Exercise 1

AUDIT OF CASH

Instruction: Read and understand the problem carefully and answer the following requirements

below and show your solution.

You are auditing the cash of THE 1 Corp. for the fiscal year ended September 30, 2016.

The bank reconciliation prepared by the accountant of THE 1 Corp for the months of August is presented below:

Bank balance, per bank statement 156,000

Add: Deposit in transit, August 31 2,700

Total 158,700

Less: Outstanding checks:

No. 547 P 600

561 5,400

562 4,200

565 1,800 12,000

Adjusted balance 146,700

Book balance, per general ledger 120,000

Add: Proceeds of note receivable collected by bank in August

24,000

Deposit made in bank on August 31 not recorded on books until September

3,000

Total 147,000

Less: Bank service charge 300

Adjusted balance 146,700

There was no available bank reconciliation for the month of September, instead, the accountant provided you a copy
of the September bank statement to aid you in your audit.

The September bank statement included the following bank debits and credits:
Particulars Debits Credits

Date:

August 31 Check No. 561 5,400 2,700

September 1 Check No. 562 4,200

September 9 Check No. 565 1,800 30,000

September 12 Debit Memo 420 420

September 15 Check No. 566 3,000

September 17 600

September 20 Check No. 567 2,100 42,000

September 27 Check No. 569 4,320

September 29 Errors Corrected 300 Error Corrected 300

September 30 Service Charge 1,320

September 30 Debit Memo 900

September 30 Check No. 570 5,460

Further investigation revealed the following information:

a. All books reconciling items during August has been recorded in September
b. The check register revealed that the last check issued in September was no. 571 for P3,000 and that check no.
568 was P7,200.
c. Cash received for the period September 25 through 30 of P28,200 was deposited in the bank on October 1.
d. The debit memo on September 12 and September 30 were customer NSF checks returned by the bank. The check
on September 12 was immediately redeposited without entry. The check returned on September 30 was
redeposited by the client in the bank on October 1 also without entry.
e. Among the bank credits for the month was P600 deposit of THE 2 Corp. credited by the bank to the company’s
account.

Required:
 A B C D

1. How much is the unadjusted bank balance as of September 30, 202,800 192,900 109,200 101,000
2016?

2. How much is the total book receipts for September? 129,900 127,200 106,620 75,420

3. How much is the total disbursements for September? 29,220 26,280 25,380 25,080

4. How much is the unadjusted book balance as of September 30, 224,920 224,620 222,820 221,820
2016?

5. How much is the adjusted cash balance as of September? 221,820 220,200 219,600 219,000