Professional Documents
Culture Documents
***The information below was taken from the bank transfer schedule prepared during the audit
of BAY Co.s financial statement for the year ended December 31, 2013. Assume all checks are
dated and issued on December 30, 2013.
Check no.
101
202
303
404
From
National
Country
Federal
State
To
Federal
State
American
Republic
Disbursement date
Per books Per bank
Dec. 30
Jan.4
Jan.3
Jan.2
Dec. 31
Jan.3
Jan. 2
Jan.2
Receipt date
Per books
Dec.30
Dec.30
Jan.2
Jan.2
Per bank
Jan. 3
Dec.31
Jan. 2
Dec.31
A.
B.
C.
D.
Disbursement
Recorded in Paid by bank
books
12/31/11
01/04/12
01/04/12
01/05/12
12/31/11
01/05/12
01/04/12
01/11/12
Receipts
Recorded in Received by
books
bank
12/31/11
12/31/11
12/31/11
12/31/11
12/31/11
01/04/12
01/04/12
01/04/12
STRAIGHT PROBLEMS
PROBLEM 1
The cash and cash equivalents account in the ledger of Ajalon Company had a balance of
P5, 935, 000 at December 31, 2014. An examination of the account, however, disclosed the
following.
1. Current account at May bank
2. Current account at DBP
3. Payroll account
4. Saving account in rural bank
5. Treasury warrants
6. Treasury note, due November 30, 2015
7. Change fund
8. Credit memo from a vendor for purchase return
9. Travellers check
10. Customers checks returned by the bank marked
DAIF
11. Money order
12. Petty cash fund
P 200, 000
(100, 000)
500, 000
1, 000, 000
200, 000
400, 000
10, 000
20, 000
50, 000
15, 000
30 , 000
10, 000
200, 000
300, 000
500, 000
800, 000
Audit notes:
a. Rural Bank was closed two years ago. The company expects to recover only P0. 60 for
every peso deposited.
b. This amount includes unreplenished vouchers totalling P7, 000 as of December 31, 2014.
c. This is a two-year treasury note acquired on December 31, 2014.
d. This a 180-day treasury bill acquired on July 31, 2014.
Required:
How much should Ajalon Company report as cash and cash equivalent on its December 31, 2014
balance sheet? P2, 993, 000
PROBLEM 2
The auditor for Diadem Jade Company examined the office cash working fund immediately after
the close of the business June 30, 2014, the end of the companys fiscal year. The following fund
composition was arrived at:
Currency
P972
Unreplenished vouchers:
Supplies
338
Transportation
240
Repairs
170
400
1, 100
230
500
1198
500
500
230
230
PROBLEM 3
The following cash count sheet and additional information pertain to the accounts of Brewer
Corporation for the year ended December 31, 2014.
Cash count date: December 16, 2014
Currency- Details omitted
4, 800
Explanation
11/20/2014
postage stamps
100
12/04/2014
repair of typewriter
150
12/12/2014
transportation-messenger
60
12/15/2014
office supplies
90
400
500
5, 750
Accountability:
Petty cash fund
1, 000
Undeposited collections
4, 900
5, 900
Shortage
150
Additional information:
1. The last replenishment of the fund was made on December 14, 2014 cocering the
period from December 1 to 14, 2014.
2. Found inside the cash box were two pay envelopes which had been opened and the
contents aggregating P240 removed. The face of the envelope bore the notation
unclaimed.
Required: Compute the amount of cash shortage. P750
PROBLEM 4
You are examining the accounts of Joash Beauty Salon. Your count of the imprest cash fund,
made at 9:00 a.m. on January 2, 2014, in the presence of Joezer petty cashier, revealed:
Coins
Quantity
Bills
Denominations
Quantity
Denominations
32
P 1. 00
500
40
0.25
100
10
20
15
10
Checks:
Date
December 27
30
Payee
Maker
Amount
Cash
Manso, Beautician
P 5, 000
Joezers
Raymund, Hairdresser
6, 100
30
Joezers
Andrew, customer
6, 500
Unpaid stamps:
Various denomination
P 80
Vouchers:
Date
Nature of Disbursements
December 15
transportation
65
16
office supplies
70
17
xerox fees
80
28
postage
150
newspaper
10
freight charges
50
January
IOUs
Date
Maker
December 20
Monterola, employee
50
Escala, salesman
100
23
The balance of the petty cash account, December 31, 2013, was P 5, 000.
Sales invoices (for cash sales, all in cash, no checks)
Invoices
#2007
December 30
4, 000
#2008
December 31
5, 100
#2009
January 2
3, 050
Required:
Compute the amount of cash shortage. P2, 767
PROBLEM 5
Charlene Companys cash ledger on June 30, 2014 showed a balance of P936, 000 which include
total deposits of P490, 000
Your audit of the cash account revealed the following:
I.
II.
III.
IV.
V.
Outstanding checks amounted to P29, 000 while deposit in transit totalled P98, 000.
NSF checks of P56, 000 had been returned by the bank and were not yet reflected in
the books of the company.
Total debits in the bank statement for June amounted to P398, 000 which included the
NSF checks in letter II above, and service fees of P10, 000. The services were
recorded in the conpanys books in the succeeding month.
