UNIVERSIDAD DE DAGUPAN

Arellano Street, Dagupan City

School of Business and Accountancy

MIDTERM EXAMINATION
AUDITING AND ASSURANCE: CONCEPTS AND APPLICATIONS

PROBLEM 1: Use the following information for the next five questions

Your examination of the financial statements of MAGDALO Group Co. for the year ended December 31, 2021 you
obtained the following information on the checking account of the company:
a. The bank statement on November 30, 2021 showed a balance of P15,300.
b. Among the bank credits in November was a customer’s note for P5,000 collected for the account of the
company which the company recognized in December among its receipts.
c. Included in the bank debits in November was a cost of checkbooks amounting to P60.
d. A check for P2,000 issued by MAGULO Group Co. in November was charged by the bank in error against
MAGDALO Group Co. account.
e. You also ascertained that there were deposits in transit amounting to P4,000 and outstanding checks
totaling P8,500 as of November 30, 2021.
f. The bank statement for the month of December showed total credits of P20,800 and total charges of
P10,200.
g. Company books for December showed total receipts of P36,780 and disbursements of P20,360.
h. Bank debit memos for December were: No. 418 for service charges, P80 and No. 504 on a customer’s
returned check marked “Refer to Drawer” for P1,200.
i. On December 29, 2021 the company placed with the bank a customer’s promissory note with a face value
of P6,000 for collection. The company treated this note as part of its receipts although the bank was able to
collect on the note only in January, 2021.
j. A check for P198 was recorded in the company cash payments books in December as P1,980.

1. Adjusted cash balance as of December 31, 2021.

a. P24,280 b. P36,880 c. P18,782 d. P16,940

2. Unadjusted book balance November 30, 2021.

a. P12,800 b. P7,800 c. P12,860 d. P7,860

3. Adjusted cash balance November 30, 2021.

a. P8,800 b. P12,800 c. P21,300 d. P10,800

4. Deposit in transit as of December 31, 2021.

a. P21,980 b. P10,980 c. P8,890 d. P16,980

5. Outstanding Checks as of December 31, 2021.

a. P19,940 b. P16,818 c. P19,880 d. P18,098
PROBLEM 2: Use the following information for the next five questions

You have been engaged to prepare audited financial statement figures for BOURNE, Inc. The records are in
agreement with the following balance sheet:
BOURNE, INC.
Balance Sheet
December 31, 2021
Assets Liabilities and Capital
Cash P10,000 Accounts Payable P10,000
Accounts receivable 12,000 Notes Payable 3,000
Notes receivable 13,000 Common Stock 20,000
Inventory 25,000 Additional paid-in capital 40,000
Equipment- net 40,000 Retained Earnings 27,000
P100,000 P100,000

A review of the records of the corporation indicates that the errors and omissions listed in the table below had
not been corrected during the applicable years:
Inventory Inventory Depreciation Prepaid Unearned Accrued
December 31 Overstated Understated Expense Expense Income Expense
2018 --- P6,000 P250 P900 --- P200
2019 P7,000 --- 500 700 P400 75
2020 8,000 --- 150 500 --- 100
2021 --- 9,000 350 600 300 50

The net income according to the records is: 2019, P7,500; 2020, P6,500; and 2021, P5,500. No dividends were
declared during these years, and no adjustments were made to retained earnings.

Ignoring income tax effects, answer the following questions:

6. Adjusted net income/(net loss) for 2019:

a. P (6,475) b. P 225 c. P (6,225) d. P 775

7. Adjusted net income/(net loss) for 2020:

a. P 6,025 b. P (1,475) c. P 5,525 d. P (8,475)

8. Adjusted net income/(net loss) for 2021:

a. P 22,000 b. P 14,000 c. P 6,000 d. P 22,150

9. What is the effect of these errors on the net working capital at the end of 2021?
a. P 8,000 understated c. P 16,850 understated
b. P 8,900 understated d. P 9,250 understated

