AUDIT OF CASH

Problem 1: The accountant of MJ Company is in the process of preparing the companys financial statements
for the year ended December 31, 2014. He is trying to determine the correct balance of cash and cash
equivalents to be reported as a current asset on the statement of financial position. The following items are
being considered:

Balances in the companys accounts at the Metropolitan Bank:

o Current account P81,000
o Savings account P132,600
Undeposited customer checks of P22,200 (including a customer check dated January 2, 2015 for
P3,000)
Currency and coins on hand of P3,480
Savings account at the Northern Philippines Bank with a balance of P2,400,000. This account is being
used to accumulate cash for future plant expansion (in 2015)
Petty cash of P4,000 (currency of P1,200 and unreplenished vouchers for P2,800)
P120,000 in a current account at the Northern Philippine Bank. This represents a 20% compensating
balance for P600,000 loan with the bank. The company is legally restricted to withdraw the funds until
the loan is due in 2017.
Treasury bills:
o Two-month bills P90,000
o Seven-month bills P120,000
Time deposit P100,000

Question: What is the correct balance of cash and cash equivalents to be reported in the current assets section
of the statement of financial position?
Problem 2: The auditor of EDWARD Inc. Examined the petty cash fund immediately after the close of the
business, July 31, 2014, the end of the companys natural business year. The petty cash custodian presented
the following during the count:
Currency
Petty cash vouchers:
Postage
Office supplies expense
Transportation
Computer repairs
Advances to office staff
A check drawn by Edward payable to
the petty cash custodian

P1,650
420
900
340
800
1,500
7,200
300

Postage stamps
1,000
Employees check, returned by the
bank, marked NSF
1,890
An envelope containing currency of
P1,890 for a gift to a retiring employee
P16,000
1.) How much is the petty cash shortage or overage?
2.) What is the adjusted balance of the petty cash fund at July 31, 2014?
Problem 3: The bank statement for the current account of CHUNKS Co. Showed a December 31, 2014,
balance of P585,284. Information that might be useful in preparing a bank reconciliation is as follows:
a.) Outstanding checks were P52,810
b.) The December 31, 2014 cash receipts of P23,000 were not deposited in the bank until January 2, 2015.
c.) One check written in payment of rent P8,940 was correctly recorded by the bank but was recorded by
CHUNKS as P9,840.

d.) In accordance with prior authorization, the bank withdrew P18,000 directly from the current account as
payment of a mortgage note payable. The interest portion of that payment was P14,000. Chunks has
made no entry to record the automatic payment.
e.) Bank service charges of P740 were listed on the bank statement.
f.) A deposit of P35,000 was recorded by the bank on December 12, but it did not belong to Chunks.
g.) The bank statement included a charge of P3,400 for a not-sufficient-fund check. The company will seek
payment from the customer.
h.) Chunks maintains an P8,000 petty cash fund that was appropriately reimbursed at the end of
December.
i.) According to instructions from Chunks on December 30, the bank withdrew P40,000 from the account
and purchased treasury bills for Chunks. The company recorded the transaction in its books on
December 31 when it received notice from the bank. Half of the treasury bills mature in three months
and the other half in six months.
1.) What is the cash in bank balance per books on December 31, 2014?
A. P549,714
B. P543,514
C. P534,914
D. P541,714
2.) What is the adjusted cash in bank balance on December 31, 2014?
A. P520,474
B. P527,274
C. P518,674
D. P520,154
3.) What amount would Chunks report as cash and cash equivalents in the current assets section of the
December 31, 2014, statement of financial position?
A. P928,474
B. P728,474
C. P720,474
D. P735,274
Problem 4: The following information pertains to JRC Corp:
JRC Corp
Bank Reconciliation
November 30, 2014
Balance per bank
Less: Outstanding checks

