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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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11. The following data pertaining to the cash transactions and bank account of Mandirigma Company for the month of May are available to you: Cash balance, per bank statement, 5/31 - 31,948; Bank service charge for May - 109; Debit memo for the cost of printed checks delivered by the bank - 125; Outstanding checks, May 31 - 6,728; Deposit of May 30 not recorded by bank until June 1 - 4,880; Proceeds of a bank loan of May 30, net of interest of P300 - 5,700; Proceeds from a customer's promissory note, including interest of P100 - 8,100; Check No. 2772 issued to a supplier entered in the accounting records at P2,100 but deducted in the bank statement at an erroneous amount of - 1,200; Stolen check lacking an authorized signature, deducted from Mandirigma's account by the bank in error - 800; Customer's check returned by the bank marked NSF; no entry has been made in the accounting records to record the returned check - 760.

What is the cash balance per books at May 31? *

a. P18,994

b. P30,000

c. P42,806

d. P17,194

12. Grass Company provided the following information: Balance per bank statement July 31 - 1,240,000; Balance per ledger, July 31 - 750,000; Deposit of July 30 not recorded by bank - 280,000; Debit memo - service charges - 10,000; Credit memo - collection of note by bank for Grass - 300,000; Outstanding checks - ??? An analysis of the canceled checks returned with the bank statement reveals the following: * Check for purchase of supplies was drawn for P60,000 but was recorded as P90,000. * The manager wrote a check for traveling expenses of P100,000 while out of town. The check was not recorded.

What is the amount of outstanding checks on July 31 ? *

a. 550,000

b. 270,000

c. 970,000

d. 610,000

13. At the end of the current year, an entity had various checks and papers in the safe. Which of the following should not be included in "cash" in the current year-end statement of financial position? *

a. US $20,000 cash.

b. Past due promissory note issued in favor of the entity by the President.

c. The entity's undelivered check payable to a supplier dated December 31 of the current year.

d. Another entity's P150,000 check payable to the entity dated December 15 of the current year.

14. On March 31, 2014, Able Company received the bank statement. However, the closing balance of the account was unreadable. Attempts to contact the bank after hours did not secure the desired information. The following data are available in preparing a bank reconciliation: February 28 book balance - 1,460,000; Note collected by bank - 100,000; Interest earned on note - 10,000; NSF check of customer - 130,000; Bank service charge on NSF check - 2,000; Other bank service charges - 3,000; Outstanding checks - 202,000; Deposit of February 28 placed in night depository - 85,000; Check issued by Axle Company charged to Abie's account - 20,000.

What is the cash balance per bank statement? *

a. 1,532,000

b. 1,557,000

c. 1,338,000

d. 1,435,000

15. Campbell Company had the following account balances on December 31, 2014: Petty cash fund - 50,000; Cash in bank - current account - 4,000,000; Cash in bank - sinking fund - 2,000,000; Cash on hand - 500,000; Cash in bank - restricted account for plant addition, expected to be disbursed in 2015 - 1,500,000; Treasury bills - 1,000,000. The petty cash fund included unreplenished December 2014 petty cash expense vouchers of P10,000 and employee IOU of P5,000. The cash on hand included a P100,000 check payable to Campbell dated January 15,2015. In exchange for a guaranteed line of credit, the entity has agreed to maintain a minimum balance of P200,000 in its unrestricted current bank account. The sinking fund is set aside to settle a bond payable that is due on June 30,2015.

What total amount should be reported as "cash and cash equivalents" on December 31, 2014? *

a. 5,535,000

b. 4,435,000

c. 7,435,000

d. 5,435,000

16. Which of the following is not a characteristic of a system of cash control? *

a. Daily deposit of all cash received

b. Combined responsibility for handling and recording cash

c. Use of a voucher system

d. Internal audits at irregular intervals

17. The following pertains to Miraflor, Inc. on December 31 of the current year: Checking account balance P925,000; an overdraft in special checking account at same bank as normal checking account of P17,000; certificate of deposit P400,000; cash held in a bond sinking fund P200,000; postdated check from customer PI 1,000; certified check from customer P9,800; NSF cheek received from customer PI 5,000; cash advance to subsidiary of P300,000; postage stamps on hand P620; utility deposit paid to electric company P8,000; currency and coins in a petty cash fund (the company has not replenished the fund to the imprest amount of P5,000) P800.

The correct amount that should be reported as cash is *

a. P918,600

b. P908,800

c. P1,322,800

d. P1,318,600

18,19,20 see attached photo

18. Which of the following items must be added to the cash balance per ledger in preparing a bank
reconciliation which ends with adjusted cash balance? *
a. Erroneous bank debit
b. Note receivable collected by bank in favor of the depositor and credited to the account of the depositor
c. Service charge
d. NSF customer check
19. Letty Company provided the bank statement for the month of April which included the following
information: Bank service charge for April - 15,000; Check deposited by Letty đuring April was not
collectible and has been marked "NSF" by the bank and returned - 40,000; In comparing the bank
statement to its own records, the entity found the following: Deposits made but not yet recorded by bank -
130,000; Checks written and mailed but not yet recorded by bank - 100,000. All deposits in transit and
outstanding checks have been properly recorded in the entity's books. A customer check for P35,000
payable to Letty Company had not yet been deposited and had not been recorded by the entity. The cash
in bank account balance per ledger is P920,000.
What is the adjusted cash in bank on April 30? *
a. 930,000
b. 865,000
c. 900,000
d. 965,000
20. At December 31, 2015, Mursi Co. had the following balances in the accounts it maintains at First
State Bank: Checking account #101 - P175,000; Checking account #201 - (10,000); Money market
account - 25,000; 90-day certificate of deposit, đue 2/28/16 - 50,000; 180-day certificate of deposit, đue
3/15/16 - 80,000.
In its December 31, 2015 statement of financial position, what amount should Mursi report as cash
and cash equivalents? *
a. P240,000
b. P320,000
c. P190,000
d. P200,000

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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