10. What is the adjusted balance of the stockholders’ equity at December 31, 2021?
a. P 95,000 b. P 95,900 c. P 103,850 d. P 96,250
PROBLEM 3: Use the following information for the next five questions

You were engaged to audit the books of accounts of E Enterprise for the year ended December 31, 2021. From the
records of the Co. you gathered the following information:

E Enterprises started operation on October 2, 2021 with E investing P200,000 cash. Monthly bank reconciliation
statements have not been prepared for 2021; however, bank statements for October, November, and December
were made available to you. Your analysis of these bank statements revealed total bank credits (deposits) of
P1,140,000 including, E’s initial investment and bank loan, details of which are in the additional data. The bank
statement in December, 2021 showed an ending balance of P60,760.

Examination of the paid checks disclosed that checks totaling P9,000 were issued by the Co. in December, 2021 and
were presented for payment only in January, 2022. Cash count of the Cashier’s accountability amounted to P12,600.
You were told by the Cashier that P10,000 of these, in checks, were cash sales on December 29, 2021, deposited on
Jan. 3, 2022. The balance, in currency and coins, represents Petty Cash Fund.

Additional data:
1. Accounts receivable subsidiary ledger had a total balance of P140,000 at December 31, 2021.
P10,000 of this was estimated to be uncollectible.
2. Supplier’s unpaid invoices for merchandise totaled P30,000; while an account for store fixtures bought
on October 2, 2021 for P100,000 had an unpaid balance of P10,000. Fixtures are depreciated at 10%
per annum.
3. Merchandise inventory at December 31, 2021 amounted to P60,000.
4. The bank statement in October showed a bank credit for P190,000 dated October 2, 2021. Inquiry from
the Cashier disclosed that the amount represents proceeds of a 90-day, 20% discounted bank note.
P160,000 of this loan was paid by check in December, 2021.
5. Operating expenses paid during the period totaled P351,500; while merchandise purchases amounted
to P500,000.

REQUIRED:

11. Petty cash fund as of December 31, 2021.

a. P12,600 b. P5,000 c. P11,600 d. P2,600

12. Adjusted cash balance per bank.

a. P61,760 b. P51,760 c. P60,760 d. P70,760

13. Total cash paid to suppliers for merchandise purchases.

a. P500,000 b. P470,000 c. P530,000 d. P560,000

14. Net income in 2021.

a. P98,600 b. P96,000 c. P86,000 d. P106,000

15. Cash shortage as of December 31, 2021.

a. P14,140 b. P16,740 c. P4,140 d. P6,740
PROBLEM 4: Use the following information for the next three questions

You were first appointed auditor of the Pringles Corporation in 2021. You completed the audit for 2021 and
prepared audited financial statements directly from the audit working papers.

You have returned to make the 2022 audit and discovered that the client’s bookkeeper failed to record the
adjusting entries you made in 2021 audit working papers, which entailed adjustments for the following items:

1. The December 31, 2021 inventory was understated by P5,000.

2. No entry was made for accrued utilities expense of P2,500 as of year-end.
3. Ordinary motor repairs of P3,200 was charged to Accumulated Depreciation during 2021.
4. The Company failed to record the provision for uncollectible accounts in the amount of P6,000.

Your examination of the 2022 entries in the accounts uncovered the following:
1. An expenditure of P10,000 for repairs of office equipment had been charged to Furniture and Equipment.
The Company records depreciation at 10% of the December 31 balance of the Property and Equipment
accounts.
2. A 2021 account receivable in the amount of P4,000 had been written off as uncollectible by a charge to
Retained Earnings.
3. Salesmen’s commission includes P2,400 paid on undelivered customers’ orders.

Additional data:
1. The audited statement of 2021 showed a net income of P250,000.
2. The unadjusted net income for 2022 is P320,000.

