1) The document summarizes the audit of cash and cash equivalents for several companies. It provides bank reconciliation details such as unadjusted balances, deposits/checks outstanding, and adjusting journal entries.
2) It examines cash counts, petty cash funds, bank accounts and other items to determine the accurate cash balance. Discrepancies are identified and corrected through adjustments.
3) Sample problems are provided for audit teams to practice verifying cash amounts reported in trial balances and reconciling to bank statements and source documents. Adjustments are made for items such as NSF checks, errors and unrecorded transactions.
1) The document summarizes the audit of cash and cash equivalents for several companies. It provides bank reconciliation details such as unadjusted balances, deposits/checks outstanding, and adjusting journal entries.
2) It examines cash counts, petty cash funds, bank accounts and other items to determine the accurate cash balance. Discrepancies are identified and corrected through adjustments.
3) Sample problems are provided for audit teams to practice verifying cash amounts reported in trial balances and reconciling to bank statements and source documents. Adjustments are made for items such as NSF checks, errors and unrecorded transactions.
1) The document summarizes the audit of cash and cash equivalents for several companies. It provides bank reconciliation details such as unadjusted balances, deposits/checks outstanding, and adjusting journal entries.
2) It examines cash counts, petty cash funds, bank accounts and other items to determine the accurate cash balance. Discrepancies are identified and corrected through adjustments.
3) Sample problems are provided for audit teams to practice verifying cash amounts reported in trial balances and reconciling to bank statements and source documents. Adjustments are made for items such as NSF checks, errors and unrecorded transactions.
Requirement No. 1 Cash on hand, per trial balance 372,000 NSF check (60,000) Post dated check received (30,000) Cash on hand, as adjusted 282,000 Requirement No. 2 Petty cash fund per total 10,300 Employees' vales (1,600) Currency in envelope marked "collections for charity" (1,200) Unreplenished petty cash vouchers (800) Petty cash fund, as adjusted 6,700 Requirement No. 3 BPI current account, per trial balance 950,000 Unreleased check 50,000 Post dated check delivered 86,000 BPI current account, as adjusted 1,086,000 Requirement No. 4 Cash on hand (see no. 1) 282,000 Petty cash fund (see no. 2) 6,700 BPI current account (see no. 3) 1,086,000 Security Bank current account no. 1 1,280,000 Security Bank current account no. 2 (40,000) 1,240,000 PNB time deposit (assumed can be preterminated) 300,000 Cash and cash equivalents, as adjusted 2,914,700 Note: The P500,000 PNB savings account will be presented separately from cash and cash equivalents since it has been earmarked for the acquisition of a noncurrent asset. Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 2 BANK BOOKS Unadjusted balances, December 31 106,000 203,000 Add (deduct): a) Customer's uncollectible check (NSF) (30,000) AJE No. 1 b) Dishonored note receivable (including P2,000 protest fee) (62,000) AJE No. 2 c) Book error in recording collection (P15,400 - P14,500) 900 AJE No. 3 d) Book errors in recording disbursements Check no. 142 (P12,425 - P12,245) - under (180) AJE No. 4 Check no. 156 (P3,290 - P32,900) - over 29,610 AJE No. 5 e) December bank service charges (1,830) AJE No. 6 f) Note collected by bank (including interest income of P1,000 and net of service charge of P500) 25,500 AJE No. 7 g) Deposits in transit 24,000 h) Outstanding checks (35,000) I) Bank error in recording deposit (20,000) j) Petty cash fund (10,000) AJE No. 8 k) Stolen cash sales to be recovered from insurance co. (60,000) AJE No. 9 l) Double counted deposit - NSF (20,000) AJE No. 10 Adjusted balances, December 31 75,000 75,000 Adjusting J ournal Entries 1) Accounts receivable 30,000 Cash in bank 30,000 2) Accounts receivable 62,000 Cash in bank 62,000 Notes receivable - discounted 60,000 Notes receivable 60,000 3) Cash in bank 900 Accounts receivable 900 4) Accounts payable 180 Cash in bank 180 5) Cash in bank 29,610 Accounts payable 29,610 6) Bank service charge 1,830 Cash in bank 1,830 7) Cash in bank 25,500 Bank service charge 500 Notes receivable 25,000 