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Al '104-Audit of Cash and Cash caval AUDITING PROBLEMS CPA REVIEW 0 alae A OCAMPO/CABARLES OCTOBER 2016 INTERNAL CONTROL MEASURES FOR CASH 1. Cash receipts should be deposited intact ~ that is, in the same amount and form as they are received. 2. All disbursements should be authorized and made by ‘check except those involving small amounts which should be paid from petty cash fund. 3. Both receipts and disbursements should be properly accounted for in the records. 4. ‘There should be separation of personnel duties for receiving cash recording receipts depositing cash collections reconciling bank account authorizing disbursement disbursing cash Bank reconciliation statement should be prepared monthly. 6. Provide physical protection for cash, ‘Minimize cash on hand in the office. Cash actually present in the office - petty cash, change fund and undeposited receipts can be periodically counted and compared with the company records. 9. Adopt imprest fund system for petty cash. SUBSTANTIVE AUDIT PROCEDURES FOR CASH Cash Balances: Existence: Cash recorded on the books exist 1. Count cash on hand. 2. Confirm bank balances. 3. Examine interbank transfers. 4. Perform analytical procedures, Completeness: All of the entity's cash is included 5. Perform cash cutoff test. 6. Prepare proof of cash. Rights and obligations: Any restrictions on cash have been identified 7. Examine standard bank confirmations and read the minutes of the board of directors’ meetings to determine whether any restrictions have been placed on cash, Valuation and allocation: Cash Is correctly valued. 8. Obtain bank cutoff statements directly from the bank and use them to test the bank reconclliation as of the balance sheet date. Presentation and disclosure: disclosed property. 9. Review financial statements and perform analytical procedures to determine whether accounts are classified and disclosed in accordance with GAAP. Cash is presented and Cash Collections Completeness: recorded For a sample of days, verify that all cash receipts are recorded by reconciling daily listing(s) of cash receipts and validated deposit ticket to cash receipts journal. All receipts of cash and checks are Occurrence: Recorded recelpts represent actual colections of cash from customers For a sample of entries in cash receipts journal, trace to the prelisting of cash receipts and to remittance advice. For a sample of entries, reconcile daily deposit to validated deposit ticket. Classification: Cash receipts transactions have been recorded in,the proper accounts Review account coding for a sample of entries in the cash receipts journal, Accuracy (Valuation): Debits to cash and credits to accounts receivable are valued at amounts received For a sample of entries in cash receipts journal, examine remittance advice and verify that discount taken was appropriate. Foot accounts receivable subsidiary ledger and reconcile to general ledger. Cash Payments Completeness: All cash payments made are recorded Reconcile cash payments per books with cash payments per bank. Prepare or test bank reconciliation. Occurrence: Recorded cash payments occurred Examine paid checks for appropriate endorsements. Examine documents underlying payments. Classification: Cash payments transactions have been recorded in the proper accounts Check accuracy of accounts on invoices by reference to chart of accounts. Accuracy (Valuation): Debits to various accounts and credits to cash are valued at proper amounts Recalculate invoices paid. -end- Page 1 of 7 www. prtc.com.ph AP.2104 PROBLEM NO. 1 You were able to gather the following from the December 31, 2016 trial balance of Peso Corporation in connection with your audit of the company: Cash on hand P 372,000 Petty cash fund 10,000 BPI current account 950,000 Security Bank current account No.01 1,280,000 Security Bank