16. The unadjusted net income for the year 2021 is:
a. P 253,500 b. P 256,700 c. P 263,700 d. P 261,700

17. By how much would the December 31, 2022 retained earnings be misstated if no adjustments were made
for the above errors?
a. Retained earnings overstated by P11,800. c. Retained earnings overstated by P15,800.
b. Retained earnings overstated by P12,800. d. Retained earnings overstated by P16,800.

18. The adjusted net income for the year 2022 is:
a. P 315,900 b. P 308,400 c. P 314,900 d. P 310,900

PROBLEM 5: Use the following information for the next five questions

Your audit of Camiguin Company disclosed that your client kept very limited records. Purchases
of merchandise were paid for by check, but most other items were out of cash receipts. The
company’s collections were deposited weekly. No record was kept of cash in the bank, nor was a
record kept of sales. Accounts receivable were recorded only by keeping a copy of the ticket, and
this copy was given to the customer when he paid his account.

On January 2, 2020 started business and issued common stock, 108,000 shares with P100 par, for
the following considerations:

Cash P 900,000
Building (useful life, 15 years) 8,100,000
 Land 2,700,000
P 11,700,000

An analysis of the bank statements showed total deposits, including the original cash investment,
of P6,300,000. The balance in the bank statement on December 31, 2020, was P450,000, but
there were checks amounting to P90,000 dated in December but not paid by the bank until
January 2021. Cash on hand on December 31, 2020 was P225,000 including customers’ deposit
of P135,000. During the year, Camiguin Company borrowed P900,000 from the bank and repaid
P225,000 and P45,000 interest.

Disbursements paid in cash during the year were as follows:

Utilities P 180,000
Salaries 180,000
Supplies 360,000
Dividends 270,000
P 990,000

An inventory of merchandise taken on December 31, 2020 showed P1,359,000 of merchandise.

Tickets for accounts receivable totaled P1,620,000 but P90,000 of that amount may prove
uncollectible.

Unpaid suppliers invoices for merchandise amounted to P630,000.

Equipment with a cash price of P720,000 was purchased in early January on a one-year
installment basis. During the year, checks for the down payment and all maturing installments
totaled P801,000. The equipment has a useful life of 5 years.

Based on the above and the result of your audit, determine the following: (Disregard income
taxes)

19. Payments for merchandise purchases in 2020

a. P4,869,000 b. P3,654,000 c. P3,879,000 d. P3,969,000

20. Collections from sales in 2020

a. P6,480,000 b. P5,580,000 c. P7,380,000 d. P4,500,000

21. Net income for the year ended December 31, 2020
a. P2,430,000 b. P2,655,000 c. P1,440,000 d. P2,340,000

22. Stockholders’ equity as of December 31, 2020

a. P13,860,000 b. P14,085,000 c. P12,870,000 d. P13,770,000

23. Total assets as of December 31, 2020

a. P14,175,000 b. P14,374,800 c. P14,085,000 d. P14,310,000
 PROBLEM 6: Use the following information for the next five questions
We were given the following information which were obtained from the single-entry records of Poging
Bagsik

January 1 June 30
Interest receivable P 12,000 P 9,600
Accounts receivable 540,000 1,056,000
Notes receivable 180,000 144,000
Merchandise inventory 456,000 120,000
Store and office equipment (net ) 390,000 360,000
Prepaid operating expenses 30,000 26,400
Interest payable 3,600 6,000
Accounts payable 420,000 300,00
Notes payable 120,000 144,000
Accrued operating expenses 32,400 60,000

An analysis of the cashbook shows the following:

Balance, January 1 P 180,000
Receipts:
Interest income P 24,000
Accounts receivable 432,000
Notes receivable 180,000
Investment by Bagsik 72,000 708,000
888,888
Disbursements:
Interest expense 18,000
Accounts payable 624,000
Notes payable 96,000
Operating expenses 204,000 942,000
( 54,000 )
Questions:
Based on the above and the result of your audit, determine the following for the six months ended June
30, 2021

