edition)
Conrado T. Valix, Jose F. Peralta & Christian Aris M. Valix
Chapter 1: Cash and Cash Equivalents
Problem 1-1 (IAA)
1. Accounts Receivable ₱ 200,000 2. Cash and Cash Equivalents
Cash in Bank ₱ 200,000 Cash in Bank ₱ 3,000,
Stale Check (200,000)
Cash in Bank 250,000 Undelivered Check 250,
Accounts Payable 250,000 Postdated Check 100,
Error (450,000)
Cash in Bank 100,000 Total Cash in Bank ₱ 2,700,
Accounts Payable 100,000 Time Deposit - 30 days 1,000,
Accounts Receivable 450,000 Total Cash and Cash Equivalent ₱ 3,720,
Cash in Bank 450,
Problem 1-2 (IAA)
1. Accounts Receivable ₱ 150,000 2. Cash and Cash Equivalents
Cash on Hand ₱ 150,000 Cash on Hand ₱ 1,000,
Postdated Check (150,000)
Expenses (Unreplenish PCV) 10,000 Total Cash on Hand ₱ 850,
Advances to Employees 5,000 Petty Cash Fund (aft. Adj.) 35,
Petty Cash Fund 15,000 Security Bank current account 2,000,
PNB current account 1,500,
Problem 1-3 (IAA)
1. Accounts Receivable ₱ 100,000 2. Compute Total Cash
Cash on Hand ₱ 100,000 Cash on Hand ₱ 1,000,
NSF Check (100,000)
Accounts Receivable 150,000 Postdated Check (150,000)
Cash on Hand 150,000 Total Cash on Hand ₱ 750,
Petty Cash Fund 50,
Advance to Employees 10,000 Employees' IOU (10,000)
Cash Short or Over 5,000 Shortage (5,000)
Petty Cash Fund 15,000 Total Petty Cash Fund 35,
Cash in Bank 4,000,
Cash in Bank 200,000 Undelivered Check 200,
Accounts Payable 200,000 Postdated Check 300,
Total Cash in Bank 4,500,
Cash in Bank 300,000 Saving deposit 2,000,
Accounts Payable 300,000 Total Cash ₱ 7,285,
3. Money Market Placement is a short-term investment and Sinking Fund is for long-term liability. Both do not qualify as cash
equivalents. Saving deposit in closed bank is a receivable.
3. BDO current account (overdraft) is a current liability; BSP Treasury Bills 120-Days is a short-term investment; BPI Time Deposit -
90 Days is a cash fund for acquisition of non-current asset; and Bonk Sinking Fund is a cash fund for long-term liability.
Problem 1-4 (PHILCPA Adapted)
1. Accounts Receivable ₱ 35,000 2. Compute Total Cash
Cash on Hand ₱ 35,000 Cash on Hand ₱ 200,
NSF Check (35,000)
Accounts Receivable 15,000 Postdated Check (15,000)
Cash on Hand 15,000 Total Cash on Hand ₱ 150,
Petty Cash Fund 20,
Advance to Employees 2,000 Employees' IOU (2,000)
Expenses (PCF Vouchers) 12,000 Expenses (12,000)
Cash Short or Over 1,000 Shortage (1,000)
Petty Cash Fund 15,000 Total Petty Cash Fund 5,
Philippine Bank current account 5,000,
Cash in Bank 25,000 Undelivered Check 25,
Accounts Payable 25,000 Postdated Check 45,
Total PB current account 5,070,
Cash in Bank 45,000 City Bank current account, net 3,900,
Accounts Payable 45,000 Asia saving account 250,
Asia saving time deposit, 90 days 2,000,
Total Cash on Hand ₱ 11,375,
Problem 1-5 (ACP)
Imprest Fund System Fluctuating Fund System
1 Petty Cash Fund ₱ 10,000 Petty Cash Fund ₱ 10,
Cash in Bank ₱ 10,000 Cash in Bank ₱ 10,
2 No Entry Postage 1,
Supplies Expense 5,
Transportation Expense 1,
Miscellaneous Expense 800
Petty Cash Fund 9,
