Sample Problem 1: Onor Company (Roque,2018)
1. In connection with your audit of the financial statements of Onor Company for the year
ended December 31,2018,you gathered the following information.
The company maintains its current account with Tsunami Bank. The bank statement on
December 31,2018.showed a balance P638,340.
Your audit of the company's account with Tsunami Bank disclosed the following:
A check for P22,500 received from a customer whose account is current had been
deposited and then returned by the bank on December 28,2018.No entry was made for
the retum of this check. The customer replaced the check on January15,2019.
A check for P5,720 was cleared by the bank as P7,520. the bank made the correction on
January2,2019.
A check for P3,500 representing payment of an employee advance was received and
deposited on December 27,2018, but was not recorded until January3,2019.
Postdated checks totaling P67,300 were included in the deposit in transit.These
represent collections of current accounts receivable from customers. The checks were
actually deposited on January 5,2019.
Various debit memos for drafts purchased for payment of importation of equipment
totaling P230,000 were not yet recorded. These purchases were set up as accounts
payable.Said equipment arrived in December 2018.
Interest earned on the bank balance for the 4th quarter of 2018,amounting to P1,950 was
not recorded.
Bank service charges totaling P1,260 were not recorded.
Deposit in transit and outstanding checks at December 31, 2018 totaled P136,250 and
P276,380 respectively.
2.Various expenses from the company's imprest petty cash fund dated December 2018,
totaled P16,250,while those dated January2019, amounted to P5,903.Another disbursement
from the fund dated December 2018 was a cash advance to an employee amounting to
P3,500.a replenishment if the petty cash fund was made on January8.2019.
3.The company's trial balance on December 31,2018, includes the following accounts:
Cash in bank -Tsunami Bank P748,320
Cash in bank - Earthquake bank restricted account for
plant expansion, expected to be disbursed in 2019) 700,000
Petty cash fund
Time deposit, placed December 20,2018,and due
March 20.2019 1,000,000.00
Money market placement -Prudential Bank 4,000,000
1.What is the adjusted petty cash fund balance on December 31,2018?
2.The petty cash shortage on December 31,2018 is
3.What is the adjusted Cash in Bank-Tsunami Bank balance on December 31,2018?
4. The entry to adjust the Cash in Bank -Tsunami Bank account should include a debit to AR
5.The December 31,2018.statement of financial position should show "Cash and cash
equivalents" at -
Answers:
1.P10.250
2P0
3.P432,710
4.P89,800
5.P5,442,960