24. Sales
a. P948,000 b. P132,000 c. P1,092,000 d. P1,164,000

25. Purchases
a. P624,000 b. P576,000 c. P816,000 d. P504,000

26. Operating expenses, excluding depreciation

a. P172,800 b. P231,000 c. P228,000 d. P235,200

27. Operating expenses, excluding depreciation

a. P172,800 b. P231,000 c. P228,000 d. P235,200

28. Net loss

a. P4,800 b. P132,000 c. P152,400 d. P1,221,600
 PROBLEM 7: Use the following information for the next two questions
The “CASH” account of Don Corporation’s ledger on December 31, 2020 showed the
following:

a. Petty cash fund (including P7,500 unreplenished

voucher of which P2,400 is dated January 3, 2021) P 15,000
b. Redemption Fund Account – PNB 500,000
c. Traveler’s check 100,000
d. Money order 10,000
e. Treasury bill, purchased December 1, 2020 (due on Feb. 1, 2021) 50,000
f. Time deposit due on March 31, 2021 50,000
g. 180-day Treasury bill, due March 15, 2021 120,000
h. Note receivable in the possession of a collecting agency 20,000
i. PNB – Checking Account #211-009-091 325,900
j. Cash on hand, including customer postdated check of P15,000 23,000
k. Savings deposit, earmarked for acquisition of equipment 210,000
a. A check payable to San Ignacio Incorporated, dated January 5, 2021,
that was included in the December 31 PNB Checking Account
#211-009-091 50,000
b. Bond Sinking Fund (used to finance the maturing long-term obligation
on March 31, 2021) 150,000
n. Overdraft in PNB Checking Account #211-099-085 ( 50,000)
a. Check #801 in payment to Accounts Payable, dated Dec. 31, 2020
not mailed until January 5, 2021 20,000
b. Advances to Officers/Employees for Seminars (no liquidation is
required) 80,000
q. Money market placement (due June 30, 2021) 600,000
r. Listed stock held as temporary investment 100,000
a. Check #789 in payment to Suppliers, dated January 5, 2021 and
recorded December 31, 2020. 35,000
t. Customers’ certified checks 10,000
u. Pension Fund 150,000
TOTAL 2,568,900

29. DON CORPORATION’S cash and cash equivalents balance at December 31, 2006 is:
a. Overstated by P1,950,100 c. Overstated by P 1,845,100
b. Overstated by P 1,895,100 d. Overstated by P 1,795,100

30. DON CORPORATION’S adjusted cash and cash equivalents balance at December 31,
2006 is:
a. P 618,800 b. P 623,800 c. P 673,800 d. P 723,800

PROBLEM 8: Use the following information for the next three questions
The following items are found in the cash account of Ivie Company at December 31, 2006.
The company’s controller asks your opinion whether the items listed below should be
considered as part of cash account and come up with adjusting entry to adjust the cash
account.

1. Customers’ check dated December 25, 2006, P25,000.

2. Company’s check (P30,000) dated December 26, 2006 which was drawn in payment for
merchandise purchased on that date but not delivered until January 3, 2007. This check
was deducted in the cash balance.
 3. A check worth P196,000 from customer who paid the account net of the 2% discount.
The company records the transaction as credit to Accounts Receivable for the proceeds.
4. Cash in closed bank (Urban Bank), P95,000.
5. Redemption fund, P100,000
6. Sinking fund, P100,000. This will be used on March 1, 2007 to redeem the bonds
payable.
7. Metro Bank Checking Account No. 0004568, P210,000.
8. RCBC Checking Account No. 0002347, P115,000.
9. Overdraft in PNB Checking Account No. 00011256, P50,000.
10. Company’s check dated January 3, 2007 in payment of account, P50,000. This was
recorded in the company’s disbursement ledger at December 31, 2006.
11. Overdraft in RCBC Checking Account No. 0056791, P15,000.
12. Postage stamps, P2,000.
13. 90-day Treasury Bills (purchase on November 1, 2006), P100,000
14. Treasury Bills that matures on February 1, 2007, P50,000.
15. Change fund, P10,000.
16. Customers’ certified check, P20,000.
17. Company’s certified check, P50,000. (This was included in the cash disbursement for
December).