current account No.02 (40,000) PNB savings account ~ rastrictus ‘500,000 PNB time deposit ~ silent axes egmveiso 300,000 Cash on hand includes the following items: ‘a, Customer's check for P60,000 returned by bank on December 26, 2016 due to insufficient fund but subsequently redeposited and cleared by the bank on January 8, 2017, b. Customer's check for P30,000 dated January 2, 2017, received on December 29, 2016. Postal. money orders received from 36,000. customers, The petty cash fund consisted of the following items as of December 31, 2016. Currency and coins P 2,100 Employees’ vales — veesivatie 4,600 Currency in an envelope marked “collections for charity” with names attached -P: +e" 1,200 Unreplenished petty cash vouchers - 240i. ‘800 Check drawn by Peso Corporation, payable to the petty cashier ~ vriensnant 4,600 Included among the checks drawn by Peso Corporation against the BPI current account and recorded in December 2016 are the following a. Check written and dated December 29, 2016 and delivered to payee on January 2, 2017, P50,000. b. Check written on December 27, 2016, dated January 2, 2017, delivered to payee on December 29, 2016, 86,000. ‘The credit balance in the Security Bank-current account No. 2 represents checks drawn in excess of the deposit balance. These checks were still outstanding at December 31, 2016. The savings account deposit in PNB has been set aside by the board of directors for acquisition of new equipment. This account is expected to be disbursed in the next 3 months from the balance sheet date, (QUESTIONS: Based on the above and the result of your audit, compute for the adjusted balances of following: 1. Cash on hand a. 282,000 . P408,000 b. 246,000 d. 342,000 2. Petty cash fund a. P6,700 cP 2,100 b. P9,100 d. P10,000 3, BPI current account a, P1,086,000 c. P1,000,000 b. P ‘914,000 dP '950,000 4. Cash and cash equivalents 2. P2,914,700 ©. 2,614,700 b. P2,954,700 d. P3,414,700 PROBLEM NO. 2 In connection with the audit of the financial statements of Rupee Company for the year ended December 31, 2016, you performed a surprise count of the petty cash fund and Undeposited collections under the custody of Ms. Jessie at 8:15 a.m. on January 2, 2017. Your count disclosed the following: Bills and Coins Bilis Coins P100 10 pieces P1.00 410 pieces 50 80 pieces 0.50 324 pieces 20 70 pieces 0.25” 64 pieces 410 54 pieces Unused postage stamps ~ P730 ~ Date PavEE ogund Drawer Amount Dec. 30. Cash. TMs. Jessie P 2,400 Dec. 30 Rupee Company Robert wear stelm28,000 Dec, 31. ‘Rupee Company Jay Ar, sales iin manager 3,360 Dec. 31 Rupee Company Francis 35,600» Dec. 31 Rupee Company Ryan 416,600 Dec. 31 German Corp. Rupee wo hag” (not endorsed) — Company 54,000 Expense Vouchers Date Payee Amount Dec. 23. Jay Ar, Cash advance for sales manager trip to Baguio . city P14,000 Dec. 27 CEntral Post Postage stamps Office 3,240. Dec. 29 Messengers ‘Transportation 300 Dec. 29 PC Express Computer repair 1,600 Other items found inside the cash box: a) Two pay envelopes which had been opened and the contents aggregating P15,000 representing unclaimed salaries had been removed. _ & seo recrtet escuth b) The sales managér’s liquidation report for his Baguio trip: Cash advance received on Dec. 23, 14,000 Less: Hotel accommodation _—_—P9,000 Bus fare for two ‘800 Cash given to Roy, salesman 600 10,400 Balance 23.609 ‘Accounted for as follows: Cash returned by Roy to the sales manager P 240 Personal check of sales manager 3.360 Total 23.600 Additional informatio a) The custodian is not authorized to cash checks. b) The last official receipt included in the deposit on December 30 is No. 351 and the last official receipt Issued for the current year is No. 355. The following official receipts are all dated December 31, 2016. ©.R.No, Amount Form of payment 352 27,200 Cash 353 135,600 Check - 354 7/200 Cash 385 16,600 Check» a