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# Computation of Cash Shortage

Your client, a successful small business has never given much attention to a
sound internal control. In its employ is Alex Coopit, the companys cashierbookkeeper. Alex handles cash receipts, makes small disbursements from the
cash receipts, maintains accounting records, and prepares the monthly bank
reconciliation.
The bank statement for the month ended March 31,2014, shows a cash balance
of P590,000. The following checks are outstanding on March 31:
No. 7163
P 8,623
No. 7284
7,320
No. 7285
10,612
No. 8722
6,322
No. 8724
12,280
No. 8733
6,200
The companys general ledger shows a cash balance of P696,499 on March
31,2014.
Realizing that being the cashier-accountant of the company he can easily
misappropriate collections and conceal it, Alex removed all the cash on hand in
excess of P127,301, and then prepared the following reconciliation in an effort to
conceal this theft.
BANK RECONCILIATION
Balance per accounting records
No. 8722
P 6,322
No. 8724
12,280
No. 8733
6,200
Total
Deduct: Cash on hand
Balance per bank statement, March 31

P 696,499

20,802
717,301
127,301
P 590,000

## 1. How much was taken by the cashier-accountant?

2. What is the amount of cash that should be on hand at November
15,2014?

## Computation of Cash Shortage

FE COMPANY, organized on March 1, 2014, has a very poor internal control
system. The companys cashier is also its accountant. After 9 months of
operations, the companys manager suspects that the cashier-accountant has
been misappropriating company collections. You have been engaged to audit the
companys accounts to determine the extent of fraud, if any.

You started the audit on November 15. On that date, the cash on
hand per your surprise count was P 5, 140. Also on that date,
the bank confirmed that the balance of the companys current
account was P 26, 328. Your examination of the records reveals
that a check for P 1,852 was outstanding on November 15. The
companys mark-up is 40% of sales.
Further examination of the companys records reveals the
following balances at November 15, 2014:
Ordinary share capital
300,000
20,000
Real property purchased for cash
200,000
Mortgage payable
Furniture & fixtures (of the acquisition cost,
P6,000 remains unpaid as of Nov. 15)
29,000
Notes payable-bank
32,000
46,284
Expenses paid (excluding purchase)
60,756
Merchandise inventory at cost
93,920
Total sales

80,000

85,380
340,000

## 1. How much was paid for inventory purchases?

2. How much was collected from customers?
3. How much is the cashiers accountability at November
15, 2014?

## 4. What is the adjusted bank balances as of November

15, 2014?
5. The cash shortage as of November 15, 2014 totalled

## Computation of Working Capital and Current Ratio

JAM COMPANYs unadjusted trial balance at December 31,2014, included the
following accounts:
Debit
Credit
Cash
P 69,200
Accounts receivable
102,650
Merchandise inventory
947,160
Accounts payable
P 789,715
Accrued expenses
13,214
Jam Cos year end is December 31. At the end of 2014, it held its cash book
open so that its statement of financial position would show a more favourable
financial condition. Your audit revealed the following items:

## 1. The December cash book included January cash receipts of P 65,460 of

which P 36,010 represents cash sales and P 29,450 represents
collections from customers, net of 5% cash discounts.
2. The December check register included payments of accounts to
suppliers of P 37,240 on which discounts of P 1,240 were taken.
3. The merchandise inventory account balance was determined by physical
count on December 31, 2014.
1. What are Jams working capital and current ratio at December 31, 2014,
based on balances per company books?
2. What are Jams correct working capital and current ratio at December
31, 2014
Computation of Cash Shortage
In connection with the audit of the financial statements of JEM COMPANY for the
year ended October 31, 2014, you conducted a surprise count of undeposited
receipts on October 31,2014. It was witnessed by the companys cashier whose
accountability on October 31 was determined to be P 80,000. Your count
revealed the following:
Currency and coins
Unused postage stamps
Checks:
Date
Payee
1-22
Cash

