397351802 Quizzer Cash Solution PDF

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AUDIT OF CASH - QUIZZERSPROBLEM NO. 1In connection with your examination, the Pound Company presented to you the following information regarding its Cash in Bank account for the month of December, 2005:a) Balances per bank statements: November 30, P107,800, and December 31, P115,200.b) Balances of c...

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AUDIT OF CASH - QUIZZERS PROBLEM NO. 1 In connection with your examination, the Pound Company presented to you the following information regarding its Cash in Bank account for the month of December, 2005: a)

Balances per bank statements: November 30, P107,800, and December 31, P115,200.

b)

Balances of cash in bank account in company’s books: November 30, P82,725, and December 31, P113,400.

c)

Total receipts per books were P1,110,950 of which P6,050 was paid in cash to a creditor on December 24.

d)

Total charges in the bank statement during December were P1,094,850.

e)

Undeposited receipts were: November 30, P45,300 and December 31, P50,600.

f)

Outstanding checks were: November 30, P13,375, and December 31, P9,650, of which a check for P2,500 was certified by the bank on December 26.

g)

NSF checks returned, recorded as reduction of cash receipts, were:  

Returned by bank on December, recorded also in December, P5,200. Returned by bank on December but recorded in January, P4,300

h)

Collections by bank not recorded by Company were P60,750 in November and P58,200 in December.

i)

Bank service charges not entered in company’s books were: November 30, P3,750 and December 31, P2,100.

j)

A check for P4,750 of Found Company was charged to Pound Company in error.

k)

A check drawn for P4,200 was erroneously entered in the books as P2,400.

QUESTIONS: Based on the above and the result of your audit, answer the following: 1.

2.

How much is the adjusted cash balance as of November 30, 2005? a. P107,800 b. P139,725 c. P75,875 P137,225

d.

How much is the adjusted book receipts for December, 2004? a. P1,102,350 b. P1,113,600 c. P1,056,950 P1,108,400

d.

3.

How much is the adjusted book disbursements for December, 2004? a. P1,084,725 b. P1,078,675 c. P1,089,925 d. P1,084,725

4.

How much is the adjusted cash balance as of December 31, 2004? a. P158,650 b. P153,900 c. P165,200 P163,400

5.

How much is the cash shortage of December 31, 2004? a. P1,800 b. P9,500 c. P4,750

SUGGESTED ANSWERS: B, B, C, D, D PROBLEM NO. 2

d.

d. P0

Your audit senior instructed you to prepare a four column proof of cash receipts and disbursements for the month of August, 2005. The bank reconciliation prepared by Franc Company at July 31 is reproduced below: (All book adjustments were recorded in August). Bank balance

P52,000

Add deposit in transit, July 31

900

Total Less outstanding checks: No. 436 450 451 454 Adjusted balance

52,900

P200 1,800 1,400 600

4,000 P48,900

Book balance Add: Proceeds of note receivable collected by bank in July Deposit made in bank on July 31 not recorded in books until August Total Less bank service charge

Adjusted balance

P40,000

8,000

1,000 49,000 100

. P48,900

Upon inquiry about the client’s August 31 bank reconciliation, you were informed that it has been lost and that the client is too busy at this time to prepare another. Your senior told you to get the August bank statement and paid checks and to prepare the August 31 reconciliation so that you may complete the August proof of cash. The August bank statement is reproduced below: Kapuso Bank Account Name: Franc Company Date Debits July 31 August 1 1,800 August 6 1,400 August 9 600 August 12 140 DM August 15 1,000 August 20 700 August 27 1,440 August 29 100 EC August 31 440 SV August 31 300 DM 1,820

Credits 900 10,000 140 14,000 100 EC

SV – Service Charges; DM – Debit Memo; EC – Error Corrected; CM – Credit Memo

The paid checks accompanying this bank statement (all clearing in August) were (checks listed in order of payment by bank). No. 450 451 454

P1,800 No. 455 1,400 456 600

P1,000 No. 458 700 459

P1,440 1,820

The check register revealed that the last check issued in August was no. 460 for P1,000 and that check no. 457 was for P2,400.

Cash received for the period August 21 through 31 of P9,400 was deposited in the bank on September 1. The debit memo on August 12 and August 31 were customer NSF checks returned by the bank. The check on August 12 was immediately redeposited without entry. The check returned on August 31 was redeposited by the client in the bank on September 1 without entry. 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.

2.

3.

4.

5.