3 Postage 1,500 Petty Cash Fund 14,
Supplies Expense 5,500 Cash in Bank 14,
Transportation Expense 1,
Miscellaneous Expense 800
Petty Cash Fund 5,
Cash in Bank 14,
Problem 1-6 (ACP)
Imprest Fund System Fluctuating Fund System
1 Petty Cash Fund ₱ 10,000 Petty Cash Fund ₱ 10,
Cash in Bank 10,000 Cash in Bank 10,
2 No Entry Postage 1,
Supplies Expense 3,
Petty Cash Fund 4,
3 No Entry
Transportation Expense
Accounts Payable 3500
Petty Cash Fund 4500
4 Postage 1,500 Petty Cash Fund 19,
Supplies Expense 3,000 Cash in Bank 19,
Transportation Expense
Accounts Payable 3,
Petty Cash Fund 10,
Cash in Bank 19,
Problem 1-10 (AICPA Adapted) Problem 1-11 (IAA)
Solution: Solution:
Cash in checking acoount ₱ 350,000 Cash on Hand ₱ 500,
Cash in money market account 750,000 Demand Deposit 4,000,
Petty Cash Fund 50,
Traveler Check 200,
Manager Check 100,
Total Cash and Cash Equivalent ₱ 4,600,000 Money Order 150,
b. P4,600,000 Total Cash ₱ 5,000,
d. 5,000,
Problem 1-12 (PHILCPA Adapted) Problem 1-13 (PHILCPA Adapted)
Checking account at Metrobank ₱ 3,000,000 Petty Cash Fund ₱ 50,
Total Unrestrited Cash ₱ 5,500,
b. 5,500,000 Cash in Bank 2,500,
Deposit in bank closed by B 100,
Total Cash ₱ 4,050,
d. 4,050,
Problem 1-14 (AICPA Adapted) Problem 1-15 (AICPA Adapted)
Bank statement balance ₱ 5,000,000 Solution:
Petty Cash Fund ₱ 50,
Unreplenished Vouchers (5,000)
IOU employees (5,000)
Total Petty Cash Fund ₱ 40,
Total Cash
₱ 5,500,000 Cash on Hand 500,
b. 5,500,000 Postdated Check (100,000)
Total Cash on Hand 400,
Cash in Bank - current account 4,000,
Cash in Bank - payroll account 1,000,
Time Deposit 2,000,
Total Cash and Cash Equivalent ₱ 7,440,
d. 7,440,
Problem 1-16 (AICPA Adapted) Problem 1-17 (AICPA Adapted)
Solution: Solution:
Cash in Bank - current account
Cash in bank
Petty Cash Fund 50,000 Cash on Hand 125,
Time Deposit 2,500,000 Total Cash
Saving Deposit 1,000,000 c. 2,375,
Total Cash and Cash Equivalents
b. 9,150,
Problem 1-18 (IAA) Problem 1-19 (IAA)
Solution: Solution
Pety Cash Fund
Undeposited collections
Cash in Bank - BDO checking account 4,000,
Cash in Bank - BDO fund for payroll 1,000,
Undelivered Check 100,000 Cash in Bank - BDO Time deposit, 90 days 2,000,
Total 4,100,000 Cash in Bank - BDO value added tax account 450,
Money Market Placement - Third Bank 1,000,
Total Cash and Cash Equivalent
d. 8,050,
Total Cash and Cash Equivalents
b. 5,150,
Treasury bill, purchased November 1,
2021 maturing January 31, 2022
Foreign bank account unrestricted and in
equivalent pesos
Undeposited receipts,
excluding postdated check
Check drawn on Thor's account, payable to
supplier, dated and recorded on December 31,
2021 but not mailed until January 31, 2022
Cash held for
compensating balance
Current Account - First
Bank
- b. Money kept on hand for making minor disbursements of
coin and currency rather than by writing checks
3. c. When the fund is created and when the size of the
fund is created
INTERMEDIATE ACCOUNTING Vol.1 (2021 Edition)
Conrado T. Valix, Jose F. Peralta & Christian Aris M. Valix