etme, ©)_ The Petty Cash balance per general ledger is P20,000. The last replenishment of the fund was made on December 22, 2016. REQUIRED: 1. Computation of shortage or overage, if any 2. Adjusting entries as of December 31, 2016 PROBLEM NO. 3 You are conducting an audit of the Swerte Company for the year ended December 31, 2016. The internal control Procedures surrounding cash transactions were not adequate. The bookkeeper-cashier handles cash receipts, maintains accounting records, and prepares the monthly bank reconcillations. The _ bookkeeper-cashier_ prepared the following reconciliation at the end of the year: Balance per bank statement 350,000 ‘Add: Deposit in transit 175,250 Note collected by banky 15,000 190,250 Total ‘on 540,250 Less outstanding checks 246,750 Balance per general ledger 293,500 In the process of your avait, you gathered the following + At December 31, 2016, the bank statement and general ledger showed ‘balances of 350,000 and 293,500, respectively +The cut-off bank statement showed a bank charge on January 2, 2017 for P30,000 representing correction of an erroneous bank credit, eBAOR Grne + Included in the list of outstanding checks were the following: 2. Accheck payable to a supplier, dated December 29, 2016, In the amount of 14,750, released on January 5, 2017, at cash b. A''check” representing advance payment to a Supplier in the amount of P37,210, the dote of which is "Januery 4, 2019,( and’ released in December, 2046. ‘He ca * On December 31, 2016, the company received and recorded customer's postdated check amounting, to 750,000, > aah yok cw Quesrions: Based.on the above and the result of your audit, answer the following: 1. The adjusted deposit in transit as at December 31, 2016 Is a._ P175,250 c. P225,250 BB P125,250 d. P125,000 2. The adjusted outstanding checks as at December 31, 2016 is a. P298,710 c. 209,540 b. P232,000 Ae P194,790 3. The adjusted cash to be presented in the statement of financial position at December 31, 201 2, P235,460 c. P265,460 2 250,460 d. 310,460 4, The cash shortage as of December 31, 2016 is a. P45,000 @° P60,000 b. P58,040 dP 8,040 5. The net adjustment to the cash account as of December 31, 2016 is = P43,040 b. P60,000 c. P58,040 d. 45,000 PROBLEM NO. 4 You were engaged to audit the books of Davao Company. From the records of the company, you gathered the following information: Davao Company started operations on October 2, 2016 with the owners investing P1S0,000 cash. Monthly bank reconciliation statements have not been prepared; however, bank statements for October, November, and December were made available to you.’ Your analysis of these bank statements showed total bani sit (deposits) of P575,000. including the owners’ initial investment and a bank loan, details of which are in additional data, The bank statement in December, 2016 showed an ending balance of P91,500, ‘atch Examination of/the paid checks disclosed that necks totaling P&.soBlvereisuee by the cornpany in December, 2016, ard were presented for payment only. In saver; 2017. Cash count ofthe cashiers sccountebity ansountd to P5,000. You were told by the cashier that these mere collections from credit sales on December 30, 2016, deposted on January 2, 2017. Additional information are as follows? a. Account receivable subsidiary ledaers. had a total balance ef P70,000 at December 31, 2016, PS5,000 of this was ascertained to be uncallectible, . Suppliers’ unpaid invoices for merchandise totaled 15,000; while an-account for store fixtures bought for £50,000'had an unpaid balance of P5,000. © Merchandise inventory at December 31, 2016 amounted to P30,000 but P5,000 of these were spoiled with no resale value. ar@0 @. The bank statement in October showed a bank credit for 98,000, dated October 2, 2016. Inquiry from the cashier disclosed that the amount represents proceeds of @ 90-day, discounted