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    Audit of Cash and Cash Transactions (Handouts 1) - 1 PDF

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    mae

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    © All Rights Reserved
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    of 16
    AUDIT OF GASH AND CASH TRANSACTIONS 2 21 ‘. Descbe the folowny cash-elatedlerms. Show proforma schedules or examples 19 the class, ‘Gach count shout Bank reconciation Standard bank confirmation Proof of cash ting Lapping 9. Window dressing 2, What should be considered in classiiying cash tems? What are those items that ‘Should be accounted for as ‘cash and cash equivalents”? How should we accourt for ‘those items that are “nef cash? Discussion questions 2.2 1. Why fafficut to detect the withvolding of cosh receipts? 2, ldentfy bree ways ev employee might misappropriale cash receipts, Discussion questions 2.3 Substantive auxtt rocedures on cash and cash equivaknts For each fnancial statement assertion listed below, identéy the appropiate audit ‘substantive audit procedures, Tail cach received is recorded (Lapping isnot occuring) 2. Cash recorded as received was actualy received. 3, Caghis not counted twice by using foot. Discussion questions 2=t ‘ FP Bes ine ie! fon months of the yeor, Alger Tang, the cashier ina small company. Roc engaged m lapping operations. Howover, he was able to restore the amount of ash Bornes" by arch 31, ano he refraned frm any freudulont acts ofr that ‘Gate, Wil the yearend eu probably lead tothe discovery ef hs lapping activities? Eplein 2, -Athough the primary objective ofan dependent gudtis nthe discovery of fraud, the ougtiors ther work on cash teks info considereton the high relative sk ‘associated with this asset, One evidonre ¢* ths sti o's evidence by the CPA Slennoss fer eqns of apping Requires (2) Detie lopang,(b) Explan the avait procedures that CPAs must tuttze to uncover lapping. Problem 2-1 Analysis and classicatin ot casi batances, ‘Tho cach and cash equivalents account in the ledger of Aeson Company had a balance Of P5,935,000 at December 31, 2015. An examination of the account, nowever, ‘Gaclosed tho folowing f "Curent ace. nt at May Bank 2900900 eat }Current account at DBP * (190,000) 2 a GFoyrell Account Ssop.000 24/0 veal Gh Savings Aczount n Rural Bank (Note A) 1900000" “}esis wana» ‘ 200,000 5) veh Hteasisy hows ce Navember 90,2017 ‘400000, ee g)Crange fund.» 10.000 f 1 yt (cred mam tiom a vendor fora purchase return '* 20,000 aon Stat "Travelers check | 50,000 omk ged Hore ee nectytatmaromarone BE i Money order 30,000, 1) ety each tun (Noe &) 30000 re ae Wp Treasury note, cue 2/26/17 (Note ©) ¥ 200,000 1) Treasury bils, due 1/31/17 (Note D) 300.000 ~~ icae Seiad '500.000 {) Protec redemption turd tooo UK Auait totes aetna ete ene nei iw naa cnt ot Btn reste temtig P70 ct Deen © Ro eeerumnnnaesn Dect 3.208 Fe ; ured onc shou Aeson Company reports cach and cash eqivaent on ts December 312010 bane set? Poti 2.2 ans ant casa of ash lonare Fees Sorta eas ow poe on Ki tho column eat he Coreen rons Drone tow Ren nuttineet Reeve Problem 2:9 Cash fore count ‘The audier for Gernie Company examined the office cash working fund immediately ater the cose ofthe busbwess June 30,2016, the end ofthe cormpany's fiscal year. The felling fund composiion wes aitved at ‘Currency e972 Unveplerished vouchers: Sunpes 388 Transporation 240 Repevs 70 Advances to employee a 400 Gheck drenn by Gennie poyabe 1o Philip, cash custodian 3,100 ‘Acheck prepared by en employee payabie wo Gerrie 230 AA sheet of poper Dearing the signatures of several employes, tegether wih their contbutions (otal PS00) for agit