Problem - You are auditing the cash account of HANSON MERCHANDISING as of the Fiscal year ended October 31,2007 and discovered the following information:
a. The bank statement as of October 31 showed a balance of P63,628.35.
b. Receipts totaling to P20,550 from October 29 to October 31 were deposited on November 2.
c. Hanson's account was debited on October 25 for a customer's uncollectible check amounting to P3,429.
d. The company and the bank recorded a customer check at P1,875 whereas the correct amount should have been P2,175. The bank discovered the error and corrected the same presenting the correction as a credit for the period.
e. Bank service charges for the month of October is at P118.29.
f. A 3-month, 9% P9,000 customer's note dated July 25, discounted on September 12, was dishonored October 26 and the bank charged Hanson P9,220, which included a protest fee of P17.50.
g. Check no. 661 for P3,727.50 was entered in the cash disbursement book at P3,277.50 and check no. 652 for P98.70 was entered as P987. The company uses the voucher system of recording disbursements.
h. A bank memo stated that Linda Company's note for P7,500 and interest of P187.50 had been collected on October 28, and the bank charged P37.50.
i. Upon your investigation, the following checks remained outstanding as of
October 31:
No. 620.................................................P 3,750.00
No. 621................................................. 10,344.69
No. 632................................................. 7,215.75
No. 669................................................. 5,326.14
No. 670................................................ 2,977.50
No. 671................................................ 2,761.20
No. 675................................................ 827.16
No. 679................................................ 6,699.45
Check 670 has been certified by the bank
Questions:
1. What is the correct cash balance as of October 31, 2007?
2. What is the net adjustment to the Hanson's Cash account?
3. What is the unadjusted balance per books as of October 31, 2007 prior to the reconciliation?