How much is the unadjusted book receipts for August? a. P25,140 b. P42,400 c. P35,540 P43,300

d.

How much is the unadjusted book disbursements for August? a. P8,460 b. P9,740 c. P8,760 P8,360

d.

How much is the adjusted book receipts for August? a. P33,640 b. P33,450 P33,400

d.

c. P34,400

How much is the adjusted book disbursements for August? a. P9,100 b. P8,900 c. P9,200 P9,340

d.

How much is the adjusted cash balance as of August 31, 2005? a. P73,940 b. P73,060 c. P73,400 P73,200

d.

SUGGESTED ANSWERS: B, A, D, A, D

PROBLEM NO. 3 You were able to obtain the following information in connection with your audit of the Cash account of the Piso Company as of December 31, 2005: a. b. c.

Balances per bank Balances per books Outstanding checks

November 30 P742,800 619,304 254,096

December 31 P774,696 670,392 300,184

d.

The bank statement for the month of December showed total credits of P5,401,800 while the cash receipts per books totaled P9,341,780.

e.

NSF checks are recorded as a reduction of cash receipts. NSF checks which are later redeposited are then recorded as regular receipts. Data regarding NSF checks are as follows: 1. Returned by the bank in Nov. and recorded by the company in Dec., P1,000. 2. Returned by the bank in Dec. and recorded by the company in Dec., P25,000. 3. Returned by the bank in Dec. and recorded by the company in Jan., P9,200.

f.

Check of Sopi Company amounting to P9,292 was charged to the company account by the bank in error on December 31.

g.

A bank memo stated that the company’s account was credited for the net proceeds of TM’s note for P8,060. This is not yet recorded on the books.

h.

The company has hypothecated its accounts receivable with the bank under an agreement whereby the bank lends the company 80% of the hypothecated accounts receivable. The company performs accounting and collection of the accounts. Adjustments of the loan are made from daily sales reports and deposits.

i.

The bank credits the company account and increases the amount of the loan for 80% of the reported sales. The loan agreement states specifically that the sales report must be accepted by the bank before the company is credited. Sales reports are forwarded by the company to the bank on the first day following the date of sale. The bank allocates each deposit 80% to the payment of the loan, and 20% to the company account. Thus, only 80% of each day’s sales and 20% of each collection deposits are entered on the bank statement. The company accountant records the hypothecation of new accounts receivable (80% of sales) as a debit to Cash and a credit to the bank loan as of the date of sales. One hundred percent of the collection on accounts receivable is recorded as a cash receipt; 80% of the collection is recorded in the cash disbursements books as a payment on the loan. In connection with the hypothecation, the following facts were determined: 

 j.

Included in the undeposited collections is cash from the hypothecation of accounts receivable. Sales were P162,000 on November 30, and P169,000 at December 31, the balance was made up of from collections of P128,440 which was entered on the books in the manner indicated above. Collections on accounts receivable deposited in December, other than deposits in transit, totaled P4,800,000.

Interest on the bank loan for the month of December charged by the bank but not recorded in the books, amounted to P24,560.

QUESTIONS: Based on the above and the result of your audit, answer the following: 1.

2.

How much is the adjusted cash balance as of November 30, 2005? a. P618,304 b. P514,624 c. P488,704 P359,104 How much is the adjusted book receipts for December, 2005? a. P5,427,488 b. P9,370,240 c. P9,505,440

d.

d. P9,350,260

3.

How much is the adjusted book disbursements for December, 2005? a. P9,255,992 b. P9,246,700 c. P9,349,452 d. P5,406,700

4.

How much is the adjusted cash balance as of December 31, 2005? a. P509,492 b. P612,244 c. 602,952 P636,804

5.

How much is the cash shortage as of December 31, 2005? a. P19,980 b. P20,550 c. P97,200

d.

d. P0

SUGGESTED ANSWERS: C, B, B, B, D

PROBLEM NO. 4 The Rupiah Corporation was organized on January 15, 2005 and started operation soon thereafter. The Company cashier who acted also as the bookkeeper had kept the accounting records very haphazardly. The manager suspects him of defalcation and engaged you to audit his account to find out the extent of the fraud, if there is any.

On November 15, when you started the examination of the accounts, you find the cash on hand to be P25,700. From inquiry at the bank, it was ascertained that the balance of the Company’s bank deposit in current account on the same date was P131,640. Verification revealed that the check issued for P9,260 is not yet paid by the bank. The corporation sells at 40% above cost.