Sandy Companys check of P15, 000 was charged by the bank to Charlene companys
account.
A check of P90, 000 is issued by Charlene company was recorded in its books as
P120, 000.
Charlene companys cash ledger on June 30, 2014 showed a balance of P936, 000 which
include total deposits of P490, 000.
Required: Based on the results of your audit, determine the following:
1.
2.
3.
4.
Amount
P1, 040
1973
720
1974
816
1975
692
P27, 000
P 720
No. 1974
816
No. 1975
692
2,028
P24, 972
Add: Cash on hand (this count is correct)
Collected note
P9, 228
500
9,728
P34, 700
Required:
1. What is the amount of shortage? P2,240
2. How did the cashier attempt to conceal the shortage?
By understating the outstanding checks by 1, 240
Improper treatment of the CM (500*2)
PROBLEM 7
You are engaged to audit the books of HEIDY ENTERPRISES. From the records of the
company, you gathered the following information:
HEIDY ENTERPRISES started operation on October 2, 2014 with HEIDY investing P 150, 000
cash. Monthly bank reconciliation statements have not been prepared; however, bank statements
for October, November, and December were made available to you. The bank statement in
December 2014, showed an ending balance of P30, 500.
Examination of the paid checks disclosed that checks totalling P4, 500 were issued by the
company in December 2014, and were presented for payment only in January 2015. Cash Count
of the cashiers accountability amounted to P8, 500. You were told by the cashier that P5, 000 of
these, in checks, were cash sales on December 29, 2014 deposited on January 3, 2015. The
balance, in currency and coins, represents petty cash fund.
Additional data:
1. Accounts receivable subsidiary ledgers had a total balance of P70, 000 at December 31,
2014.
2. Suppliers unpaid invoices for merchandise totalled P60, 000.
3. The bank statement in October showed a bank credit for P98, 000, dated October 2, 2014.
Inquiry from the cashier disclosed that the amount represents proceeds of a 90-day,
discounted bank note. P80, 000 of this loan was paid by check in December, 2014.
4. Merchandise inventory at December 31, 2014 amounted to P30, 000.
5. Operating expenses paid during the period totalled P180, 000; while merchandise
purchases amounted to P250, 000.
6. The gross profit rate is 40%.
PROBLEM 8
Data for the ERNEL COMPANY are assembled as follows:
11/31/2014 12/31/2014
P 1, 000
P 3,790
6, 690
10, 350
400
600
1, 300
1, 500
10
40
200
300
5, 000
6, 00
Tapes for bank statement and company cash data offer the following totals:
Deposit and credit memos per bank statement
P 13, 800
10, 140
8, 000
10, 000
PROBLEM 9
You have been instructed by your supervisor on an audit of ROBERT Company to prepare a
four-column proof of cash receipts and disbursements for the month of June 2014. The bank
reconciliation statement prepared by the client in May is reproduced below:
May, 2014 Reconciliation
Bank balance
32, 600
Book balance
500
5/31
28,540
Total
33, 100
P 500
152
400
153
100
May
3, 500
Total
100
32, 140
32, 100
40
32, 100
Upon inquiry about the clients June 30 bank reconciliation, you were informed that it has been
lost and that the client is too busy at this time to prepare another. Your supervisor tells you to get
the June bank statement and paid checks and to prepare the June 30 reconciliation so that you
may complete the June proof of cash. The June bank statement is reproduced below:
E-Error
EC-Error corrected
DM-Debit Memo
The Debit memo on June 30 represents customer NSF check returned by the bank. The check
was redeposited by the client in the bank on July 1.
Cash received for the period June 21 through June 30 of P3, 500 was deposited in the bank on
July 1.
The paid checks accompanying this bank statement (all clearing in June) were:
No. 152
P 400
No. 154
P 700
No. 157
P 600
No. 153
P 100
No. 155
P 200
No. 158
P 900
The check register revealed that the last check in June was No. 159 for P250 and that Check no.
156 was for P 130.
REQUIRED:
a. Unadjusted Book Disbursements in June 30, 2014.
b. Unadjusted Book Receipts in June 30, 2014.
c. Unadjusted book balance as of June 30, 2014.
PROBLEM 10
Comparative balance sheets for 2014 and 2013 and an income statement for 2014 are provided
below for Angelita Company. Additional information from the accounting records of Angelita is
provided.