Chapter 2: Bank Reconciliation
Problem 2-1 (IAA) Problem 2-2 (IAA)
a. Apathy Campany a. Sensible Company
Bank Reonciliation Bank Reonciliation
December 31 December 31
Unadjusted Book Balance ₱ 65,000 Cash Balance per Book ₱ 110,
Add: Credit Memo Add: Credit Memo
December 29 collection 30,000 Decemeber 28 collection 45,
Total 95,000 Total 155,
Less: Debit Memo Less: Debit Memo
(2,000) Bank Service Charge (5,000)
Adjusted Book Balance 93,000 NSF Check (10,000)
Add: Outstanding Checks Total 140,
Check No. 102 15,000 Error:
Check No. 105 30,000 Check No. 776 (27,000)
Check No. 107 50,000 Adjusted Book Balance ₱ 113,
Total 188,
Less: Deposit in Transit Cash Balance per Bank 135,
December 31 deposit (80,000) Add: Deposit in Transit
Unadjusted Bank Balance ₱ 108,000 Decemeber 31 deposit 60,
Total 195,
b. Cash ₱ 30,000 Add: Outstanding Checks
Accounts Receivable ₱ 30,000 Check No. 770 (20,000)
Check No. 775 (30,000)
Bank Sevice Charge 2,000 Check No. 777 (40,000)
Cash 2,000 Total 105,
Error:
Check No. 1042 8,
Adjusted Bank Balance ₱ 113,
b. Dec 31 Cash 45,000 Accounts Receivable 10,
Service Bank Charge 5,000 Cash 10,
Accoutns Receivable 45,
Accounts Payable 27,
Bank Service Charge 5,000 Cash 27,
Cash 5,
Problem 2-3 (IAA)
a. Xanthous Company b. Cash 270,
Bank Reonciliation Serivce Bank Charge 10,
February 28 Notes Receivable 250,
Unadjusted Book Balance ₱ 2,840,000 Interest Receivable 30,
Add: Credit Memo
February 28 note collection 270,000 Serivce Bank Charge 5,
Total 3,110,000 Cash 5,
Less: Debit Memo
Service Charge (5,000) Accounts Receivable 800,
Adjusted Book Balance ₱ 3,105,000 Cash 800,
Problem 2-6 (IAA) b.
Balance per bank statement, January 31 ₱ 3,500,000 Service Bank Charge 5,
Cash 5,
Total 4,050,000 Cash 180,
Less: Checks outstanding on January 31 (650,000) Accounts Receivable 180,
Adjusted Bank Balance 3,400,
Accounts Payable 270,
Cash 270,
Total 3,405,000 Accounts payable 125,
Errors: Cash 125,
Slide Error on Creditors check 270,
Slide Error on Customers check (180,000)
Omission (125,000) (35,000)
Unadjusted Book Balance ₱ 3,370,
Problem 2-7 (IAA)
a. Rancor Company b.
Bank Reonciliation Service charge ₱ 10,
December 31 Cash ₱ 10,
Cash Balance per Bank ₱ 4,000,000 Cash 940,
Add: Deposit in Transit ₱ 475,000 Interest expense 18,
Less: Outstanding checks (600,000) (125,000) loans Payable 940,
Total 3,875,000 interest payable 18,
Error:
Slide Error deposit by bank 90,000 Accounts Receivable 50,
Erroneous charged by bank 150,000 Cash 50,
Erroneous charged by bank 200,
Erroneous deposit of bank (300,000) 140,000 Cash 435,
Adjusted Bank balance ₱ 4,015,000 Service charge 5,
Notes Receivable 400,
Book Balance 2,700,000 Interest income 40,
Add: Credit Memos
Proceeds of bank loan 940,
Collection by bank 435,000 1,375,
Less: Debit Memos 4,075,
NSF check (50,000)
Service charge (10,000) (60,000)
Adjusted book balance ₱ 4,015,
Add: Collections on January 31 but
undeposited
Bank debit memo for safety deposit box
rental but not recorded by the depositor
Problem 2-8 (IAA) b.