Interest income 1,000 8) Petty cash fund 10,000 Cash in bank 10,000 9) Claims from insurance co. 60,000 Cash in bank 60,000 10) Accounts receivable 20,000 Cash in bank 20,000 BoomPanes COMPANY Bank Reconciliation December 31, 2014 Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 3 Beginning Receipts Disb Ending Unadjusted bank balances 230,000 420,000 500,000 150,000 Undeposited collections November 200,000 (200,000) December 120,000 120,000 Outstanding checks November (80,000) (80,000) December 60,000 (60,000) Erroneous bank debits November 10,000 (10,000) December (20,000) 20,000 Erroneous bank credits November (40,000) (40,000) December (30,000) (30,000) NSF check redeposited (10,000) (10,000) Adjusted bank balances 320,000 290,000 410,000 200,000 Unadjusted book balances 227,000 270,000 407,000 90,000 Customers' note collected by bank November 100,000 (100,000) December 120,000 120,000 AJE No. 1 Bank service charges November (2,000) (2,000) December 3,000 (3,000) AJE No. 2 NSF checks November (5,000) (5,000) December 7,000 (7,000) AJE No. 3 Adjusted book balances 320,000 290,000 410,000 200,000 - - - - Adjusting journal entries: 1) Cash in bank 120,000 Note receivable 120,000 2) Bank service charge 3,000 Cash in bank 3,000 3) Accounts receivable 7,000 Cash in bank 7,000 Ngan Company Proof of Cash For the month of December, 2014 Chapter 1 - Audit of Cash and Cash Equivalents AJE No. 1 AJE No. 2 AJE No. 3 Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 4 Beginning Receipts Disb Ending Unadjusted bank balances 14,010 281,070 275,450 19,630 Deposits in transit August 31 2,740 (2,740) September 30 3,110 3,110 Outstanding checks August 31 (4,260) (4,260) September 30 3,870 (3,870) Certified check (700) 700 Bank error - Check of Yin Company (2,010) 2,010 Cash receipts used for payment 750 750 Adjusted bank balances 12,490 282,190 273,100 21,580 Unadjusted book balances 13,290 279,540 274,635 18,195 Bank collections not in books August 31 1,200 (1,200) September 30 1,600 1,600 AJE No. 1 Bank service charges not in books August 31 (950) (950) September 30 640 (640) AJE No. 2 NSF checks Returned in Sept., not recorded 800 (800) AJE No. 3 Returned in Aug., recorded in Sept. (1,050) 1,050 Returned and recorded in Sept. 900 900 Book errors Customer check (P465-P165) 300 300 AJE No. 4 Disb check (P3,250-P325) (2,925) 2,925 AJE No. 5 Adjusted book balances 12,490 282,190 273,100 21,580 - - - - Adjusting journal entries: 1) Cash in bank 1,600 Accounts/Notes receivable 1,600 2) Bank service charge 640 Cash in bank 640 3) Accounts receivable 800 Cash in bank 800 4) Cash in bank 300 Accounts receivable 300 5) Cash in bank 2,925 Accounts payable 2,925 Harthart Company Proof of Cash For the month of September, 2014 Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 5 Beginning Receipts Disb Ending Unadjusted bank balances 76,500 104,000 51,000 129,500 Add (deduct) adjustments: Undeposited collections November 20,000 (20,000) December 54,900 54,900 Outstanding checks November (42,500) (42,500) December 90,490 (90,490) Erroneous bank debit-November 10,000 (10,000) - Adjusted bank balances 64,000 128,900 98,990 93,910 Unadjusted book balances 39,300 183,900 101,800 121,400 Add (deduct) adjustments: Bank service charges November (300) (300) December 400 (400) NSF checks December 6,000 (6,000) Customers' note collected by bank November 25,000 (25,000) Book errors in December Uncollected customer's note treated as receipts (30,000) (30,000) Error in recording a check (SB P990, AR P9,900) (8,910) 8,910 Adjusted book balances 64,000 128,900 98,990 93,910 - - - - (3) (4) (5) (6) Undeposited collections, December 31: Deposit in transit, Nov. 30 20,000 Add collections in December: December book receipts 183,900 Less receipts not representing collections in December: Customers' note collected by bank, Nov. 30 25,000 Note with the bank treated as receipts 30,000 55,000 128,900 Total 148,900 Less deposits credited by the bank in December: December bank receipts 104,000 Less receipts not representing deposits: Erroneous bank debit, Nov.; corrected Dec. 10,000 94,000 54,900 (1) Outstanding checks, December 31: Outstanding checks, Nov. 30 42,500 Add checks issued in December: December book disbursements 101,800 Less disbursements not representing checks for December: Book error (SB P990, AR P9,900) 8,910 Bank service charge, Nov.; recorded