CPA REVIEW SCHOOL OF THE PHILIPPINES AP-7708 Manila AUDITING PROBLEMS CPA Review AUDIT OF CASH PROBLEM NO.1 In connection with an audit, you are given the following bank reconciliation, BANK RECONCILIATION December 31, 2015 Balance per ledger, December 31, 2015, 103,050 Add: Collections received on the last day of December and charged to "Cash in Bank” an books but not deposited 15,975 Debit memo for customer’s check returned unpaid (check is on hand but no entry has been made on the books) 12,000 Debit memo for bank service charge for December —3,000 P 140,025 Deduct: Outstanding checks (see detailed tist below) P55,875 Credit memo for proceeds of a note receivable which had been left at the bank for collection but which has not been recorded as collected 24,800 (Check for an account payable entered on books as P38,675 but drawn and paid by bank as P48,675 10,000 96,675 Computed balance P43,350 Unlocated difference —LLLa00 Balance per bank (checked to confirmation) P1s4.750 UST OF ANDIN( 1, 201 Check No. Amount 14344 P17,460 14358 3,885 14367 10,629 14399 6,003 14401 14,676 14407 15,222 ‘PS5,875 1. What is the correct amount of outstanding checks on December 31? A, P55,875 4B. P67,875 C. P52,875 D. P64,875 2. The correct amount of “unlocated difference” is A. P99,400 8. P108,400 . P111,400 D. PO 3. The Cash in bank to be shown on the company’s December 31, 2015 statement of financial position is A. P105,850 B. P113,650 C. P102,850 D. p114,85¢ Page 1 of 6 Pages(CP AR -MANILA AP7708 = AUDIT OF CASH PROBLEM NO. 2 From the following information, prepare the following: |. A four-column reconciliation that would end at adjusted batances, 2. Adjusting journal entries as of December 31, 2014, Reconciling items: November 30 December 31 Deposits in transit 40,400 ? ‘Outstanding checks 16,014 2 NSF checks 1,052 P1,400 Customers’ notes collected by bank 3,000 8,554 Bank service charges 100 130 Erroneous bank debits 1,200 1,800 Erroneous bank credits 2,000 6,000 Book balances 2 332,472 Bank balances 261,120 2 December transactions: Books Bank Receipts 302,460 299,902 Disbursements 222,846 220,196 PROBLEM NO. 3 The following information was obtained in connection with the audit of SOLEDAD COMPANY'S cash account as of December 31, 2015. Outstanding checks, 11/30/15 48,750 Outstanding checks, 12/31/15 37,500 Deposit in transit, 11/30/15. 37,500 Cash balance per general ledger 12/31/15 412,500 Actual company collections from its customers during December 457,500 ‘Company checks paid by bank in December 390,000 Bank service charges recorded on company books in December 7,500 Bank service charges per December bank statement. 9,750 Deposits credited by bank during December 435,000 November bank service charges recorded on company books in December 4,500 ‘The cash receipts book of December is underfooted by P7,500. ‘The bank erroneously charged the company’s account for a P11,250 check of another depositor. This bank error was corrected in January 2016. 1. How much is the depostt in transit on December 31, 2015? - A. P15,000 B. P67,500 C. PS2,500 _D._P60,000 2. The total unrecorded bank service charges as of December 31, 2015 is _ Ad P6,750 B. P2,250 C. P5,250 D, P12,750 3. What is the totel book receipts in December? A. P457,500 B. P465,000 (CP 450,000 D. P442,500 4. What is the total amount of company checks issued in December? A. P390,000 (B. , P378,750 C. P369,000 D. P401,250SPAR - MANILA, APT 708 — AUDIT OF CASH 5. What is the total book disbursements in December? A. 386,250 B. P371,250 C. P385,500 D. P378,750 6. What is the book balance on November 30, 20157 A. P63,750 B,/PAB,750 C. P112,500 D. Pt05,000 7. What Is the bank balance on November 30, 2015? A. “P55,500 B. 69,000 C. P130,500 D. P48,750 8. What is the total bank receipts in December? ‘A. P360,000 B. P420,000 C._ P435,000 D. 450,000 9. What is the total bank disbursements in December? ‘A 411,000 B. PA63,500 C. P397,500 D, P388,500 10. What is the bank balance on December 31, 2015? A. 64,500 B. P93,000 C. P99,750 -D.°P79,500 PROBLEM NO. 4 ‘The auditor for RAKI-RAKI, INC. examined the petty cash fund immediately after the close of business, June 30, 2015, the end of the company’s fiscal year. ‘The following fund composition was arrived at: Currency P1272 Fund vouchers: Office supplies expense 388 Travel expense 240 Office equipment repairs 170 Loans to officers and employees 400 A check drawn by Raki-Raki, Inc., payable to the order of Jingle, fund custodian 1,100 An employee's check, returned by bank, stamped NSF 230 ‘A Sheet of paper bearing the signatures of several employees, together with their contributions (total P200) for a gift for a departing employee. Attached to the paper is currency of —200 ‘The petty cash fund general ledger account has an imprest balance of P4,000. REQUIRED: ee ans Sige S 1. What audit adjustment should be prepared as of June 30, 2015? Rae sR? 2. At what amount should the cash fund be shown in the balance sheet as of June 30, 2015? aa 7 “PROBLEM NO. 5 You have been asked by the proprietor of the SANDOVAL CO. to verify the accountability of the cashier-bookkeeper, who was allowed to take a vecation leave a few days ago. A. The bank reconciliation statements prepared by the cashier-bookkeeper are presented below: November 30, 2015 Balance per bank statement 21,500 Cash on hand =, 500 Total 22,000 Outstanding checks: No. 2520 P 2,000 2521 4,400 2522 1,900 (3,300)APTIO8 — AUDIT OF CASH CPAR = MANILA Erroneous bank charge 2,000 Erroneous