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    'ACT1204 Audit of Cash and Cash Equivalents Quiz No. 4

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    The document contains 3 problems related to auditing cash and cash equivalents. Problem 1 involves counting cash on hand and reconciling various cash items. Problem 2 requires preparing a bank reconciliation statement and computing deposit and check amounts. Problem 3 deals with a company that had poor cash controls, and the auditor must determine the cash shortage amount based on bank and book balances.

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    'ACT1204 Audit of Cash and Cash Equivalents Quiz No. 4

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    The document contains 3 problems related to auditing cash and cash equivalents. Problem 1 involves counting cash on hand and reconciling various cash items. Problem 2 requires preparing a bank reconciliation statement and computing deposit and check amounts. Problem 3 deals with a company that had poor cash controls, and the auditor must determine the cash shortage amount based on bank and book balances.

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    Act1204-Quiz No. 4

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    The document contains 3 problems related to auditing cash and cash equivalents. Problem 1 involves counting cash on hand and reconciling various cash items. Problem 2 requires preparing a bank reconciliation statement and computing deposit and check amounts. Problem 3 deals with a company that had poor cash controls, and the auditor must determine the cash shortage amount based on bank and book balances.

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    320 views4 pages

    'ACT1204 Audit of Cash and Cash Equivalents Quiz No. 4

    Uploaded by

    mark
    The document contains 3 problems related to auditing cash and cash equivalents. Problem 1 involves counting cash on hand and reconciling various cash items. Problem 2 requires preparing a bank reconciliation statement and computing deposit and check amounts. Problem 3 deals with a company that had poor cash controls, and the auditor must determine the cash shortage amount based on bank and book balances.

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    of 4

    `ACT1204

    AUDIT OF CASH AND CASH EQUIVALENTS


    QUIZ NO. 4

    Problem 1

    Mama Lance is the cashier of the MPC Corporation. As representative of AGA and
    Associates, CPA’s, you were assigned to verify her cash on hand in the morning of January
    3, 2021. You began to count at 8:00AM in the presence of Mama Lance. In the course of
    your counting you found currencies in paper bills and coins together with checks, vouchers
    and other items, which are mentioned below:

    Bills and coins Php 6,634.50


    Checks
    Maker Date Payee Amount
    Jose Cruz, Asst. Manager 12/23/20 Bulacan Glass Co. Php 1,200.00
    Mari G., Cashier 12/26/20 Bulacan Glass Co. 800.00
    IOU’s
    Name of Employee Date Amount
    K Constantino, Janitor 12/20/20 Php 700.00
    J Cristobal, clerk 12/22/20 500.00
    C Liclican, bookkeeper 12/24/20 300.00
    Petty Cash Vouchers for Replenishment
    Payee Date Account Charged Amount
    S Arevalo, Messenger 12/16/20 Advances to employees Php 200.00
    AEG & Co. 12/17/20 Supplies 290.00
    Abdo Liner 12/18/20 Freight-in 165.00
    Bureau of Posts (stamps) 12/18/20 Supplies 600.00
    G. Iballo, Carpenter 12/20/20 Repairs 900.00
    U. Ratuita 12/21/20 Miscellaneous expense 308.00

    Your investigation also disclosed the following:

    a. The balance of petty cash fund per books is Php18,000.


    b. Cash sales of January 2, 2021 amounted to Php17,300 per sales records, while
    Cash Receipts Book and Deposit Slip showed that only Php15,300 was deposited in
    the bank on January 3, 2021.
    c. The following employees’ pay envelopes had been opened and the money removed.
    Each envelope was marked “unclaimed”.
    M. Amaro Php 665.00
    M. Diot 495.00

    Required:
    1. Compute the following: (7.5 pts)
    a. Total Amount per count
    b. Total cashier’s accountability
    c. Difference between Total Amount per count and Total cashier’s
    Accountability, if any. Indicate whether the difference is shortage or overage.
    2. Adjusting Journal Entry (10 pts.)
    a. Unreplinished disbursement as of December 31, 2020.
    b. IOU’s and Advances to officers and employees
    c. Unclaimed wages
    d. Shortage or overage ( if shortage- charge to Cashier, if overage- charge to
    Miscellaneous income)

    Problem 2
    On your examination of the financial statements of Van Angelo Reyes Group Company for
    The year ended December 31, 2020 you obtained the following information on the checking
    account of the company:
     The bank statement on November 30, 2020 showed a balance of Php1,530,000. Among
    the bank credits in November was customer’s note for Php500,000 collected for the
    account of the company which the company recognized in December among its
    receipts. Included in the bank debits were cost of checkbooks amounting to Php600,
    Php5,400 returned check due to DAUD and Php200,00 check was charged by the bank
    in error against Van Angelo Reyes Group Co. account. Also in November , you
    ascertained that there were deposits in transit amounting to Php400,000 and
    outstanding checks totaling Php850,000.
     The bank statement for the month of December showed a total credits of Php2,080,000
    and total charges of Php1,020,000. Company books for December showed total receipts
    of Php3,678,000 and disbursements of Phpp2,036,000. Bank debit memos for
    December were: No. 418 for service charges, Php800 and No. 504 on a customer’s
    returned check marked “Refer to Drawer” for Php127,200
     The bank error of Php200,000 in November was corrected by the bank in December.
     On December 29, 2020 the company placed with the bank a customer’s promissory note
    with a face value of Php600,000 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 2021.
     AS check for Php19,800 was recorded in the company cash payment book in December
    as Php198,000.
    Required:
    1. Prepare a four (4) column bank reconciliation statement for the month of December,
    2020 for Van Angelo Reyes Group Company. Use Adjusted balance method. (20pts)
    Nov 30 December Dec 31
    Receipts Disbursements
    Balance per bank

    Adjusted Bank Balance

    Balance per book

    Adjusted Book Balance


    2. Present computations of
    a. Deposit in transit, December 31, 2020 (5 pts.)
    b. Outstanding checks, December 31, 2020 (5 pts)

    Problem 3

    Paui Company had poor internal control over its cash transactions. Data pertaining to its
    cash position at October 31, 2020 were as follows:
    a. The cash book showed a balance of Php656,848.88, which included undeposited
    receipts. A credit of Php8,000 n the bank records for a deposit made did not appear
    on the books of the company.
    b. The bank statement had a balance of Php5,796,600. The outstanding checks were
    as follows:
    No. 0210667 Php 4,728.00
    0210671 5,200.00
    0210693 10,130.00
    0210734 7,628.40
    0210737 16,272.00
    0210749 6,611.60

    The cashier misappropriated all undeposited receipts in excess of Php107,700.80 and


    prepared the following reconciliations:

    Balance per books, October 31, 2020 Php 656,848.80


    Outstanding checks
    No. 0210734 Php 7,628.40
    0210737 16,272.00
    0210749 6,611.60
    --------------------- ( 30,512.00)
    -------------------------
    Php 687,360.80
    Undeposited receipts ( 107,700.80)
    -------------------------
    Balance per bank, October 31, 2020 Php 579,660.00
    Unrecorded credit ( 8,000.00)
    ------------------------
    Correct cash balance, October 31, 2020 Php 571,660.00
    ==============

    1. How much did the cashier misappropriate (cash shortage)? (5 pts)

    2. Breakdown of Shortage (5 pts.)

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