P 48,840
440
Maker
Cashier

P 4,000

10-19
10-28
10-31
Office Supplies
Total per count

Jem Company
Jem Company
CCP Co.
paid out of receipts

DWU,Inc.
PSU Co.
Jem Company

9,400
7,840
3,600
6,400
80,520

## 1. What is the cash shortage on October 31, 2014?

2. A cash shortage may be concealed by transporting funds from one
location to another or by converting negotiable assets to cash. Because
of this, which of the following is vital?
Computation of Cash Shortage
The following table summarizes the cash receipts and disbursements of LOI
COMPANY for the last six months of 2014:
Month
July
August
September
October
November
December

Receipts
P 102,000
70,000
120,000
172,000
260,000
280,000
P 964,000

Disbursements
P 60,000
110,000
68,000
92,000
122,000
180,000
P 668,000

1. Bank balance, July 1, 2014
2. Bank balance, December 31, 2014
3. Outstanding checks, December 31, 2014
(No checks were outstanding on July 1)
4. Undeposited receipts, December 31, 2014
(included in the December receipts)
5. Bank deposits, July 1 through December 31
1. What is the total shortage?

P 200,000
524,000
42,000
24,000
914,000

## Computation of Cash Shortage

The LEINOR COMPANY does not have adequate controls over its cash
transactions. During an audit, you found the following data concerning its cash
position at December 31, 2014.
1. On the companys records the cash balance is P 173,500
2. A credit of P 2,500 for a note collected by the bank does not appear on the
companys records.
3. The bank statement balance is P 135,000.
4. Outstanding checks are as follows:
Number
1428
1431
1445
1446
The cashier made the following reconciliation:
Balance per bank statement
Deduct: Outstanding checks:
No. 1431
1445
1446

Amount
P 5,200
3,600
4,080
3,460
P 135,000

P 3,600
4,080
3,460

## Add: Undeposited collections (per count)

Collected note
Cash per books, December 31,2014

10,140
P 124,860
P46,140
2,500

48,640
P 173,500

## 1. What is the total shortage?

2. How did the cashier attempt to conceal the shortage?

## Computation of Cash Shortage

You started the audit of the financial statements of ARCIE, INC. on January
15,2015, for the year ended December 31,2014. The general ledger shows cash
account balance of P247,200 as at December 31,2014.
The following items are included in the December 31, 2014, reconciliation
prepared by the cashier:
Cash per records, December 31,2014
Cash per bank statement, December 31, 2014
Outstanding checks
Check of Tsikoy Co., charged by bank in
error on December 28,1014; corrected by
bank on January 2,2015
Deposit in transit

P 247, 200
264, 095
25,325
750
3,500

From January 2, 2105, to January 15, 2015, the date of your cash count, total
cash receipts appearing in the cash records amounted to P 53,500. During the
same period, the bank had credited total deposits of P47, 965. The following
cash and cash items were on hand at the close of business on January 15, 2015:
Currency
Customers checks
Expense vouchers

P 1,425
1,950
375
P 3,750

## Your further investigation revealed the following:

a. Cash received on account from customers:
DATE
07/05/14

AMOUNT
P 4,000

12/10/14

P 3,000

12/15/14

P 3,500

4,000
Accounts receivable
Inventory
3,000
Accounts receivable
Not recorded

4,000
3,000

## b. Unrecorded but deposited checks received from customers from January

2,2015, to January 15,2015, totaled P 2,000.
c. The cashier presented receipts for collections from customers on
January 10,2015, totalling P 4,500; these were unrecorded and
undeposited.
1. What adjusting entries would you provide for items (a) through (c)?
2. What is the total cash shortage as of December 31, 2014?
3. What is the total cash shortage as of January 15,2015?

## Computation of Cash Shortage

Presented below is the cash receipts book of APPLE,INC:
CASH RECEIPTS BOOK
June 1-30, 2014
Date
June 1 Cash Sales
10 BA
15 BO
20 BE
20 Cash Sales
25BU
26 BO
26 BE
30 BO
30 BA

Accounts
Receivables

Cash
Sales
P 800

P 3,200
6,000
4,800

Sales
Discount

Net
Cash
P 800
3,136
5,880
4,664
2,400
10,504
4,000
11,680

P 64
120
96
2,400

10,800
4,000
12,000
3,600
800
P 45,200

216
240
3,600
P 3,200

P 936

800
P 47,464

The following are the companys accounts receivable subsidiary ledgers. All the
debits represent sales. The credit terms are 2%-10 days, net 30 days.
BA
June 3 3,200 June 10 3,200
4 4,800
30 800