31. The entry to correct/adjust item number 17 is:

a. Accounts payable 50,000
Cash 50,000
b. Cash 50,000
Accounts receivable 50,000
c. Cash 50,000
Accounts payable 50,000
d. No adjustments

32. The entry to correct/adjust item number 16 is:

a. Accounts receivable 20,000
Cash 20,000
b. Cash 20,000
Accounts payable 20,000
c. Cash 20,000
Accounts receivable 20,000
d. No adjustments

33. IVIE COMPANY’S adjusted cash and cash equivalents balance at December 31, 2020 is:
a. P 771,000 b. P 741,000 c. P 721,000s d. P 691,000
 PROBLEM 9: Use the following information for the next three questions
You are making an audit of the Darwin Corporation for the past calendar year. The balance
of the Petty Cash account at December 31, 2020 was P1,300. Your count of the imprest
cash count made at 8:30 am on January 3, 2021, in the presence of the petty cash
custodian, revealed:

Currency and coins 571.38

Checks:
Date Maker Bank
12/28/20 Macky, vice-president PNB 360.00
12/29/20 Andy, employee DBP 60.00
12/31/20 Bobot, customer RCBC 153.80
01/02/21 Neil, customer PNB 121.36
01/10/21 Jeff, employee PNB 60.00
(check received Dec. 29)
(These checks were all considered good when deposited after dates shown on the
checks. The first four checks were actually deposited Jan. 3; the last check was
deposited Jan. 11; all five checks proved to be good.)

Vouchers:
Dec. 11 #261 Richard, shipping clerk – temporary advance for the use of the
receiving department. Your count of Mr. Richard’s fund revealed:
currency – P28.80; merchandise freight bills, P31.20. P 60.00
Dec. 28 # 301 Postage 12.00
Dec. 29 # 302 Freight bill on merchandise purchases 47.30
Dec. 31 # 305 Freight bill on office supplies 88.93
Jan. 2 # 500 Freight bill on merchandise purchases 29.36

IOU Dec. 21 Mabel, employee 36.00

Sales Invoices (for cash sales, collections handled by the petty cashier):
Invoice # 315 Dec. 30 P 120.00
328 Dec. 31 153.80
334 Jan. 2 121.36
(As a general rule, the petty cashier endeavored to turn over the proceeds of
cash sales to the general cashier on the 10 th, 20th and last days of each month.
Proceeds on these sales were recorded and deposited by the general cashier.)

Postage Stamps:
Three one-peso stamps. The petty cashier handled postage stamps. These
stamps represent the unused stamps purchased on Voucher # 301.

Questions
34. The petty cash fund shortage at December 31, 2020 is:
a. P 216.39 b. P 123.83 c. P 98.03 d. P 95.03

35. The adjusted petty cash fund balance of DARWIN CORPORATION at December 31, 2020
is:
a. P 900.74 b. P 960.74 c. P 1,174.54 d. P 1,234.54
36. DARWIN CORPORATION’S operating expenses found in the petty cash fund at December
31, 2020 is:
a. P 208.23 b. P 205.75 c. P 174.03 d. P 97.93

37. The Cash account (excluding PCF) of DARWIN CORPORATION is understated at December
31, 2020 by:
a. P 395.16 b. P 273.80 c. P 153.80 d. P 120.00

PROBLEM 10: Use the following information for the next three questions
Mary Jane is the cashier of Adlawan Corporation. AS representative of the Zarate and
Associates, CPAs, you were assigned to verify her cash on hand in the morning of January
3, 2021. You began to count at 9:00 AM in the presence of Mary Jane. In the course of
your counting, you found currencies in paper bills and coins together with checks, vouchers,
and other items, which are mentioned below:

