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Chapter 1 - Audit of Cash and Cash Equivalents PROBLEM NO. 1 - Rev Justice Corporation

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

Adjust ing Journal Entr ies

1) Accounts receivable 30,000

Cash in bank 30,000


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


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

BoomPanes COMPANY

Bank Reconciliation

December 31, 2014




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

- - - -

Adju sting journal entr ies:


Note receivable 120,000

2) Bank service charge 3,000

Cash in bank 3,000


Cash in bank 7,000

Ngan Company

Proof of Cash

For the month of December, 2014



Chapter 1 - Audit of Cash and Cash Equivalents






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



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


- - - -

Adju sting journal entr ies:


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

Harthart Company

Proof of Cash

For the month of September, 2014






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) -


Unadjusted book balances 39,300 183,900 101,800 121,400 Add (deduct) adjustments:


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

Ubirhed Company

Proof of Cash




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




11/30/14 Receipts Disb 12/31/14


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)


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


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


- - - -

* (P40,320+P400,000+P440,800) (2) (3) (4)

1. C

2. C

3. C

4. C

5. D

FourTwo Company

Proof of Cash




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


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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)


Deposit in transit 5,000

Total 30,700 120,700

Cash shortage (90,000)


-

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



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


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)



Note collected by bank, July 8,000 (8,000)

Unrecorded deposit in July 1,000 (1,000)


July (100) (100)

August 440 (440) NSF check not redeposited 300 (300)


- - - -

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 DCost 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


Balances 148,080 537,580

Shortage (389,500)


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