Your examination of the available records disclosed the following information: Capital stock issued at par for cash Real state purchased and paid in full Mortgage liability secured by real state Furniture and fixtures (gross) bought on which there is still balance unpaid of P30,000 Outstanding notes due to bank Total amount owed to creditors on open account Total sales Total amount still due from customers Inventory of merchandise on November 15 at cost Expenses paid excluding purchases

P1,600,000 1,000,000 400,000 145,000 160,000 231,420 1,615,040 426,900 469,600 303,780

QUESTIONS: Based on the above and the result of your audit, compute for the following as of November 15, 2005: 1. 2. 3. 4. 5.

A B 1,615,040 2,041,940 1,207,204 922,180 3,273,400 2,625,984 1,007,180 537,580 389,500 859,100

Collections from sales Payments for purchases Total cash disbursements Unadjusted cash balance Cash shortage

SUGGESTED ANSWERS: D, D, C, B, A - End of AP-5907Q –

Charis Marie F. Urgel

BSA – IV

C D 1,153,600 1,188,140 1,854,620 1,391,780 2,810,560 2,340,960 74,740 722,156 574,076 0

“CASH AND CASH EQUIVALENTS” PROBLEM NO. 1 – Composition of cash and cash equivalents The following data pertain to PRTC Corporation at December 31, 2015: Current account at Metrobank P 1,800,000 Current account at Allied Bank (100,000) Payroll account 500,000 Foreign bank account (in equivalent pesos) 800,000 Savings deposit in a closed bank 150,000 Postage stamps 1,000 Employee’s post dated check 4,000 IOU from employees 10,000 Credit memo from a vendor for a purchase return 20,000 Traveler’s check 50,000 Money order 30,000 Petty cash fund (P4, 000 in currency and expense receipts for P6, 000) 10,000 Pension fund 2,000,000 DAIF check of customer 15,000 Customer’s check dated 1/1/16 80,000 Time deposit – 30 days 200,000 Money market placement (due 6/30/16) 500,000 Treasury bills, due 3/31/16 (purchased 12/31/15) 200,000 Treasury bills, due 1/31/16 (purchased 2/1/15) 300,000 REQUIRED: Determine the cash and cash equivalents to be reported on the entity’s December 31, 2015 statement of financial position. SOLUTIONS: Current account at Metrobank 1,800,000 Payroll account 500,000 Foreign bank account (in equivalent pesos) 800,000 Traveler’s check 50,000 Money order 30,000 Petty cash fund 4,000 Time deposit – 30 days 200,000 Treasury bills, due 3/3/16 (purchased12/31/15) 200,000 Cash and cash equivalents – Dec. 31, 2015 3,584,000

PROBLEM NO. 2 – Computation of adjusted cash and cash equivalent You were able to gather the following from the December 31, 2015 trial balance of PRTC Corporation in connection with your audit of the company: Cash on hand Petty cash fund BPI current account Security Bank current account No. 01 Security Bank current account No. 02 PNB saving s account PNB time deposit

P 372,000 10,000 950,000 1,280,000 (40,000) 500,000 300,000

Cash on hand includes the following items: a. Customer’s check for P60,000 returned by bank on December 26, 2015 due to insufficient fund but subsequently redeposited and cleared by the bank on January 8, 2016. b. Customer’s check for P30,000 dated January 2, 2016, received on December 29, 2015. c. Postal money orders received from customers, P36,000. The petty cash fund consisted of the following items as of December 31, 2015. Currency and coins P 2,100 Employees’ vales 1,600 Currency in an envelope marked “collections for charity” with names attached 1,200 Unreplenished petty cash vouchers 800 Check drawn by PRTC Corporation, payable to the petty cashier 4,600 P10,300 Included among the checks drawn by PRTC Corporation against the BPI current account and recorded in December 2015 are the following: a. Check written and dated December 29, 2015 and delivered to payee on January 2, 2016, P50,000. b. Check written on December 27, 2015, dated January 2, 2016, delivered to payee on December 29, 2015, P86,000. 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, 2015. 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. REQUIRED: 1. Compute for the adjusted balances of following: a. Cash on hand b. Petty cash fund c. BPI current account d. Cash and cash equivalent 2. Adjusting entries as of December 31, 2015 SOLUTIONS:

A. Cash on Hand Unadjusted cash on hand Less: Returned customer’s check Customer’s check dated Jan. 2, 2016 Adjusted cash on hand B. Petty cash fund Petty cash fund total Employee’s vales Currency in an envelope marked “collections for charity” Unreplenished petty cash vouchers Adjusted petty cash fund C. BPI current account Unadjusted BPI current account Unreleased check Postdated check delivered Adjusted BPI account 1,086,000 D. Cash and cash equivalents Cash on hand Petty cash fund BPI current account 1,086,000 Security Bank current account PNB Time deposit Adjusted cash and cash equivalents Adjusting Entries a. Accounts Receivable 90,000 Cash on hand 90,000 b. Advances to employees Expenses Cash short/over Petty cash fund

1,600 800 900

c. BPI current account Accounts payable

50,000 50,000

d. Accounts Receivable Cash on hand

372,000 (60,000) (30,000) 282,000

10,300 (1,600) (1,200) ( 800) 6,700

950,000 50,000 86,000

282,000 6,700 1,240,000 300,000 2,914,700

3,300

86,000 86,000

PROBLEM NO. 3 – Cash count and shortage computation In connection with the audit of the financial statements of Rupee Company for the year ended December 31, 2015, 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, 2016. Your count disclosed the following: Bills and coins Bills P100 50

10 pieces 80 pieces

Coins P1.00 0.50

410 pieces 324 pieces

20 10

70 pieces 54 pieces

o.25

64 pieces

Unused postage stamp – P730 Checks Date Dec. 30 Dec. 30 Dec. 31 Dec. 31 Dec. 31 Dec. 31

Payee Cash Rupee Company Rupee Company Rupee Company Rupee Company German Corp.

Drawer Ms. Jessie Robert Jay Ar, Sales Manager Francis Ryan Rupee Company

Expense Vouchers Date Payee Description Dec. 23 Jay Ar, sales manager Cash advance for trip to Baguio City Dec. 27 Central Post Office Postage stamps Dec. 29 Messengers Transportation Dec. 29 PC Express Computer repair

Amount P 2,400 28,000 3,300 35,000 16,600 54,000

Amount P14,000 3,200 300 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. b. The sales manager’s liquidation report for the Baguio trip: Cash advance received on Dec. 23 Less: Hotel accommodation P9,000 Bus fare for two Cash given to Roy, salesman Balance

P14,000 800 600

Accounted for as follows: Cash returned by Roy to the sales manage Personal check of sales manager Total

10,400 P 3,600 P 240 3,360 P 3,600

Additional information: 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, 2015. O.R. No. 352 353 354 355

Amount P27,200 35,600 7,200 16,600

Form of payment Cash Check Cash Check

c. The Petty Cash balance per general ledger is P20,000. The last replenishment of the fund was made on December 22, 2015.

REQUIRED: 1. Determine shortage or overage, if any 2. Adjusting entries as of December 31

SOLUTIONS: Requirement No. 1 Rupee Company CASH COUNT SHEET January 3, 2016 – 8:15 a.m. Bills and coins: Denomination Total 100 50 20 10 1 .50 .25

Quantity

Amount

10 80 70 54 410 324 64

1,000 4,000 1,400 540 410 162 16__

Drawer Ms. Jessie Robert Jay, Ar

Amount P 2,400 28,000 3,360

Ryan

16,600_

P

7,528 Checks:

Dec.31

Date Dec.30 Dec.30 Dec.31 Frances 35,600 Dec.31

P 85,960 Unreimbursed vouchers: Date Dec.27 Dec. 29 Total cash accounted Less: Accountabilities

Dec. 23 Postage 3,240 Dec.29 Repairs 1,600

Account Advances

Amount P 14,000

Transportation 300 19,140 P 112,628

Petty cash Collections (per official receipt) Unclaimed salary Excess travel advance Unreceipted collection from Robert 28,000 P 152,960 CASH SHORTAGE P 40,332 Requirement No. 2 - Adjusting Entries: a. Cash 28,000 Accounts receivable 28,000 b. Advances to officers and employees Postage expense Transportation expense Repairs expense Petty cash fund

14,000 3,240 300 1,600 19,140

20,000 86.600 15,000 3,360

c. Unused postage Postage expense d. Cash

730 730 54,000

Accounts payable e. Cash

54,000 15,000

Salaries payable f. Receivable from custodian Cash 40,332

15,000 40,332

g. Travel expenses 10,160 Petty cash fund 3,360 Advances to officers and employees

13,520

PROBLEM NO. 4 – Bank Reconciliation The Cash in Bank account of Dollar Company disclosed a balance of P203,000 a...