BO
June 2 6,000 June 15 6,000
9 4,000
26 4,000
15 3,600
30 3,600

BU
June 2 6,000 June 10 10,800
10 4,800
30 800

BE
June 15 4,800 June 20 4.800
16 12,000
26 12,000

## 1. What is the correct amount of cash receipts in June?

2. What is the cash shortage on June 30?

## Computation of Cash Shortage

The JUNNEL COMPANY had weak internal control over its cash transactions.
Facts about its cash position at November 30,2014 were as follows:
The cash books showed a balance of P94, 508, which included undeposited
receipts. A credit of P500 on the banks records did not appear on the books of
the company. The balance per bank statement was P 77,750. Outstanding
checks were no. 8420 for P581, no. 8422 for P750, no. 8430 for P1,266, no.
8621 for P954, no. 8623 for P1,034, and no. 8632 for P726.
The cashier stole all undeposited receipts in excess of P18,972 and prepared the
following reconciliation:
Balance per books, Nov. 30, 2014
8621
P 954
8623
1,034
8632
726
Less: Undeposited receipts
Balance per bank, Nov. 30, 2014
Less: Unrecorded credit
True cash, Nov. 30, 2014

P94,508

2,214
96,722
18,972
77,750
500
77,250

1. What is the correct amount of cash that should be on hand for deposit
on November 30, 2014?
2. How much was stolen by the cashier?
3. The cashier attempted to conceal his theft by
I. Not listing all outstanding checks
II. Underfooting outstanding checks shown on the reconciliation.
III. Adding an item to the bank balance that should be deducted
from the book balance.
4. Taking only the information given, which of the following internal
control deficiencies allowed the cashier to steal cash and conceal his
theft?
5. What is the adjusted cash balance as of November 30, 2013?

## Computation of Cash Shortage

The bookkeeper-cashier of the TANYING COMPANY abscond on the evening of April 16, 2014,
apparently with a large portion of the companys cash. He had taken with him certain accounting
records, including the cash journals and the general ledger. You are called upon to ascertain, if
possible, the shortage with which the missing employee may be charged.
You obtained the following information from the available subsidiary journals, ledgers, and other data.

## Balances at close of business, April 16,2014:

Accounts receivable
Accounts payable
Cash in bank, less checks outstanding

P 442,550
207,300
98,830

## Transactions, January 1-April 16, 2014:

Sales, per receivable check
Cash sales
Sales allowances in customers accounts
Cash purchase of furniture, per dealers invoice
Total merchandise purchases
Expenses paid, supported by paid invoices and payrolls
Cash dividend declared, P50,000 (of which, P10,000
remains unpaid)

P 5,876,170
none
18,330
3,000
3,615,260
1,865,830
40,000

A check for P100,000 had been cashed by the bookkeeper shortly before his departure. Although the
signature on the check had been obviously forged, it was paid by the bank and returned with other
cancelled checks.

A statement of financial position prepared from the books and other files follows:
Tanying Company
Statement of Financial Position
December 31, 2013
ASSETS
Cash
P 32,670
Accounts receivable
226,230
Inventory (at cost)
440,350
Furniture
P 74,560
Less: Accumulated depreciation
31,800
42,760
Total assets
P 742,010
LIABILITIESAND SHAREHOLDERS EQUITY

Accounts payable
Share capital
Retained earnings
Total liabilities and shareholders equity
1.
2.
3.
4.
5.

P 114,720
500,000
127,290
P 742,010

## What is the total amount paid for merchandise purchases?

What is the total amount of collections from sales?
What is the total amount of cash disbursements from January 1-April 16,
2014?
What is the cashiers accountability (correct cash balance before shortage) on
April 16, 2014?
What is the amount of cash shortage chargeable against the cashier?

Data for the ANNABELLE, INC. are shown below:
Cash account balance
Bank statement balance
Deposits in transit
Outstanding checks
Bank service charges for the month,
not shown on company books
NSF checks returned by bank, not
shown on company books
Bank collections from company
Customers, not shown on company books

Nov.30
P 20,340
107,060
8,200
27,700

Dec.31
P 48,540
137,820
12,880
30,100

720

600

4,300

8,240

72,240

80,900

1.
2.
3.
4.