Dec. 300 9,210 92,590 Total 135,090 Less checks paid by the bank in December: December bank disbursements 51,000 Ubirhed Company Proof of Cash For the month of December, 2014 Chapter 1 - Audit of Cash and Cash Equivalents Less disbursements not representing checks: NSF checks, Dec. 6,000 Bank service charge, Dec. 400 6,400 44,600 90,490 (2) Answers: B, B, B, B, B, B Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 6 11/30/14 Receipts Disb 12/31/14 Unadjusted bank balances 96,800 842,400 131,200 808,000 Deposits in transit November 30 18,000 (18,000) December 31 88,800 88,800 Outstanding checks November 30 (16,000) (16,000) December 31 (No. 276,284,285,286,288,290,292,293,294) 216,800 (216,800) (1) Adjusted bank balances 98,800 913,200 332,000 680,000 Unadjusted book balances 58,640 881,120 * 304,000 635,760 Unrecorded CMs November 30 40,320 (40,320) December 31 (CM84) 64,000 64,000 Bank service charges November 30 (160) (160) December 31 (DM98) 4,000 (4,000) NSF check - December (DM 97) 40,000 (40,000) Book errors Understatement of OR no. 419 (P72,400 - 72,000) 400 400 Underfooting of CRJ (P448,800-P440,800) 8,000 8,000 Overfooting of CDJ (P288,000-P304,000) (16,000) 16,000 Adjusted book balances 98,800 913,200 332,000 680,000 - - - - * (P40,320+P400,000+P440,800) (2) (3) (4) 1. C 2. C 3. C 4. C 5. D FourTwo Company Proof of Cash For the month of December, 2014 Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 7 - Submarine Company Requirements No. 1 and 2 Bills and coins Denomination Quantity Amount Total P100.00 10 1,000 50.00 80 4,000 20.00 70 1,400 10.00 54 540 1.00 410 410 0.50 324 162 0.25 64 16 7,528 Checks Date Drawer Amount Dec. 30 Ms. Au 2,400 Dec. 30 Emong De Leon 28,000 Dec. 31 Apol Boba 3,360 Dec. 31 Datu Macmod 35,600 Dec. 31 Tom Guts 16,600 85,960 Unreplenished vouchers Date Account Amount Dec. 23 Advances 14,000 Dec. 27 Postage 3,240 Dec. 29 Transportation 300 Dec. 29 Repairs 1,600 19,140 AJE 1 Total cash and cash items counted 112,628 Less accountabilities: Petty cash 20,000 Unclaimed salaries 15,000 AJE 3 Excess travel advance returned 3,360 AJE 4 Collections per offical receipts 86,600 Unreceipted collection from Emong De Leon 28,000 152,960 AJE 5 Cash shortage (40,332) AJE 6 Requirement No. 3 Petty cash fund per GL 20,000 Unreplenished vouchers (19,140) Excess travel advance 3,360 Petty cash fund balance, 12/31/14 4,220 Requirement No. 4 1 Advances to officers and employees 14,000 Postage expense 3,240 Transportation expense 300 Repairs and maintenance 1,600 Petty cash fund 19,140 2 Unused postage 730 Postage expense 730 3 Cash 15,000 Salaries payable 15,000 Chapter 1 - Audit of Cash and Cash Equivalents 4 Travel expense [P9,000+P800+(P600-P240)] 10,160 Petty cash fund (personal check of sales manager) 3,360 Advances to officers and employees 13,520 5 Cash 28,000 Accounts receivable 28,000 6 Receivable from custodian 40,332 Cash 40,332 Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 9 - Napoles Company Requirement a: BANK BOOKS Unadjusted balances, December 31 20,000 61,000 Add (deduct): Underfooting of cash receipts journal 6,400 Unrecorded loan proceeds 8,000 Overfooting of cash disbursements journal 500 Bank charge - dishonored note guaranteed (5,000) December bank service charges (1,200) (1,200) Outstanding checks (5,600) Deposit in transit (P5,200-P1,800+P2,900) 6,300 Total 19,500 69,700 Cash shortage - actual (50,200) Adjusted balances 19,500 19,500 - Requirement b: Actual cash shortage (see above) 50,200 GL/SL discrepancy on collections (credits to AR): Amount per individual credits to AR sl 70,400 Less amount per general ledger, corrected 66,400 4,000 Maximum probable shortage 54,200 PROBLEM NO. 10 - Dinar Company BANK BOOKS Unadjusted balances 30,200 122,000 (see below) Petty cash fund (1,300) Outstanding checks (4,500) Deposit in transit 5,000 Total 30,700 120,700 Cash shortage (90,000) Adjusted balances 30,700 30,700 - Cash receipts: Owners' investment 150,000 Proceeds from loan 98,000 Collections from customers (see below) 414,000 Total 662,000 Cash disbursements: Purchases (P250,000 - P15,000) 235,000 Store fixtures (P50,000 - P5,000) 45,000 Loan payment 80,000 Expenses paid 180,000 540,000 Cash balance per books, 12/31 122,000 Collections from customers: Purchases 250,000 Less merchandise inventory, 12/31 30,000 Cost of sales 220,000 Add gross profit (P220,000 x 