Error: Problem 2-9 ( IAA) (Still needs clarification) b. Adjusting entries:
- Petty Cash Fund 4,000 Cash in Bank 4,
- Cash 516, a. Alpha Company
- Bank Reconciliation Interest Expense 6,
- December 31 Loans payable 516,
- Interest payable 6,
- Bank balance ₱ 5,500,
- Add: Deposit in transit 300,000 Accounts payable 180,
- less: outstanding checks (544,000) (244,000) Cash 180,
- Total 5,256,
- Error: Petty Cash Fund 10,
- Erroneous deduction 50,000 Cash 10,
- Omission by bank 150,000 70, Erroneous deposit (130,000)
- Adjusted bank balance ₱ 5,326,
- add: Proceeds of bank loan 516, Book balance `
- Petty cash fund (10,000) 326, Slide Error on record (180,000)
- Adjusted book balance ₱ 326,
- Service charge 5, a. Pathetic Company
- Bank Reconciliation Cash 5,
- August
- Accounts Receivable 85,
- Bank Balance ₱ 1,200,000 Cash 85,
- Add: Deposit in Transit ₱ 275,
- Less: Outstanding check (235,000) 40,000 Cash 20,
- Adjusted Bank balance ₱ 1,240,000 Accounts payable 20,
- Book balance ₱ 1,300,000 Cash 10,
- Add: Transpositional error ₱ 20,000 Accounts payable 10,
- Cancelled check No. 555 10,
- Less: Service charge (5,000) Receivable from cashier 40,
- NSF check (85,000) (60,000) Cash 30,
- Adjusted Book Balance ₱ 1,240,000 Sales discount 10,
Problem 2-12 ( AICPA) Problem 2--13 (IAA)
Solution: Solution:
Balance per Bank statements ₱ 1,805,000 Balance per Bank Statement ₱ 2,000,
Deposit in Transit 325,000 Outstanding Check, net of Certified Check (400,000)
Outstanding Check (275,000) Deposit in Transit 200,
Total Adjusted Cash in Bank ₱ 1,855,000 Credit Error (300,000)
a. 1,855,000 Totl Cash in Bank ₱ 1,500,
a. 1,500,
Problem 2-14 ( AICPA Adapted) Problem 2-
Solution: February 28 book balance ₱ 1,460,
Balance per Bank Statement ₱ 3,800,000 Note collected by bank 100,
Deposit in Transit 520,000 Interest earned on note 10,
Outstanding Check (675,000) NSF Check of customer (130,000)
Credit Error (40,000) Bank sevice charge on NSF check (2,000)
Adjusted cash balance per bank 3,605,000 Other Bank Service Charge (3,000)
Bank service charge for December 5,000 Adjusted Bank Balance 1,435,
NSF Check 50,
Unadjusted Cash Balance per Book ₱ 3,660,
b. 3,660,000 Outstanding Check 200,
Debit Error, must be charged to Axle (20,000)
Cash balance per bank statement ₱ 1,530,
b. 1,530,
Problem 2-16 (IAA) Problem 2-17 (IAA)
Cash balance per book ₱ 920,000 Balance per bank statement ₱ 2,800,
Bank service charge for April (15,000)
Error: Adjusted Cash balance 2,500,
Unrecorded customer check 35,000 Bank service charge for december 12,
Adjusted Cash balance/ cash in Bank ₱ 900,
a. 900,
Error:
Transpositional Error on Check 18,
Cash Balance per ledger ₱ 2,520,
b. 2,520,
Problem 2-18 ( IAA) Problem 2-19 (IAA)
Solution for No.1: Solution for No. 1:
Bank per bank statement, July 31 ₱ 1,240,000 Correct Cash balance ₱ 3,000,
Deposit of July 30 not recorded by bank 280,000 Proceeds of bank loan not recorded in ledger (500,000)
Outstanding Checks (550,000) (435,000)
Adjusted Cash Balance ₱ 970,
a. 970,000 Debit memo for July service charge 5,
Solution for No. 2:
Adjusted Cash Balance ₱ 970,000 Cash balance per ledger ₱ 2,120,
Debit memo - service charge 10,000 a. 2,120,
credit memo - collection of note by bank for Gr (300,000)
Error: Solution for No. 2:
Transpositional Error on check (30,000) Correct Cash balance ₱ 3,000,
Unrecorded check 100,
Cash balance per ledger ₱ 750,
b. 750,000 Outstanding Check, net of certified checks 700,
Error:
Note Deposit of February 28 placed in night
depository
Deposit made but not yet recorded by the
bank Check deposited by Laconic during April was
not collectible and has been marked "NSF" by
the bank and returned Checks written but not yet recorded by the
bank
Intereset paid by bank to Sapphire company
for December
Proceeds from customer note, net of interest
income and collection fee
A customer check was returned by bank
marked DAIF
Deposit for July 31 not recorded by bank until
August 1
Errorneous debit record, (180,000)
Cash balance per bank stateme b. ₱ 3,070,