## Deposits and credit memos per bank statement

Canceled checks and debit memos per bank statement
Cash receipts per cash book
Checks written per cash book

P249,100
218,340
172,880
211,900

1.
2.
3.
4.
5.
6.

## What is the total book receipts in December?

What is the total book disbursements in December?
What is the adjusted cash balance on November 30?
What is the adjusted cash balance on December 31?
What is the adjusted book receipts in December?
What is the adjusted bank disbursements in December?

RODELIO CO. has a current account in Pinoy Bank. Your audit of the companys cash
account reveals the following:
1.

2.

3.

## Balances taken from the companys general ledger:

Cash balance, Nov. 30, 2014
Cash balance, Dec.31, 2014
Receipts, Dec. 1-31, 2014

P 637,860
576,420
306,220

## Balances taken from the companys general ledger:

Cash balance, Nov. 30, 2014
Cash balance, Dec.31, 2014
Disbursements (debit)

P 685,180
637,220
356,080

## Outstanding checks, Nov. 30, 2014 (P 26,140 was

paid by bank in December)

64,140

## Check written and recorded in December; not

included in the checks returned with the
December bank statement

36,080

5.

15,260

6.

16,140

7.

## A bank credit memo was issued in December to

Correct an erroneous charge made in November

1,500

## Note collected by bank in December (company was

Not informed of the collection)

2,060

4.

8.
9.

## A check for P2,020 (payable to a supplier) was

Recorded in the Check Register in December
As P3,000

## 10. A check for P2,240 was charged by the bank

As P2,420 in December
11. Rodelio Co, issued a stop payment order to the
bank in December. This pertains to a check
written in December which was not
received by the payee. A new check was

980
180

## written and recorded in the Check Register

in December. The old check was written off
by journal entry also in December.

780

60

## 1. What is the total book disbursements in December?

2. What is the total bank receipts in December?
3. What is the total outstanding checks on December 31?
4. What is the adjusted bank balance on November 30?
5. What is the adjusted bank receipts in December?
6. What is the adjusted bank disbursements in December?
7. What is the adjusted book balanxce on December 31?

## PROOF OF CASH: Book to Bank Balances Format

The auditor of TSIKOY COMPANY gathered the following information:
1.The November 30 bank statement balance included bank service charges of
P2,000.
2.The November 30 cash balance in the general ledger was P244,500.
3.Outstanding checks on November 30 were P63,000 while undeposited receipts
were P36,000.
4.The bank service charges as shown on the bank statement totaled P3,000.
5.The December 31 cash balance in the general ledger was P 319,750, which
recognized P 482,750 for December receipts and P 405,500 for checks
written during December. In transit to the bank were receipts of P28,750.
Checks of P15,000 written prior to December and checks of P 60,500 written
in December had not yet cleared the bank.
1.What is the total book disbursements for December?
2.What is the November 30 bank balance?
3.What is the total bank receipts in December?
4.What is the total bank disbursements in December?
5.What is the bank balance on December 31?

The following data are assembled by the accountant of the HAROLD COMPANY:
Cash account balance
Bank statement balance
Deposits in transit
Outstanding checks
Bank service charges
NSF check*
Companys notes receivable
collected by bank

Nov.30, 2014
P 41,175.00
267,705.00
20,502.50
69,295.00
1,800.00

## Dec. 31, 2014

P 100,712.50
344,542.50
32,200.00
75,280.00
1,500.00
20,625.00

175,537.50

202,250.00

*Redeposited in the same month. No entries made to take up the return and
redeposit.
The bank statement and the companys cash records show the following totals:
Canceled checks and debit memos
per bank statement
545,932,50
Cash receipts per cash book
Checks written per cash book
Deposits and credit memos per bank statement
1.What is the total book receipts in December?
2.What is the total book disbursements in December?
3.What is the adjusted book balance on November 30?
4.The adjusted bank receipts in December should be?
5.The adjusted book disbursements in December should be
6.What is the adjusted book balance on December 31?

