In relation to your audit of the cash in bank of your client, Meg Company, the following information were gathered: • As of May 31, 2016, the book balance is P20,000 and the bank balance is P18,000. • The deposit in transit for May is P10,000; for June, P15,000. • The outstanding checks for May amount to P2,000 and the outstanding checks for June total to P5,000. • Credit memo for May pertain to a collection for a note totalling to P8,000; while for June, the credit memo is P30,000 pertaining to a bank loan. • Debit memos total to P500 for May and P2,000 for June. • A May book disbursement for P1,500 was not recorded. The correction was made in June. • A June collection for P4,500 was not recorded. No correction was made. • Bank errors for June are as follows: a deposit of P10,200 made by the entity was erroneously omitted; and a disbursement made by your client for P3,000 was erroneously debited to the account of MIG Company. No corrections were made during the month. • June book debits – P150,000; June bank debits – P158,000; June cash balance per books (unadjusted) – P6,000; June bank credits – P161,300   1. How much is the total disbursement made by the entity for the month of June 2016? Answer:  164,000 2. What is the adjusted cash balance as of May 31, 2016? Answer: 26,000 3. What is the adjusted cash balance as of June 30, 2016? Answer:38,500  Solution is attached (The following Proof of Cash for point of view of the Bank & Book was provided that shows adjusted cash balance and total disbursement:) Now, your turn: Prepare a compound adjusting journal entry to correct the cash in bank balance as of June 30, 2016.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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In relation to your audit of the cash in bank of your client, Meg Company, the following information were gathered:

• As of May 31, 2016, the book balance is P20,000 and the bank balance is P18,000.
• The deposit in transit for May is P10,000; for June, P15,000.
• The outstanding checks for May amount to P2,000 and the outstanding checks for June total to P5,000.
• Credit memo for May pertain to a collection for a note totalling to P8,000; while for June, the credit memo is P30,000 pertaining to a bank
loan.
• Debit memos total to P500 for May and P2,000 for June.
• A May book disbursement for P1,500 was not recorded. The correction was made in June.
• A June collection for P4,500 was not recorded. No correction was made.
• Bank errors for June are as follows: a deposit of P10,200 made by the entity was erroneously omitted; and a disbursement made by your
client for P3,000 was erroneously debited to the account of MIG Company. No corrections were made during the month.
• June book debits – P150,000; June bank debits – P158,000; June cash balance per books (unadjusted) – P6,000; June bank credits – P161,300

 

1. How much is the total disbursement made by the entity for the month of June 2016? Answer:  164,000
2. What is the adjusted cash balance as of May 31, 2016? Answer: 26,000
3. What is the adjusted cash balance as of June 30, 2016? Answer:38,500 

Solution is attached (The following Proof of Cash for point of view of the Bank & Book was provided that shows adjusted cash balance and total disbursement:)

Now, your turn: Prepare a compound adjusting journal entry to correct the cash in bank balance as of June 30, 2016.

 

The following Proaf of Cash for paint af view of the Bank & Book was provided:
June
Disbursements
made by the entity
for June
158,000
June 30
(Adjusted Cash
Balance)
21,300
Bank
May 31 (Adjusted Receipts
Cash balance)
Balance
Deposit in transit 10,000
18,000
161,300
(10,000)
|- May
Deposit in transit
|- June
15,000
15,000
Outstanding
Check - May
Outstanding
Check - June
(2,000)
(2,000)
5,000
(5,000)
Error - Depasit
10,200
10,200
(3,000)
Error -
3,000
Disbursement
Тotal
26,000
176,500
164,000
38,500
June
May 31 (Adjusted Receipts
Cash balance)
Book
Disbursements
June 30
made by the entity
for June
164,000
(Adjusted Cash
Balance)
6,000
20,000
Balance
Credit Memo -
May
150,000
(8,000)
8,000
Credit Memo-
30,000
30,000
June
Debit Mema -
(500)
(500)
May
Debit Memo -
2,000
(2,000)
June
Unrecorded
Unrecorded
Total
(1,500)
(1,500)
4,500
176,500
(4,500)
38,500
26,000
164,000
Transcribed Image Text:The following Proaf of Cash for paint af view of the Bank & Book was provided: June Disbursements made by the entity for June 158,000 June 30 (Adjusted Cash Balance) 21,300 Bank May 31 (Adjusted Receipts Cash balance) Balance Deposit in transit 10,000 18,000 161,300 (10,000) |- May Deposit in transit |- June 15,000 15,000 Outstanding Check - May Outstanding Check - June (2,000) (2,000) 5,000 (5,000) Error - Depasit 10,200 10,200 (3,000) Error - 3,000 Disbursement Тotal 26,000 176,500 164,000 38,500 June May 31 (Adjusted Receipts Cash balance) Book Disbursements June 30 made by the entity for June 164,000 (Adjusted Cash Balance) 6,000 20,000 Balance Credit Memo - May 150,000 (8,000) 8,000 Credit Memo- 30,000 30,000 June Debit Mema - (500) (500) May Debit Memo - 2,000 (2,000) June Unrecorded Unrecorded Total (1,500) (1,500) 4,500 176,500 (4,500) 38,500 26,000 164,000
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