bank note. PB0,000 of this Joan was paid by check in December, 2016. ©. Operating expenses. paid during the period totaled Pi80,000; while merchandise purchases amounted to P250,000._ The gross profit rate Is 120%.of cost: questions: Based on the above and the result of your audit, answer the following: 1. Total collections from sales for 2016 is % 414,000 ‘c. P419,000 'b. P425,000 d. 430,000 2. Cash balance per books as of December 31, 2016 is a. P133,000 . P138,000 b. P127,000 # P122,000 3. The cash shortage as of December 31, 2016 is a. P35,000 22 P30,000 b. P46,000 ‘d. P4100 PROBLEM NO. 5 You were able to obtain the following information during your audit of Euro Company: Reconciling items: Nov.30 Dec. 3 Undeposited collections -#= 200,000 120,000 Outstanding checks ~ sex 80,000 60,000 Customer's notes collected by bank -- axe 100,000 120,000 Bank service charges * "# 2,000 3,000 Erroneous bank debits ~ vonk 10,000 20,00 Erroneous bank credits - ®o 40,000 30,000 NSF checks not redepasited- P< 5,000 7,000 Customer's check deposited December 10, returned by bank on December 16 marked NSF, and redeposited immediately; no entry made on books for return or redeposit 10,000 Unadjusted balances: Books 2 90,000 Bank 230,000 ? 2c Transacti Bank Books Receipts 420,000. 270,000 Disbursements 500,000 407,000 REQUIRED: 1. Prepare a 4-column bank reconciliation for the month of December, using the form that reconciles both the book and bank balances to a correct cash amount. 2. Adjusting entries as of December 31. SN ee PROBLEM NO. 6 In your audit of the cash account of Cebu Company, you were requested by the client to prepare a four-column reconciliation of receipts, disbursements, and balances to reconstruct the balances per books, Nov.30 Dec. 34 2) Balances per bank P14,010 —P19,630 b) Deposits in transit 2,740 3,110 ©) Outstanding checks 4,260 3/870 d) Bank collections not in books ase ewe 1,200 1,600 fe) Bank charges not in Books oust Fea 950 640 f. Of the checks outstanding on December 31, one check for P700 was certified at the request of the payee 9- Receipts for December, per bank statement - 281,070. hh. DAIF’check from customer was charged by the bank on December 28, and has not been recorded ~ P8Q0. rook |. DAIF check retumed in November and récorded in December, P1,050. ror Yoo DAIF check returned and recorded in December, P900 fuk 5 k. Check of Cibo Company charged by the bank in error, 72,010. ~ roa |. Receipt on December 6 paid out in cash for travel expenses, P750. Recorded as receipts and disbursements per books. ero" books m. Error in recording customer's check on December 20, PL65 instead of PAGS. _ pyar tots 1. Error in disbursements journal for December, P3,250 instead of P325, 470 ool You noted in your audit that the DAIF checks returned by the bank are recorded as a reduction on the cash receipts, Journal instead of recording it at cash disbursements journal; redeposits are recorded as regular cash receipts. QUESTIONS: Based.on the above and the result of your audit, answer SOLUTION GUIDE: the following: 1, How much is the unadjusted cash balance per books as Bank of November 30? f ©) 2 13,290 cP 11,690 I. /30 | Dec. | Dec, b. P12,490 d. P11,190 | Unadjusted bal. —~ | 2, How much is the unadjusted book receipts for DIT ~ 11/30 t a December? = 12/31 _ a. 284,840 se P279/540 [Oc= 1/30 = ene b. 281/640 . 282,190 i 2/34 teers 7 _ =] 3: How much is the unadjusted book disbursements for leer a5 a December? = 12/31 oo t — = —{ a. P273,100 . P275,335 pee Set 30 - t— b. P271/565 A. P274,635 (BE checcred. | = —| 4 How much is the unadjusted cash balance as of ‘Adjusted bal. December 31? oe 7 cy sa risiios c. P21,580 Books b. 17,495 d. P24,965 tinea tat SOLUTION GUIDE: inacjuste bi Note coll.~ 11/30 Bo & 2 | © = 42/34 L. 42i31_| BSC = 11/30 = — Unagj. bank bal, = = 12/31 —} [er i730- = 7 [NSF check-11/30 a ae ~ po 13/3 Si —] NSF check red. = 12/31 Adjusted bal. e CM-coll.