P
411,592.50
529,792.50
622,770.00

## Computation of Cash Receipts and Disbursements

In connection with your audit of the cash account of ANNE CORP., you gathered
the following information.
a.
b.
c.
d.

## Balance per bank, December 1,2014

Total bank receipts (credits) in December
Balance per bank, December 31,2014
Outstanding checks, November 30, 2014 (including
P12,000 paid by bank in December)
e. Outstanding checks, December 1, 2014 (including
checks issued in November)
f. Deposit in transit, November 30, 2014
g. A customers check received on December 4,2014,
was returned by bank on December 7 marked
NSF.It was redeposited on December 8,2014.
the only entry made was to take up the collection
on December 4, 2014
1. What is the total book receipts in December?
2. What is the total bank disbursements in December?
3. What is the total boo disbursements in December?

P 145,000
346,000
114,500
67,000
94,162
39, 458

11,143

## Petty Cash Fund; Bank Reconciliation

Your audit of the cash account of JUNIE CORP. disclosed the following
information:
1. Cash in bank balance per books, Dec. 31, 2014

P 35,000

60,000

## 3. Note collected by bak in December (principal plus

interest of P800, less collection fee of P200)

27,600

## 4. Debit memo for a checkbook

5. Deposits in transit, Dec. 31,2014

?
15,200

## 6. Transposition error mde by bank

In recording deposit of December 28:
Correct amount
P45,000
Recorded as
54,000

9,000

26,700

## 8. Included in the Cash in bank account is petty cash fund

of P 10,000. You count on December 31,
2014, revealed the following fund items:
Currency and coins
P 3,000
Supplies
2,400
Transportation
100
IOUs
4,000

9,500

11,000

## 10. Outstanding checks (including a certified

Check of P10,000)

39,400

## 1. What is the principal amount of the note collected by bank in

December?
2. What is the adjusted cash in bank balance at December 31,2014?
3. The cost of checkbook is?
4. What is the amount of petty cash shortage at December 31,2014?
5. What is the adjusted petty cash balance?

Bank Reconciliation
The cash receipts and the cash payments of LIEZEL COMPANY for April 2014
follow:
Cash Receipts (CR)
Date
Cash Debit
April 2
P 208,700
8
20,350
10
27,950
16
109,350
22
92,700
29
53,000
30
16,850
Total
P 528,900

## Cash Payment (CP)

Check No.
Cash Credit
4113
P 44,550
4114
7,350
4115
96,500
4116
33,200
4117
73,600
4118
50,000
4119
31,600
4120
83,750
4121
5,000
4122
120,650
Total
P 546,200

The cash account of Liezel Company shows the following information at April 30 ,2014:

Date
April 1
30
30

Item
Balance

Ref.
CR 6
CP 11

CASH
Debit

Credit

528,900
546,200

Balance
P 95,550
624,450
78,250

## Liezel Company received the following statement on April 30, 2014:

Bank Statement for April 2014
Beginning balance
Deposits and other Credits:
April
1
4
9

P 95,550
P 16,300 EFT
208,700
20,350

12
17
22
23
Checks and other Debits:
April
7
13
14
18
21
26
30
30
Ending Balance

Explanation:

EFT
US
BC
SC

27,950
109,350
68,400 BC
92,700
P 44,550
69,500
45,150 US
7,350
10,950 EFT
73,600
50,000
1,000 SC

543,750

(335,300)
P 304,000

## electronic funds transfer

unauthorized signature
bank collection
service charge

## Additional data for the bank reconciliation include the following:

a. The EFT deposit was a receipt of monthly rent. The EFT debit was a
monthly insurance payment.
b. The unauthorized signature check was received from Lester Soon.
c. The P 68,400 bank collection of a note receivable on April 22 included
P 9,250 interest revenue.
d. The correct amount of check number 4115, a payment on account
P 69,500. (Leizels accountant mistakenly recorded nthe check for
P 96,500.)
1.
2.
3.
4.
5.

## What is the amount of deposits in transit on April 30?

What is the amount of outstanding checks on April 30?
What is the amount of bank receipts in April?
What is the amount of bank disbursement in April?
What is the correct cash balance as of Aril 30?