Practice Set - Audit of Cash and Cash Equivalents

PRACTICE SET: AUDIT OF CASH AND CASH EQUIVALENTS
1. Graz Company provided the following information on December 31, 2021
Cash on hand 200,000

Philippine Bank current account 5,000,000
Manila Bank current account No. 1 4,000,000
Manila Bank current account No. 2 (bank overdraft) (500,000)
BDO saving account set aside for bond payable due 3,000,000
December 31, 2023
Asia Bank saving account for equipment acquisition 250,000
Asia Bank time deposit, 90 days 2,000,000
Treasury bills 1,000,000
Included among the checks drawn by the entity against the Philippine Bank current account and
recorded in December 2021 are:
• Check written and dated December 23, 2021 and delivered to payee on January 3, 2022, P100,000
• Check written December 23, 2021, dated January 30, 2022 delivered to payee on December 28,
2021, P150,000
What total amount should be reported as cash and cash equivalents on December 31, 2021?
2. Saint Pollen Company had the following account balances on December 31, 2021:
Petty cash fund 50,000

Cash on hand 500,000
Cash in bank – current account 4,000,000
Cash in bank – payroll account 1,200,000
Cash in bank – sinking fund 2,000,000
Cash in bank – restricted account for plant 1,500,000
addition and expected to be disbursed in 2022
Treasury bills 1,000,000
• The petty cash fund included unreplenished December 2021 petty cash expense vouchers P5,000
and employee IOU P5,000
• The cash on hand included a P100,000 customer check payable to Campbell dated January 15,
2022
• In exchange for a guaranteed line of credit, the entity has agreed to maintain a minimum
balance of P200,000 in the unrestricted current bank account.
• The bond sinking fund is set aside to settle bonds payable due on December 31, 2022.
What total amount should be reported as cash and cash equivalents on December 31, 2021?
3. Vienna Company reported the checkbook balance on December 31, 2021 at P5,000,000 and held the
following items on same date:
a. Check payable to Vienna, dated January 2, 2022 in payment of 2,000,000

a sale made in December 2021, not included in December 31
checkbook balance
b. Check payable to Vienna, deposited December 15 and included 500,000
in December 31 checkbook balance, but returned by bank on
December 30 stamped “NSF”. The check was redeposited on
January 2, 2022 and cleared on January 9, 2022
c. Check drawn on Vienna’s account, payable to a vendor, dated 300,000
and recorded in Vienna’s books on December 31, 2021 but not
mailed until January 10, 2022
d. Certificate of time deposit 1,000,000
What amount should be reported as cash on December 31, 2021?
4. In reconciling the cash balance on December 31 with that shown in the bank statement, Austria
Company provided the following information:
Balance per bank statement 4,000,000

Balance per book 2,700,000
Outstanding checks 600,000
Deposit in transit 475,000
Service charge 10,000
Proceeds of bank loan, December 1, discounted for 6 months at 940,000
12%, not recorded on Austria Company’s books
Customer check charged back by bank for absence of counter 50,000
signature
Deposit of P100,000 incorrectly recorded by bank as check of 10,000
Austin Company charged by bank against Austria Company
Check of Austin Company charged by bank against Austria 150,000
Company
Customer note collected by bank in favor of Austria Company 435,000
Face 400,000
Interest 40,000
Total 440,000
Collection Fee 5,000
Erroneous debit memo of December 28, to charge Austria account 200,000
with settlement of bank loan
Deposit of Austin Company credited to Austria account 300,000
What amount should be reported as adjusted cash in bank on December 31?
5. Salzburg Company received the bank statement for the month of March. However, the closing
balance of the account was unreadable.
Attempts to contact the bank after hours did not secure the desired information.
February 28 book balance 1,460,000

Note collected by bank 100,000
Interest earned on note 10,000
NSF check of customer 130,000
Bank service charge on NSF check 2,000
Other bank service charges 3,000
Outstanding checks 200,000
Deposit of February 28 placed in night depository 85,000
Check issued by Salisbury Company charged to Salzburg’s account 20,000
What is the cash balance per bank statement?

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PRACTICE SET: AUDIT OF CASH AND CASH EQUIVALENTS

1. Graz Company provided the following information on December 31, 2021

Cash on hand 200,000

Petty cash fund 50,000

a. Check payable to Vienna, dated January 2, 2022 in payment of 2,000,000

What amount should be reported as cash on December 31, 2021?

Balance per bank statement 4,000,000

What amount should be reported as adjusted cash in bank on December 31?

February 28 book balance 1,460,000

What is the cash balance per bank statement?

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