Angelita Company
BALANCE SHEETS
December 31, 2014 and 2013 (P in 000)
Assets:
Cash
2014
2013
P 1, 800
P1, 125
Accounts receivable
1, 800
1,350
Inventory
2, 700
1,575
Land
2,025
1, 800
Building
2,700
2,700
(900)
(810)
Equipment
8, 550
6, 750
(1,575)
(1,440)
Patent
3,600
4,500
P20, 700
P17, 550
Accounts payable
P 2, 250
P1, 350
900
675
Lease liability-land
450
Liabilities:
Stockholders equity
Common stock
9, 450
9, 000
2,250
1, 350
Retained earnings
5, 400
4, 500
P20, 700
P17, 550
Angelita Company
Income Statement
For the year ended December 31, 2014 (P in 000)
Revenues:
Sales Revenue
Gain sale of land
P7, 935
270
Expenses:
Cost of goods sold
Depreciation expense-building
P1, 800
90
P8, 205
Depreciation expense-equipment
945
45
Amortization of patent
900
Operating expenses
1, 500
5, 280
P2, 925
Office supplies
Postage
Entertainment
P1, 730
1, 120
420
d. General cashier
2. The following are appropriate procedures for controlling the petty cash fund, except
a. To monitor variations in different types of expenditures, the petty cash custodian files
petty cash vouchers by category of expenditure after replenishing the fund.
b. To replenish the fund, the general cashier issues a company check to the petty cash
custodian, rather than cash.
c. To determine that the fund is being accounted for satisfactorily, surprise counts for the
fund are made from time to time by the internal auditor or other responsible official.
d. Each individual to whom petty cash is paid is required to present signed receipts to
the petty cash custodian.
3. The objective of establishing a petty cash fund is to
a. Cash checks for employees
b. Account for all cash receipts and disbursements.
c. Account for cash sales
d. Facilitate payment of small, miscellaneous items.
4. What is the effect of not replenishing the petty cash at year-end and not making the
appropriate adjusting entry?
a. A detail audit is essential.
b. The petty cash custodian should turn over the petty cash to the general cashier.
c. Cash will be overstated and expenses understated.
d. Expenses will be overstated and cash will be understated.
Questions 5 through 9 are based on the following information:
Shown below is the bank reconciliation for Fitch Company for November 2013:
Balance per bank, Nov. 30, 2013
150, 000
Add:
24, 000
Deposit in transit
Total
Less:
Outstanding Check
28, 000
10, 000
38, 000
136, 000
The bank statement for December 2013 contains in the following data:
Total deposits
Total charges, including NSF check of P8, 000 and service
110, 000
Charge of P 400
96, 000
All outstanding checks on November 30, 2013, including the bank credit, were cleared in the
bank in December 2013.
There were outstanding checks of P30, 000 and deposits in transit of P38, 000 on December 31,
2013.
Required:
5. How much is the cash balance per bank on December 31, 2013?
a. 154, 000
b. 150, 000
c. 164, 000
d. 172, 00
6. How much is the December receipts per books?
a. 124, 000
b. 96, 000
c. 110, 000
d. 148, 000
7. How much is the December disbursement per books?
a. 96, 000
b. 79, 600
c. 89, 600
d. 98, 000
8. How much is the cash balance per books on December 31, 2013?
a. 150, 000
b. 170,400
c. 180,400
d. 162, 000
9. The adjusted cash in bank balance as of December 31, 2013?
a. 141, 600
b. 162, 000
c. 172, 000
d. 196, 000
Questions 10 through 15 are based on the following information:
You have been asked by the proprietor of Novey Company to verify the accountability of the
cashier-bookkeeper, who was allowed to take a vacation leave a few days ago.
P21, 500
500
22, 000
P2, 000
1, 400
1, 900
(3,300)
2, 000
(500)
P 20, 200
P135, 000
6, 300
141, 000
P 31, 000
10, 300
5, 000
(41, 300)
3, 000
(600)
P102, 400
The cash in bank account in the general ledger shows the following debits and credits during
December of 2014:
Dec.
1
2
7
12
17
23
27
31
Total
Balanced
Received customers
Received customers
Received customers
Received customers
Received customers
Received customers
Received customers
From
From
From
From
From
From
from
Cash in bank
Dec.
20, 200 1
4, 500
5
5, 000
14
20, 000 24
30, 000 28
9, 000
70, 000
48, 500 31
198,
Checks issued
Checks issued
Checks issued
Checks issued
Checks issued
2, 000
5, 200
31, 000
46, 000
7, 600
Balance
Total
102, 400
198, 200
200
b. The following summarized transactions were taken from the bank statement for the
month of December 2014:
Balance, December 1, 2014
P16, 500
173, 700
5, 000
2, 000
600
65, 200
500
3, 000
c. Cash on hand per count in the early morning of Jan. 2, 2015 amounted to P6, 300.
d. Before leaving his company for one-week vacation, the proprietor had left several signed
blank checks that the cashier-bookkeeper had cashed for his personal use.
Required:
10. What is the cash shortage as of November 30, 2014?
a. 5, 000
b. 7, 000
c. 33, 000
d. 13, 200
11. What is the adjusted cash balance on November 30, 2014?
a. 16, 500
b. 13, 200
c. 20, 200
d. 14, 500
12. The amount of unaccounted receipts in December 2014 is:
a. 11, 000
b. 13, 200
c. 9, 000
d. 15, 100
13. The amount of unrecorded/unsupported disbursements in December 2014 is:
a. 15, 100
b. 10. 900
c. 7, 000
d. 5, 000
14. What is the total cash shortage as of December 31, 2014?
a. 26, 000
b. 15, 100
c. 33, 000
d. 7, 000
15. What is the adjusted cash balance on December 31, 2014?
a. 102, 400
b. 125, 000
c. 87, 400
d. 11, 400