= 130 + : I Pane dary ® 11/30 (R) (0) _Dec, © 12/31 | DM-BSC- 11/30 = 12/31 DAIF checks: (hy G @ Bank error, Or. Receipts used for payments ‘Book errors: (Mm) (a) Unadj. book Bal. PROBLEM NO. 7 Select the best answer for each of the following: 1. Who is responsible, at all times, for the amount of the petty cash fund? a. General cashier b. President of the company c. Petty:cash custodian 4d. Chairman of the Board of Directors 2. What is the effect of not replenishing the petty cash fund at year-end and not making the appropriate adjusting entry? a, A detailed audit is necessary. 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. 3. The primary purpose of sending a standard Confirmation request to financial institutions with which the client has done business during the year is to. a. Detect kiting activities that may otherwise not be discovered. b. Corroborate information regarding deposit and loan balances. . Provide the data necessary to prepare a proof of cash. 4. Request information about contingent liabilities and secured transactions. — une inewmatien 4, The auditor should ordinarily mail confirmation requests to all banks with which the client has conducted any business during the year, regardless of the year-end balance, since a. The confirmation form also seeks information about indebtedness to the bank. b. This procedure will detect kiting activities which otherwise not be detected. ‘The mailing of confirmation forms to all such banks Is required by GAAS. d. This procedure relieves the auditor of any responsibility with respect to non-detection of forged checks. 5S. An auditor who is engaged to examine the financial statements of a business enterprise will request cutoff bank statement primarily in order to a. Verify the cash balance reported on the bank confirmation inquiry form: b. Verify reconciling items on reconciliation. c. Detect lapping. 4. Detect kiting. the client's bank . Which of the following cash transfers would appear as ‘a deposit in transit on the December 31 bank reconciliation? Bank Account A Bank Account B ‘iearDisbursing Date ty.c'- Receiving Date (Month/Day) Per Bank —Per-Books Per Bank Per Books a 12/31 12/30 12/31 12/30 b. 42 12/30 12/31 12/31 c 473 12/31 42 12 di al 12/31 42 12/31 7. Which of the following transfers would not appear as ‘an outstanding check on the December 31 bank reconciliation? Bank Account A Bank Account 8 Disbursing Date Receiving Date Mc (Month/Day) Per Bank Per Books Per Bank Per Books 42/31 12/30 12/31 12/30 baa 12/30 12/31 12/31 c 13 12/31 472 42 a 8 12/31 1p 12At Use the following information for the next two questions. ‘The information below was taken from the bank transfer schedule prepared during the audit of Khaye Ting Company's. financial statements for the year ended December 31. Assume all checks are dated and issued on December 30. No. from To Disbursements _ Receipts Per Per Per——Per . Books Bank Books Bank 101 Pocom HSBC 12/30 1/4 12/30 4/3 102 UCPB oMBank = 4/3. 1/21/30 12/31 103 HSBC PSBank 12/31 1/3 4/21/72 104 MBank PNB yee” ye? fe 1278 8. Which of the following checks might indicate kiting? a. Check Nos. 101 and 103 b. Check Nos, 102 and 104 Check Nos. 101 and 104 4. Check Nos, 102 and 103, 9. Which of the following checks deposits/transfers in transit at December 317 a. Check Nos. 101 and 102 b. Check Nos. 101 and 103, . Check Nos. 102 and 104 d, Check Nos. 103 and 104 illustrate 10. Which of the following cash transfer results in a misstatement of cash at Decerriber 31? Disbursements Receipts fom Ta Pec auks PerGank’ Per oaks 8. Poeam SBC 1R/AL ae”. tame | ana 2. ues” MB a ys 2p ua © HSBC PBank 12/31 a5 pt ua Maan PNB wa at a ua ~ now do the DIY drill - een ttle DO-IT-YOURSELF (DIY) DRILL PROBLEM NO. 1 You obtained the following information on the current account of Baht Company