AUDIT OF CASH

Problem#1

Eddie Co. was organized on January 2, 2023. The following items are from the company’s
trial balance on December 31,2023.

• Ordinary Share Capital P1,500,000

• Share Premium 150,000
• Merchandise Inventory 69,000
• Land 1,000,000
• Building 1,400,000
• Furniture & Fixtures 367,000
• Accounts Receivable 165,400
• Accounts Payable 389,650
• Notes Payable- bank 500,000
• Sales 6,235,200
• Operating Expense (including Depreciation of 400,000) 1,005,150

Additional Information as follows:

1. Deposit in Transit, December 31 384,660

2. Service Charge for December 2,000
3. Outstanding Checks, December 31 475,000
4. Bank Balance, December 31 892,000
5. Eddie Co.’s mark up on sales is 30%

REQUIREMENTS:

1. What is the total collection from sales?

2. What is the total payment for merchandise purchased?
3. What is the total cash receipts per book?
4. What s the total disbursements per book?
5. What is the cash balance per books on December 31?
6. What is the adjusted cash balance on December 31?
Problem#2

Your Audit of the cash account of Jun Corp, disclosed the following information:

• Cash in Bank Balance per books, Dec 31, 2023 P35,000

• Bank statement balance, Dec 31,2023 60,000
• Note collected by Bank in December
Principal plus interest of P800, less collection fee of P200) 27,600
• Debit memo for checkbook ?
• Deposit in transit, Dec 31,2023 15,200
• Transposition error made by bank in recording deposit of
December 28:
Correct amount P45,000
Recorded as 54,000 9,000
• Erroneous bank debit 26,700
• Included in the cash in bank account is petty cash fund
of P10,000. Your count on December 31, 2023 revealed the
following items:
Currency and coins 3,000
Supplies 2,400
Transportation 100
IOUs 4,000 9,500
• Erroneous bank credit 11,000
• Outstanding checks (including a certified check of P10,000) 39,400

REQUIREMENTS

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 31,2023?
3. The cost of checkbook
4. What is the amount of petty cash shortage at December 31, 2023?
5. What is the adjusted petty cash balance?
PROBLEM#3

Ferry Company checks register shows the following entries for the month of December:

DATE DESCRIPTION CHECKS DEPOSITS BALANCE

12/01/2023 Beginning Balance 89,300
12/05/2023 Deposit 65,000 154,300
12/07/2023 Check#14344 32,500 120,800
12/11/2023 Check#14345 14,000 106,800
12/26/2023 Deposit 49,000 155,800
12/29/2023 Check#14346 8,600 147,200

Ferry’s bank reconciliation for November revealed one outstanding check (No.14343) for
P12,000 (written on November 28), and one deposit in transit for P5,500( made on
November 29)

The following is from Ferry bank statement for December 2023

DATE DESCRIPTION CHECKS DEPOSITS BALANCE

12/01/2023 Beginning Balance 95,750
12/01/2023 Deposit 5,500 101,300
12/04/2023 Check#14344 32,500 68,800
12/05/2023 Deposit 56,000 124,800
12/14/2023 Check#14345 14,000 110,800
12/25/2023 Loan proceeds 500,000 610,800
12/20/2023 NSF Check 7,600 603,200
12/29/2023 Service Charge 1000 602,200
12/31/2023 Interest 3600 605,800

Assume that all errors were committed by Ferry Company, not the bank.

REQUIREMENTS:

1. Adjusted cash balance on November 30

2. Outstanding checks on December 31
3. Deposit in Transit on December 31
4. Total bank receipts in December
5. Adjusted cash balance on December 31
PROBLEM#4

In auditing Herman Co., you obtained the bank statement, canceled checks and other
memoranda which relates to the company bank account for December 2023. In reconciling
the bank balance with that shown on the company’s books, you observed the facts set
forth below:

• Balance per bank statement, 12/31/23 P47,174

• Balance per books,12/31/23 19,289
• Outstanding checks, 12/31/23 63,000
• Receipts of 12/31/23, deposited 1/2/24 6,260
• Service charge for November, per bank memo of 12/15/23 1,000
• Proceeds of bank loan,12/15/23, discounted for 3 mos at
18% per annum, omitted from company books 47,750
• Deposit of 12/22/23, omitted from bank statement 9,170
• Check of Milano Company, returned on 12/21/23, for
Absence of counter- signature and redeposited with complete
Signature on 1/3/24, no entry on the books having been made for
The return or redeposit 77,320
• Error on bank statement in entering deposit of 12/18/23
Correct amount P1,600
Entered in the statement 160 1,440
• Check No. 021261 of Yek Co. charged by bank in error to
Company’s account 13,600
• Proceeds of note of Harthur Co. collected by bank, 12/01/23
Not entered in cash book (principal amount of P25,000 plus
Interest P1,125 less collection fee) 25,625
• Erroneous debit memo of 12/18/23 to charge company’s
account with settlement of bank loan which was paid by
check no. 112170 on same date 5000
• Error on bank statement in entering deposit 12/4/23
Entered as 14,200.62
Correct amount 12,400.62 1,800
• Deposit of Bunso Co. of 12/02/23 credited in error to this
Company 3,500
REQUIREMENTS

1. What is the principal amount of loan obtained from bank in December?

2. What amount of prepaid interest should be shown on Herman Co. December
31,2023 statement of financial position?
3. The amount of collection fee is
4. What is the adjusted cash in bank balance as of December 31, 2023?
5. The cash in bank per ledger as of December 31, 2023 should increased/ (decreased)
by
PROBLEM#5

The following information was obtained in connection with the audit of Pink Co. cash
account as of December 31,2023

• Outstanding checks 11/30/23 P16,250

• Outstanding checks 12/31/23 12,500
• Deposit in Transit 11/30/23 12,500
• Cash balance per ledger 12/31/23 37,500
• Actual company collections from its customers
During December 152,500
• Company checks paid by bank in December 130,000
• Bank service charges per December bank statement 3,250
• Bank service charges recorded on company books in
December 2,500
• Deposit credited by bank during December 145,000
• November bank service charge recorded on company
Books in December 1,500

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

The bank erroneously charged the company’s account for a P3,750 check of another
depositor. This bank error was corrected in January 2024

REQUIREMENTS:

1. How much is the deposit in transit on December 31,2023?

2. The total unrecorded bank service charge as of December 31,2023?
3. What is the total book receipts in December?
4. What is the total amount of company checks issued in December?
5. What is the total book disbursements in December?
6. What is the book balance in November 30,2023?
7. What is the bank balance in November 30,2023?
8. What is the total bank receipts in December?
9. What is the total bank disbursements in December?
10. What is the bank balance in December 31,2023?
PROBLEM#6

Fel Company, organized on March 1,2023 has a very poor internal control system. The
company’s cashier is also its accountant. After 9 months of operations, the company’s
manager suspects that the cashier accountant has been misappropriating company
collections. You have been engaged to audit the company’s accounts to determine the
extent of fraud, if any.

You started the audit on November 15. On that date, the cash on hand per surprise cash
count was P5,140. Also on that date, the bank confirmed that the balance of company’s
current account was P26,328. Your examination of the records reveals that a check for
P1,852 was outstanding on November 15. The company’s markup on sale was 40%.

Furthermore examination of the company’s records reveals the following balances at

November 15,2023

• Ordinary share capital P300,000

• Share Premium 20,000
• Real Property purchased for cash 200,000
• Mortgage payable 80,000
• Furniture & Fixtures (of the acquisition cost, P6000
Remains unpaid as of Nov 15) 29,000
• Notes payable- bank 32,000
• Accounts payable-trade 46,284
• Expenses paid (excluding purchases) 60,756
• Merchandise Inventory at cost 93,920
• Accounts receivable-trade 85,380
• Total Sales 340,000

REQUIREMENTS

1. How much was paid for inventory purchased?

2. How much was collected from customers?
3. How much is the cashier’s accountability at November 15,2023?
4. What is the adjusted bank balance as of November 15,2023?
5. The cash shortage as of November 15,2023 totaled