120%) 264,000 Sales 484,000 Less AR, 13/31 70,000 414,000 Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 10 - CPAR Company Nov. 30 Receipts Disb Dec. 31 Unadjusted bank balances 107,800 1,102,250 1,094,850 115,200 Undeposited receipts: November 45,300 (45,300) December 50,600 50,600 Outstanding checks: November (13,375) (13,375) December 7,150 (7,150) Erroneous bank debit (4,750) 4,750 Payment to creditor in cash 6,050 6,050 Adjusted bank balances 139,725 1,113,600 1,089,925 163,400 Unadjusted book balances 82,725 1,110,950 1,080,275 113,400 NSF checks: Returned, recorded in December 5,200 5,200 Returned, recorded in January 4,300 (4,300) Unrecorded bank collections: November 60,750 (60,750) December 58,200 58,200 Bank service charges: November (3,750) (3,750) December 2,100 (2,100) Book error in December 1,800 (1,800) Adjusted book balances 139,725 1,113,600 1,089,925 163,400 - - - - (1) (2) (3) (4) 1. B 2. B 3. C 4. D 5. D December Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO.11 - ReSA Company Franc Company Proof of Cash For the month of August, 2014 July 31 Receipts Disb August 31 Unadjusted bank balances 52,000 25,140 9,740 67,400 Deposits in transit: July 900 (900) August 9,400 9,400 Outstanding checks July (4,000) (4,000) August (check nos. 436, 457 and 460) 3,600 (3,600) Erroneous bank debit, corrected (100) (100) NSF check redeposited (140) (140) Adjusted bank balances 48,900 33,400 9,100 73,200 Unadjusted book balances 40,000 42,400 8,460 73,940 Note collected by bank, July 8,000 (8,000) Unrecorded deposit in July 1,000 (1,000) Bank service charges July (100) (100) August 440 (440) NSF check not redeposited 300 (300) Adjusted book balances 48,900 33,400 9,100 73,200 - - - - Unadjusted book receipts for August: August collections credited by bank (P10,000 + P14,000) 24,000 Deposit in transit, August 31 9,400 Unrecorded deposit in July recorded in August 1,000 Note collected by bank in July recorded in August 8,000 42,400 1 B August Chapter 1 - Audit of Cash and Cash Equivalents Unadjusted book disbursements for August: Checks drawn in August (checks no. 455 to 460) 8,360 BSC for July recorded in August 100 8,460 2 A Note: Nos. 1 and 2 can alternatively be solved by working back from the adjusted bank balances. 3. D (P33,400) 4. A (P9,100) 5. D (P73,200) Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO.12 - PRTC Company Nov. 30 Receipts Disb Dec. 31 Unadjusted bank balances 742,800 5,401,800 5,369,904 774,696 Outstanding checks: November 30 (254,096) (254,096) December 31 300,184 (300,184) Erroneous bank debit (9,292) 9,292 Deposits with loan payment (P4.8M x 80%) 3,840,000 3,840,000 Undeposited collections: December 31 128,440 128,440 Adjusted bank balances 488,704 9,370,240 9,246,700 612,244 Unadjusted book balances 619,304 9,341,780 9,290,692 670,392 NSF checks: Returned in Nov., recorded in Dec. (1,000) 1,000 Returned and recorded in Dec. 25,000 25,000 Returned in Dec., recorded in Jan. 9,200 (9,200) Unrecorded bank collection in Dec. 8,060 8,060 Anticipated loan proceeds from AR hypothecation Nov. 30 sales (P162,000 x 80%) (129,600) 129,600 Dec. 31 sales (P169,000 x 80%) (135,200) (135,200) Anticipated loan payment from undeposited collections (P128,440 x 80%) (102,752) 102,752 Interest charge for bank loan in Dec. 24,560 (24,560) Adjusted book balances 488,704 9,370,240 9,246,700 612,244 - - - - (1) (2) (3) (4) 1. C 2. B 3. B 4. B 5. D December Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO.13 - CRC-Ace Corporation 1 D Sales 1,615,040 Less: Accounts receivable, 11/15 426,900 Collections from sales 1,188,140 2 D Cost of sales (P1,615,040/1.4) 1,153,600 Add: Merchandise inventory, 11/15 469,600 Purchases 1,623,200 Less: Accounts payable, 11/15 231,420 Payments for purchases 1,391,780 3 C 4 B Cash receipts: Issuance of common stock for cash 1,600,000 Mortgage note payable 400,000 Notes payable - bank 160,000 Collections from sales (see no. 1) 1,188,140 Total 3,348,140 Cash disbursements: Purchase of real estate 1,000,000 Furniture and fixtures (P145,000 - P30,000) 115,000 Expenses paid 303,780 Payments for purchases (see no. 2) 1,391,780 2,810,560 (3) Cash balance per books, 11/15 537,580 (4) 5 A Per bank Per books Unadjusted balances 131,640 537,580 Deposit in transit 25,700 Outstanding checks (9,260) Balances 148,080 537,580 Shortage (389,500) Adjusted balances 148,080 148,080