UNIVERSITY OF SANTO TOMAS

AMV-COLLEGE OF ACCOUNTANCY
CA51112- Auditing and Assurance: Concepts and Applications I
REVIEW OF CASH AND CASH EQUIVALENT ITEMS

PROBLEM 1: Charm Company showed the following cash items as of December 31, 2019:

Petty cash fund (P 3,500 is expense receipts; P 1,500 is

IOU notes; & P 500 is check dated 12/30/19 from employee) P 10,000
Cash in Security Bank per bank statement (unadjusted)(outstanding
Checks, P 25,000; deposit in transit, P10,000) 45,000
Postdated customers check of P 1,500; Travelers’ check of P 2,500;
Postal money order of P 3,000 7,000
Cash in BPI per book ( unadjusted ) ( credit memo for note collected
of P 15,000; debit memo for bank service charge of P 1000 ) 32,000
Sinking fund cash 120,000
Cash surrender value of life insurance 20,000
Cash in PNB (including unrestricted compensating balances of
P 100,000) 500,000
Treasury bills, with 90 days original maturity 50,000

Compute the following:

1. Correct petty cash fund balance on December 31, 2019.
2. Total correct cash in bank
3. Correct Cash and Cash Equivalents on December 31, 2019

PROBLEM 2: Data for AMV Co. are as follows:

Cash on Hand from undeposited sales receipts 10,000

Sinking Fund Cash 45,000
Cash in Bank 85,000
NSF check 10,000
Bank draft in a checking account with Allied Bank 70,000
Funds appropriated for building expansion 900,000

Securities: Date Acquired Maturity Date Amount

BSP T. Bills 12/1/18 03/01/19 30,000
MM Funds 1/01/18 1/31/19 80,000

4. How much is the amount of Cash and Cash Equivalents to be presented in

the balance sheet on December 31, 2018?

PROBLEM 3: Magneto Company reported a Cash and Cash Equivalent balance of

P2,375,000 on December 31, 2019 which consisted of the following:

Petty cash fund ( of which P 780 is unreplenished vouchers for

expenses; P150 is IOU notes and remaining currencies and coins
amounting to P3,800) 5,000

Cash in bank, general account A, net of P 25,000 bank overdraft in 625,000

the general payroll account in a different bank

Cash on hand including customers’ postdated checks of P 6,500 25,000

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 Cash in Bank, Administrators payroll account, after checks 750,000
amounting to P125,000 dated Dec. 31, 2019 but unreleased as of
Dec. 31, 2019

Savings deposit, earmarked for the acquisition of building which 600,000

are expected to be disbursed within 6 months from reporting date

Money market instrument purchased on December 25, 2018 100,000

maturing on March 25, 2019

Cash in bank, General account B, including restricted 270,000

compensating balances of P 200,000

5. How much is the correct amount of Cash and Cash Equivalents to be shown
in the Statement of Financial Position at December 31, 2019?
6. How much is the net adjustment to Cash and Cash Equivalents?

PROBLEM 4: You were able to gather the following from the December 31, 2019 trial
balance of SCI INC. in connection with your audit of the company:

Petty cash fund 50,000

Cash on hand 1,500,000

Cash in bank – Metrobank current 4,000,000

Cash in bank – BDO savings 3,160,000

Cash in bank – Coco bank savings 4,500,000

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 BSP Treasury bills 2,000,000

 The petty cash fund consisted of the following items as of December 31, 2019:

Currency and coins P9,000

Unreplenished PCV representing expenses for 40,000

December

 Cash on hand represents undeposited collections as of December 31, 2019 and

includes the following items:
a. Customer’s check for P160,000 returned by bank on December 26, 2019 due to
insufficient fund but subsequently redeposited and cleared by the bank on January 3,
2020.
b. Customer’s check for P80,000 dated January 2, 2020, received on December 29,
2019.
c. A customer check for P90,000 dated June 1, 2019 received on the same date and yet
undeposited as of December 31, 2019.
d. Postal money orders received, P100,000.

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  Included among the checks drawn by SCI against the Metrobank current account and
recorded in December 2019 are the following:
a. Check written on December 29, 2016 dated January 2, 2020, delivered to payee on
December 29, 2019, P160,000.
b. Check written and dated December 29, 2019 and delivered to payee on January 2,
2020, P200,000.

 The savings account deposit in Coco Bank has been set by the board of directors for
acquisition of new computers. This account is expected to be disbursed in the next 3
months from the balance sheet date.

 The BSP treasury bills were purchased on November 1, 2019 and shall mature on
November 1, 2020.

Based on the information above, determine the correct amount of the following:

7. Petty cash fund

8. Cash on hand
9. Cash in bank – Metrobank current
10. Cash and Cash equivalents to be reported in the 2019 statement of
financial position

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