Bills: (2) P500; (8) P100; (12) P50; (5) P20

Coins: P 5.00 11 loose

1.00 24 loose
0.25 5 rolls and 32 loose (50 pieces to a roll)
0.10 10 rolls and 15 loose (50 pieces to a roll)
0.05 14 rolls and 20 loose (40 pieces to a roll)
Checks:
Date Maker Payee Amount
12/22/20 Vivian, Asst. Mgr Adlawan Corp. P 6,000
12/26/20 Mary Jane, cashier Adlawan Corp. 4,000

IOUs:
Date Maker Amount
12/20/20 Yap, Janitor P 500
12/22/20 Felix, clerk 750
12/24/20 Ablay, bookkeeper 500

PETTY CASH VOUCHERS FOR REPLENISHMENT

Date Payee Accounts Charged Amount
12/16/20 Wagan, messenger Advances to employees P1,000.00
12/17/20 Maren and Co. Supplies 545.00
12/18/20 Eeman Liner Freight in 982.50
12/18/20 Posts Office Supplies 300.00
12/20/20 Alejandre, carpenter Repairs 2,950.00
12/21/20 Violan Miscellaneous expense 554.00

Your investigation also disclosed the following:

1. The balance of petty cash fund per books is P20,000.00.

2. Cash sale of January 2, 2021 amounted to P8,650 per sales records, while cash
receipts book and bank deposit slip showed that only P7,650 was deposited in the
bank on January 3, 2021

3. The following employees’ pay envelopes had been opened and the money removed.
Each envelope was marked “Unclaimed” - Ernesto, P332.50; Secinando, P447.50.
38. The petty cash shortage of ADLAWAN CORPORATION at December 31, 2020 is:
a. P 2,748.50 b. P 1,748.50 c. P 968.50 d. P 188.50

39. The adjusted petty cash balance of ADLAWAN CORPORATION at December 31, 2020 is:
a. P 10,950 b. P 11,950 c. P 11,730 d. P 12,730

40. The undeposited sales/collection of ADLAWAN CORPORATION at December 31, 2020 is:
a. P 8,650 b. P 7,650 c. P 1,000 d. P 0

PROBLEM 11: Use the following information for the next five questions
The bank portion of the bank reconciliation for Angelo Company at October 31, 2020 was as
follows:
Angelo Company
Bank Reconciliation
October 31, 2020
Cash Balance per Bank P 12,367.90
Add: Deposit in transit 1,530.20
P 13,898.10
Less: Outstanding checks

Check Number Check Amount

1 P 1,260.40
1 720.10
2 844.50
3 426.80
2474 1,050.00 4,301.80

Adjusted cash balance per bank P 9,596.30

The adjusted cash balance per bank agreed with the cash balance per books at October 31.

The November bank statement showed the following checks and deposits.

Bank Statement
Checks Deposits
Date Number Amount Date Amount

11-1 2470 720.10 11-1 1,530.20

11-2 2471 844.50 11-4 1,211.60
11-5 2474 1,050.00 11-8 990.10
11-4 2475 1,640.70 11-13 2,575.00
11-8 2476 2,830.00 11-18 1,472.70
11-10 2477 600.00 11-21 2,945.00
11-15 2479 1,750.00 11-25 2,567.30
11-18 2480 1,330.00 11-28 1,650.00
11-27 2481 695.40 11-30 1,186.00
11-30 2483 575.50 Total 16,127.90
11-29 2486 900.00
Total 12,936.20
 The cash records per books for November showed the following:

Cash Receipts
Cash Payments Journal Journal____
Date Number Amount Date Number Amount Date Amount
11-1 2475 1,640.70 11-20 2483 575.50 11-3 1,211.60
11-2 2476 2,830.00 11-22 2484 829.50 11-7 990.10
11-2 2477 600.00 11-23 2485 974.80 11-12 2,575.00
11-4 2478 538.20 11-24 2486 900.00 11-17 1,472.70
11-8 2479 1,570.00 11-29 2487 398.00 11-20 2,954.00
11-10 2480 1,330.00 11-30 2488 800.00 11-24 2,567.30
11-15 2481 695.40 Total 14,294.10 11-27 1,650.00
11-18 2482 612.00 11-29 1,186.00
11-30 1,225.00
Total 15,831.70