P435,000
#4321
#4329
#4340
#4341

P6,000
15,000
1,700
4,675

Add: Deposit in transit

27,375
P407,625
16,200

Balance per books

P423,825

Date

Payee
12/1
12/3
12/7
12/12
12/15
12/16
12/18
12/21
12/22
12/28

UA, Inc.
OLFU Corp
AUF Enterprises
RCC Corp.
Payroll
BU, Inc.
HAU Co.
SPCF, Inc.
Petty cash fund
Payroll

Check Register
December 2014
No.
Vouchers
Payable
4342
P10,000
4343
4,200
4344
3,755
4345
12,000
4346
96,000
4347
6,300
4348
14,200
4349
7,000
4350
10,000
4351
98,000
Bank Statement

Discount
P500
120
142
-

Cash
P9,500
4,200
3,755
11,880
96,000
6,300
14,058
7,000
10,000
98,000

CITY BANK
Period: November 30,2014 December 31, 2014
No.: 001-43-44
Date
Beginning
Balance
December

Description

1
1
4
4
5
6
8
10
15
22
28
29
29

Cash deposit
Check issued
Check issued
Check issued
Check deposit
Check issued
Check deposit
Check issued
Encashment
Encashment
Encashment
Debit Memo
Service Charge
Credit Memo
Interest

Page 1 of 1

Check Number

Debit

Credit

Balance
P435,000

16,200
4329
4342
4341

P15,000
9,500
4,675

4343

4,200

4344
4346
4350
4351

3,755
96,000
10,000
98,000
1,000

49,000
14,000

Deposits in transit at December 31 totaled P49,000

1.) What is the total book receipts for December?
A. P113,550
B. P80,750
C. P63,000
D. P112,000
2.) What is the cash balance per books on December 31, 2014?
A. P275,132
B. P226,132
C. P291,332
D. P274,370
3.) What is the total outstanding checks on December 31, 2014?
A. P68,313
B. P39,238
C. P46,938
D. P40,938
4.) What is the adjusted cash balance on November 30, 2014?
A. P446,375
B. P417,825
C. P423,825
D. P435,000
5.) What is the adjusted cash balance on December 31, 2014?
A. P281,682
B. P275,682
C. P226,682
D. P274,920

,1,550

451,200
436,200
426,700
422,025
471,025
466,825
480,825
477,070
381,070
371,070
273,070
272,070
273,620

Problem 5: ELI Companys check register shows the following entries for the month of December:
Date
12/2014

Checks
1
5
7
11
26
29

Beginning Balance
Deposit
Check # 14344
Check # 14345
Deposit
Check # 14346

Deposits

Balance

P65,000
P32,500
14,000
49,000
8,600

P89,300
154,300
120,800
106,800
155,800
147,200

ELIs bank reconciliation for November revealed one outstanding check (No. 14343) for P12,000 (written on
November 28), and one deposit in transit for P5,550 (made on November 29)
The following is from ELIs bank statement for December 2014:
Date
12/2014

Checks
1
1
4
5
14
15
20
29
31

Beginning Balance
Deposit
Check No. 14344
Deposit
Check No. 14345
Loan Proceeds
NSF check
Service charge
Interest

Deposits

Balance

P5,550
P32,500
56,000
14,000
500,000
7,600
1,000
3,600

P95,750
101,300
68,800
124,800
110,800
610,800
603,200
602,200
605,800

Assume that all errors were committed by ELI Company, not the bank.
Based on the preceding information, determine the following:
1.) Adjusted cash balance on November 30
A. P89,300
B. P95,750
C. P102,200
D. P101,300
2.) Outstanding checks on December 31
A. P46,500
B. P45,500
C. P8,600
D. P20,600
3.) Deposit in transit on December 31
A. P52,600
B. P49,000
C. P5,550
D. P43,450
4.) Total bank receipts in December
A. P114,000
B. P119,550
C. P565,150
D. P61,550
5.) Adjusted cash balance on December 31
A. P663,800
B. P634,200
C. P748,200
D. P597,200
Problem 6: The following information was obtained in connection with the audit of BRYAN Companys cash
account as of December 31, 2014.
Outstanding checks, 11/30/2014
Outstanding checks, 12/31/2014
Deposit in transit, 11/30/2014