during your examination of its financial statements for the year ended December 31, 2016. The hanks stetement on November 30.2016 showed a balonce of P76,500,, Among the bank eredts ih November wos customer note for e2&00 colscted for te account of the company which the company recognized ny December among its receipts. Included in the bank debits. of checkbooks amounting to P300 and a Pi0, check will was caged by the Denke in ooor spainee aoa Co. account. Also in November you ascéftaned that there were ‘deposts_in_transit amounting to 20,000 and nd Ing P42,500. ‘The bank statement for the month of December showed P104,000%and total charges Yor P51,000, Sotal-cradits of ‘The company’s books for December showed total recei jents of P101,800 and a of P183,900, P121,400. Bank d mos for Desember. were: No, a3 for service eres paOdh ard No. 145 on'8 customer’ returned check marked “DAIF” for P6,000. On December 31, 2016 the company placed with the bank ‘2 customer's promissory note with a face value of P30,000 for collection. ‘The company treated this note as part of its receipts although the bank was able to collect on the note only in January, 2017. ‘A check for P990 was recorded in the company cash Payments books in December as P9,900. -eerer tani. QUESTIONS: Based on the application of the necessary audit procedures ‘and appreciation of the above data, you are'to provide the answers to the following: 1. How much is the undeposited collections as of December 31,2016? a. PB4,900 54,900 b. P44,900 ‘d. 34,900 2. How much Is the outstanding checks as of December 31, 20167 2.’ P47,990 £90,490 b. P99,400 d. P90,790 3. How much is the adjusted bank receipts for December? a. P158,900 = P128,900 b. P118,900 4. P108,900 4. How much is the adjusted book disbursements for December? a. P 56,490 2 P9B,990 b. 107,900 4. P99,290 5. How much is the adjusted cash December 31, 20167 a. 156,410 & b. P $5,000 4. balance as of P93,910 48,910 PROBLEM NO. 2 * Jn connection with your examination, the MQM Company resented to you the following information regarding its Cash in Bank account for the month of December: a) Balances per bank statements: _ November 215,600, and December 31, P230,400, 30, 'b) Balances of cash in bank account in company’s books: November 30, P165,450, and December 31, P226,800. ©) Total receipts per books were P2,221,900 of which 12,100 was paid in cash to a creditor on December 24. ) Total charges in the bank statement during December were P2,189,700. Undeposited receipts were: November’ 30, P90,600 November 30, P26,750, 2 and December 31, P101,200. ) Outstanding checks. were: ‘and December 31, P19,300, of which a check for 5,000 was certified by the bank on December 26. 9) NSF checks returned, recorded as reduction of cash receipts, were: + Returned by bank on December, recorded also in December, P10,400. ‘+ Returned by bank on December but recorded in January, P8,600 h) Collections by bank not recorded by Company were 121,500 in November and P116,400 in December. |) Bank'service charges not entered In company’s books: were: November 30, P7,500 and December 31, 4,200. J) A check for P9,500 of QMQ Company was charged to MQM Company in error. k)_A check drawn for P8,400 was erroneously entered in the books as P4,800. QUESTIONS: Based on the above and the result of your audit, answer the following: 6. How much is the adjusted cash balance as of November 30? a. 215,600 c. P279,450 b. 151,750 d. P274,450 7. How much is the adjusted book receipts for December? a. P2,204,700 ¢. P2,227,200 b. P2,113,900 4. P2,216,800 8 How much is the adjusted book disbursements for December? a. P2,169,450 c. P2,157,350 b.P2,179,850 d. P2,169,450 9. How much is the adjusted cash balance as of December 31? ‘ a. P317,300 c. P307,800 b. P330,400 d. P326,800 Which of the following describes the most effective Preventive control to ensure proper handling of cash receipt transactions? @. Bank reconciliations are prepared by an employee ot involved with cash collections and then are reviewed by a supervisor. 