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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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PLEASE ANSWER 1-3
![PROBLEM 1: The following items are found in the cash account of Ivie Company at December 31,
2020. 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, 2020, P25,000.
2. Company's check (P30,000) dated December 26, 2020 which was drawn in payment for
merchandise purchased on that date but not delivered until January 3, 2021. 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.
Cash in closed bank (Urban Bank), P95,000.
4.
5. Redemption fund, P100,000
6. Sinking fund, P100,000. This will be used on March 1, 2021 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, 2021 in payment of account, P50,000. This was
recorded in the company's disbursement ledger at December 31, 2020.
11. Overdraft in RCBC Checking Account No. 0056791, P15,000.
12. Postage stamps, P2,000.
13. 90-day Treasury Bills (purchase on November 1, 2020), P100,000
14. Treasury Bills that matures on February 1, 2021, 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).
Based on the above data and the result of your audit, answer the following:
1. The entry to correct/adjust item number 3 is:
a. Accounts receivable 4,000
Sales discounts
4,000
b. Sales discounts
Accounts receivable
4,000
2. The entry to correct/adjust item number 10 is:
a. Accounts payable 50,000
Cash
b. Other liabilities
50,000
Cash
50,000
3. The entry to correct/adjust item number 17 is:
4,000
a. Accounts payable 50,000
Cash
50,000
b. Cash
50,000
50,000
c. Accounts receivable 4,000
Sales
d. No adjustments
c. Cash
Accounts payable
d. No adjustment
50,000
c. Cash
Accounts payable
d. No adjustments
4,000
50,000
50,000
50,000
Accounts receivable
50,000
4. IVIE COMPANY'S adjusted cash and cash equivalents balance at December 31, 2020 is:
a. P 771,000
c. P 721,000
b. P 741,000
d. P 691,000
5. The general cash account is considered significant in almost all audits
a. When the ending balance is material
b. When the beginning balance is material
c. When either beginning balance or ending balance is material
d. Even when the ending balance is immaterial](https://content.bartleby.com/qna-images/question/097e73c7-98fe-4519-a48e-c330b48492c0/e7a6acf0-28a1-417b-9637-ca27025c330e/cgesi6j_thumbnail.png)
Transcribed Image Text:PROBLEM 1: The following items are found in the cash account of Ivie Company at December 31,
2020. 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, 2020, P25,000.
2. Company's check (P30,000) dated December 26, 2020 which was drawn in payment for
merchandise purchased on that date but not delivered until January 3, 2021. 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.
Cash in closed bank (Urban Bank), P95,000.
4.
5. Redemption fund, P100,000
6. Sinking fund, P100,000. This will be used on March 1, 2021 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, 2021 in payment of account, P50,000. This was
recorded in the company's disbursement ledger at December 31, 2020.
11. Overdraft in RCBC Checking Account No. 0056791, P15,000.
12. Postage stamps, P2,000.
13. 90-day Treasury Bills (purchase on November 1, 2020), P100,000
14. Treasury Bills that matures on February 1, 2021, 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).
Based on the above data and the result of your audit, answer the following:
1. The entry to correct/adjust item number 3 is:
a. Accounts receivable 4,000
Sales discounts
4,000
b. Sales discounts
Accounts receivable
4,000
2. The entry to correct/adjust item number 10 is:
a. Accounts payable 50,000
Cash
b. Other liabilities
50,000
Cash
50,000
3. The entry to correct/adjust item number 17 is:
4,000
a. Accounts payable 50,000
Cash
50,000
b. Cash
50,000
50,000
c. Accounts receivable 4,000
Sales
d. No adjustments
c. Cash
Accounts payable
d. No adjustment
50,000
c. Cash
Accounts payable
d. No adjustments
4,000
50,000
50,000
50,000
Accounts receivable
50,000
4. IVIE COMPANY'S adjusted cash and cash equivalents balance at December 31, 2020 is:
a. P 771,000
c. P 721,000
b. P 741,000
d. P 691,000
5. The general cash account is considered significant in almost all audits
a. When the ending balance is material
b. When the beginning balance is material
c. When either beginning balance or ending balance is material
d. Even when the ending balance is immaterial
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