P16,250
12,500
12,500

Cash balance per ledger, 12/31/2014

Actual company collections from its customers during
December
Company checks paid by bank in December
Bank service charges recorded on company books in
December
Bank service charges per December bank statement
Deposits credited by bank during December
November bank service charges recorded on
company books in December

37,500
152,500
130,000
2,500
3,250
145,000
1,500

The cash receipts book of December is underfooted by P2,500

The bank erroneously charged the companys account for a P3,750 check of another depositor. This bank error
was corrected in January 2015.
1.) How much is the deposit in transit on December 31, 2014?
A. P5,000
B. P20,000
C. P22,500
D. P17,500
2.) The total unrecorded bank service charges as of December 31, 2014
A. P750
B. P2,250
C. P1,750
D. P4,250
3.) What is the total book receipts in December?
A. P150,000
B. P152,000
C. P155,000
D. P147,500
4.) What is the total amount of company checks issued in December?
A. P130,000
B. P123,000
C. P133,750
D. P126,250
5.) What is the total book disbursements in December?
A. P123,750
B. P128,500
C. P126,250
D. P128,750
6.) What is the book balance on November 30, 2014?
A. P16,250
B. P21,250
C. P37,500
D. P35,000
7.) What is the bank balance on November 30, 2014?
A. P23,000
B. P18,500
C. P43,500
D. P16,250
8.) What is the total bank receipts in December?
A. P120,000
B. P140,000
C. P145,000
D. P150,000
9.) What is the total bank disbursements in December?
A. P154,500
B. P132,500
C. P129,500
D. P137,000
10.)
What is the bank balance on December 31, 2014?
A. P21,500
B. P26,500
C. P31,000
D. P33,250

Problem 7: The TIDBITS 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 P77,750.
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 reconcillation:
Balance per books, Nov. 30, 2014
Add: Outstanding checks
8621
8623
8632

P94,508
P954
1,034
726

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

Less: Undeposited receipts

Balance per bank, Nov. 30, 2014
Less: Unrecorded credit
True cash, Nov. 30, 2014
1.) What is the correct amount of cash that should be on hand for deposit on November 30, 2014?
A. P23,069
B. P18,972
C. P22,569
D. P22,069
2.) How much cash was stolen by the cashier?
A. P3,597
B. P3,097
C. P4,097
D. P0
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.

A. I and II only
B. II and III only
C. I and III only
D. I, II and III
4.) Taking only the information given, which of the following internal control deficiencies allowed the cashier
to steal and conceal the theft?
A. The cashier is also responsible for preparing the reconciliation
B. No one other than the cashier is responsible for tracing cash receipts to the deposits in the bank
C. Both A and B
D. Neither A nor B
5.) What is the adjusted cash balance as of November 30, 2014?
A. P95,008
B. P91,411
C. P94,008
D. P87,814
Problem 8: The following table summarizes the cash receipts and disbursements of MASAKO Company for
the last six months of 2014:
Month
July
August
September
October
November
December

Receipts

DIsbursements
P102,000
70,000
120,000
172,000
260,000
280,000
P964,000

P60,000
110,000
68,000
92,000
122,000
180,000
P668,000

Additional information:

Bank balance on July 1, 2014 was P200,000

Bank balance on December 31, 2014 was P524,000
Outstanding checks on December 31, 2014 was P42,000 (no checks were outstanding on July 1)
Undeposited receipts on December 31, 2014 was P24,000 and was included in the December receipts
Bank deposits from July 1 to December 31 amounted to P914,000

Question: What is the total shortage?

A. P0
B. P76,000
C. P30,000
D. P66,000

--end of cash handouts--