bank credit (500) Book balance P20,200 December 31, 2015 Balance per bank statement P 135,000 Cash on hand 6,300 Total 141,300 ‘Outstanding checks: No. 2674 31,000 2675 10,300 2676 5000 (41,300) * Erroneous bank charge 3,000 Erroneous bank credit (600) Book balance 102.490 B. The Cash in Bank account in the general ledger shows the following debits and credits during December: Cash in Bank Balance 20,200 | 1 Checks issued P2,000 Received from customers 4,500 | 5 Checks issued 5,200 Received from customers 5,000 | 14 Checks issued 31,000 12 Received from customers 20,000 | 24 Checks issued 46,000 17 Recelved from customers 30,000 | 28 Checks issued 7,600 23. Received from customers _ 9,000 27 Received from customers 70,000 31 Received from customers_48,500 | 31 Balance — _ 102,400 Total P198.200 Totat PL28.200 C. The following summarized transactions were taken from the bank statement for the month of December 2015: Dec, Dec. 1 2 7 Balance, December 1, 2015 16,500 Total deposits 173,700 The total deposits per bank statement Include: a. Collection of notes receivable 5,000 b. Correction of November erroneous bank charge 2,000 c. December 10 deposit of Lava, Inc. credited in error ‘to SANDOVAL 600 Total 22600, Total checks 65,200 The total checks per bank statement include: ‘2. Correction of November erroneous bank credit P S00 b. December check of Nile Co. charged in error to SANDOVAL 3.000 Total 3,500 D, Cash on hand per count in the morning of January 2, 2013 amounted to P6,300. E, Before leaving his company for a one-week vacation, the proprietor had left several signed blank checks that the cashier-bookkeeper had cashed for his personal use. 1. What Is the adjusted cash balance on November 30, 2015? A. P16,500 (.B.; P13,200 C, 20,200 D, P14,500CPAR - MANILA, 2. The amount of unaccounted receipts in December is 5 A. 11,000 B. P13,200 C. P9,000 D. P15,100 3. The amount of unrecorded/unsupported disbursements in December is A. P15,100 _B.' P10,900 c. P7,000 D, P5,000 4. What is the total cash shortage as of December 31, 2015? ‘A. 26,000 B. P15,100 C. -P33,000 D. P7,000 5. What is the adjusted cash balance on December 31, 2015? _ A. P102,400 B. P125,000 cc. P87,400 D. Pi11,400 PROBLEM NO. 6 FE COMPANY, organized on March 1, 2015, 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 your surprise count was P5,140. Also on that date, the bank confirmed that the balance of the 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 is 40% of sales. Further examination of the company’s records reveals the following balances at November 15, 2015: Ordinary share capital 300,000 Share premium 20,000 Real property purchased for cash 200,000 Mortgage payable 80,000 Fumiture and fixtures (of the acquisition cost, P6,000 remains unpald as of Nov. 15) 29,000 Notes payable ~ bank 32,000 Accounts payable ~ trade 46,284 Expenses paid (excluding purchases) 60,755 Merchandise Inventory at cost 93,920 Accounts receivable — trade 85,380 Total sales 340,000 1. How much was pald for inventory purchases? A. P157,716 B. P293,716 C. 183,636 _D, P251,636 2. How much was collected from customers? ; A, P118,620 B. /P254,620 C. P50,620 D. P340,000 3. How much is the cashier’s accountability at November 35, 2015? A. P131,228 B. P83,228 C, P145,228 D. P151,228 4. What is the adjusted bank balance as of November 15, 20157 A P31,468 B. P26,328 C. jP29,616 D. P23,040 5. ‘The cash shortage as of November 15, 2015 totaled A. P121,612 B. P10i,612 C P127,612 D. P206,992CPAR - MANILA 2P7708-- AUDIT OF CASH PROBLEM NO. 7 | You were engaged to audit the books of DINAR COMPANY. From the records of the company, | you gathered the folfowing information: Dinar Company started operations on October 2, 2015, with the owners investing P150,000 cash. Monthly bank reconailiation statements have not been prepared; however, bank statements for October, November, and December were made available to you. Your analysis of these bank statements showed total bank credits (deposits) of P575,000, including the owners’ initial investment and a bank loan, details of which are in the additional data. The bank statement in December 2015, showed an ending balance of P30,200. Exemination of the paid checks disclosed that checks totaling P4,500 were issued by the company in December 2015, and were presented for payment only in January 2016. Cash count of the cashier's accountability arnounted to P6,300. You were told by the cashier that 95,000 of this, in checks, were cash sales on December 29, 2015, deposited on January 3, 2016. The balance, in currency and coins, represents petty cash fund. Additional data: 1 Be s receivable subsidiary ledgers had a total balance of P70,000 at December 31, 2015. 5,000 of this was ascertained to be uncoilectible. 2. Suppliers’ unpaid invoices for merchandise totaled P15,000; while an account for store fixtures ‘bought for P50,000 had an unpaid balance of 5,000. 3, Merchandise inventory at December 31, 2015, amounted to P30,000 but PE'OG0 of this was spolled with no resale value. 4, The bank statement in October showed a bank credit for P98,000, dated October 2, 2015. Inquiry from the cashier disclosed that the amount represents proceeds of a 90-day, discounted bank note. P80,000 of this loan was patd by check in December 2015. 5, Operating expenses paid during the period totaled P180,000; while merchandise purchases amounted to P250,000. 6. The gross profit rate is 120% of cost. REQUIRED: Determine the cash shortage at December 31, 2015. ACK.»