The bank statement contained two bank memoranda:

1. A credit of P2,105.00 for the collection of a P2,000 note for Angelo Company plus
interest of P120 and less a collection fee of P15. Angelo company has not accrued any
interest on the note.

2. A debit for the printing of additional company checks, P50.

At November 30, the cash balance per books was P11,123.90, and the cash balance per the
bank statement was P17,604.60. The bank did not make any errors, but Angelo Company
made two errors.

Note: The correction of any errors pertaining to recording checks should be made to
Accounts Payable. The correction of any errors relating to recording cash receipts should be
made to Accounts Receivable

Questions

41. The unadjusted cash ledger balance of ANGELO COMPANY at November 30, 2020 is:
a. P 11,133.90 b. P 12,990.90 c. P 13,188.90 d. P 13,377.90

42. The unadjusted bank balance of ANGELO COMPANY at November 30, 2020 is:
a. P 12,828.90 b. P 13,008.90 c. P 13,188.90 d. P 17,614.60

43. The outstanding checks of ANGELO COMPANY at November 30, 2020 is:
a. P 5,659.70 b. P 5,830.70 c. P 5,839.70 d. P 6,028.70

44. The deposit in transit of ANGELO COMPANY at November 30, 2020 is:
a. P 1,225 b. P 1,216 c. P 1,234 d. P 1,396

45. The adjusted book balance of ANGELO COMPANY at November 30, 2020 is:
a. P 11,133.90 b. P 12,990.90 c. P 13,188.90 d. P 13,377.90
 PROBLEM 12: Use the following information for the next five questions
The following information pertains to the cash of Jenny Company:

Nov 31 Dec. 31
Balance shown on bank statement P 27,380 P 26,960
Balance shown in general ledger before
reconciling the bank account 25,780 25,000
Outstanding checks 8,630 10,150
Deposits in transit 6,850 12,450

For Dec.
Deposits shown in bank statement P 55,880
Charges shown on bank statement 56,300
Cash receipts shown in company’s books 53,980
Cash payments shown in company’s books 54,760

The bank service charge was P180 in November (recorded by the company during
December) and P240 in December (not yet recorded by the company).

Included with the December bank statement was a check for P5,000 that had been received
on December 25 from a customer on account. The returned check marked “NSF” by the
bank, has not yet been recorded on the company’s books.

During December the bank collected P7,500 of bond interest for the company and credited
the proceeds to the company’s account. The company earned the interest during the
current accounting period but has not yet recorded it.

During December the company issued a check for P6,960 for equipment. The check, which
cleared the bank during December, was incorrectly recorded by the company for P8,960.

Questions
46. The adjusted cash receipts of JENNY COMPANY at December 31 is:
a. P 61,480 b. P 53,980 c. P 50,280 d. P 46,480

47. The adjusted cash disbursements of JENNY COMPANY at December 31 is:

a. P 63,980 b. P 61,980 c. P 57,820 d. P 54,780

48. The adjusted December 31 cash balance of JENNY COMPANY is:

a. P 29,760 b. P 29,260 c. P 27,260 d. P 25,600

49. The adjusted November 31 cash balance of JENNY COMPANY is:

a. P 29,160 b. P 27,260 c. P 26,160 d. P 25,600

50. The check issued but was incorrectly recorded as P8,960 should be adjusted by:
a. Accounts payable 2,000 c. Cash 2,000
Cash 2,000 Accounts payable 2,000
b. Equipment 2,000 d. Cash 2,000
Cash 2,000 Equipment 2,000

- End of Examination –
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