'b. One employee issues @ prenumbered receipt for all cash collections; another employee reconciles the dally total of prenumbered receipts to the bank deposits. . Predetermined totals (hash totals) of cash receipts are used to control posting routines. d. The employee who receives customer mail receipts prepares the daily bank deposit, which Is then deposited by another employee. 10, IN EXCEL PROFESSIONAL SERVICE PROBLEM NO. 3 Hangover Company received statement on August 1: DATE DEBITS CREDITS the following bank July 1 66,405 2 2,502 63,903 3 2,240 1,050 62,713 5 2106 64,819 6 51535 70,354 8 5817 76,171 9 8181 67,990 10 4317 72,307 it 6,819 4926 65,488, 12 7,425 62,989 13 62,989 35 3,509 66,498 16 9,777 56,721 17 6224, 7,702 58,202 18 6,484 51,718 19 3418 55,136 20 5310 60,446 22 6492 66,938 23 5,546 61,392 24 61,392 25 8,735 52,657 26 8,246 60,903, 27 9,385 70,288 29 7,060 63,228 30 63,228 31 6,405 8,987 65,810 TOTALS 77,395 P76,800 Hangover's cash account shows the following information for the month of July: ‘The June 30 balance was P62,150. duly t 3,729 165 2 5,535 3 9,181 5 5,817 6 4,317 8 6,819 9 4,926 7,425 12 3,509 B 9,391 45 7,702 16 6,221 7 3,418 6,484 48 5,310 19 6,492 20 5,074 22 8,735 23 8,246 26 8,913 6,885 29 5,152 5,913 30 2,238 31 5,857 TOTALS 75,304 P- 7,150 Additional information: 1. Hangover makes a journal entry for service charges, direct deposits, and interest earned in the month subsequent to the month the items are reflected on the bank statement. haa 2. Barek Co. makes a direct deposit of P675 to Hangover's account at the bank on the 30 of every ‘month. This payment, which Is rent revenue to Hangover, is not recorded by Hangover until the bank statement is received. 3. On the 23° of July, an NSF check for P472 was returned by the bank. The check was redeposited on July 27", and no entry was made by Hangover. 4. Check no. 1145 dated July 29 was written for P1,492 ‘of wages, but recorded by Hangover on its books as P1,000. 5. On July 16, the bank recorded @ withdrawal of P386 for Hangover that should have been for Handover Company. 6. The bank service charge for June was P165 and for July was P175. 7. ‘The Interest eared on June was P3,054 and in July was P3,160. 8. During June, Hangover wrote check no. 1095 for 9,850 for rent expense but recorded the check on its. books as P8,955. Hangover discovered the mistake in July, when the cancelled checks were returned with the June bank statement but neglected to correct the error fon the books at that time. 9. At the end of June, Hangover had P3,156 of deposits in transit, and checks totaling 4,742 that had not cleared the bank. In addition, all of Hangover's transactians with the bank after July 29 have not. cleared the bank, Questions: Based on the application of the necessary audit procedure: and appreciation of the above data, you are to provide the answers to the following: 11, How much is the adjusted cash balance as of June 30 a. 74,303 c. P64,819 b. P58,507 d. P67,991 12. How much is the adjusted bank receipts for July? a. 75,410 . P76,354 b. P75,024 4. P75,882 13. How much is the adjusted book disbursements for July? 2. P78,124 cc. P78,596 b. P78,038 d. P77,652 14, How much is the adjusted cash balance as of July 31 a. P62,577 ©, P74,291 b. 769,815 d. P61,805 15. Which of the following represents a normal substantive audit procedure for cash balances? 2. Review cash received by the client from the bank. b. Verify material deposits-in-transit to subsequent statements, ©. Foot cutoff bank statements provided by the financial institutions. 4. Perform kiting techniques to transfer cash between two client accounts, ©- end of AP.2104 - ©

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