wo 8 doparting emoloyee. Atached 1 the paper = curency of 500 “The cash wortang fund hos en enprestbolonce 214,000, Ailunrapenished vouchers are deted prot June 80,2016, REQUIRED a Cave 1 1. Babed on the information above, compute the amount ct cash shortage or overage, 2. Adjusting journal enties on June 29,2016, 3. What's the belance of he cash werking und as of June 30,018, 2002 Tr Acbumning thot the count was_porformod on July 6, 2016 and the ropaie. and ‘advancos to employooa wore Gates July? and 3, 2016 ;reepectvaly, what would be the amount of cach shortage or overage? 2, Prepare the adjusting jour enties. | 3, Whats the balance af the cash werking fund as of June 20, 2016, coco 1 Assuming that ol information given in caae 1 i the some except that the contrition teche departing empleyse of not attached tothe sheet of peper, whet would be he amount of each shortage oF overage? 2 Propare the adjusting joumal erties, 3. What's th Belance ofthe cash verking und 98 of June 20, 2016, Problem 24 Cash tnd count lowing cash court sheet and addtional information pertain to the accounts of HERWINIA Corporation tothe year ended Dacembar 31, 2016. Gash Count Date: December 16, 2016, Currency - Detais omitted Unreplenished petty cash vouchers 4,800 Voucher Date Explanation Amount 192072016 Postage siomps 109 2104720167 Repair cf typewries 150 y2rs22016 | “Transportation - Messenger © 1252016 fice Suppies 90 400 Advances -all properly approved Total amount counted Accourtatliy - Petty cach ured Maven indi sagt, Unceposives colectons — Abgdama, Ba: A Sherage ‘Aditona information: 1 The last eplonishment ofthe fund was made on December 14, 2016 covering the petiod from December 1 to 14, 2016. Fo, wer pa envelopes wah ad been pet nthe eR a eat REQUIRED: Compute te amount of ch shortage, rooien 28 Gash und count oring Pager Preparion) {You a0 ocamining the sesours o| Tang Beauly Salon. Your cout ofthe mprest cash {ung, made at 3.00 amon denser 2, 2017 i he povence of ley Pak ely casi, revealee Te = ‘uanity ——[oeroninaron Gee PEDO ——— — Bs [Bis =r v Recevabte Somme neepe 609 ahi, December 27 ‘Alger, Beautician [Becember 30 Rachel, Haideasser ecember 30] cc [Unused stamps: — — Yousef = Date Nawuro Devember 15 Transportation December 16 [Ofee supplies [Deseriber 17 Photooopy fees December26 | Postage Newspaper — | Fem Deceibei 2 Brixen, employee | T P50, December 23 Biien, esles7an, 00 The Falance of the Petly Cash accouri, December 31, 2076, was P 5,000. Sales Invoices (for cash sales. (ain cash. no checks) re invoice No. [Date Amount | st 2007 [Decerbar30 Peon cis 2008 December St 100 [| — ——bacerber 601 ) "2000 Jenuary 2 3080) “REQUIRED Prepare an audit cash count sheet. iam 2.6 Auditing a clients bar Me-ana company’s cash ledger on June 30, 2916 showed e belones of P935,000 which include total deposits of PAG0,000. our aus othe cash accourt revealed the owing Outstanding crecks amounted to P29,000 while depost in transit totaled 88,000, I. _NSF chocke of P§6,000 had been rotumod by the bark and wore rol yet ‘llecte inthe books of the cempany. I, Teta debits in the bank statement for June amounted to 988,00) which incluced the NSF chacks in late Il above, ard sence fees of P10.000. The services were recorces in me company’s books in the succeeding month, IV. Sandy Company's eheck of P1S,000 was charged bythe bank to Ghadane aan company’s account V. A shegk of P90 000i esu5) by UFEre company was recorded nits books oF 120 000. ‘Me-ann company’s cash ledger on June 30, 2078 showed a balance of P936,000 which include total daposis of 480,000. Required: Based on the results of your aut, determine the following 1” What the adjusted cash balance on une 30, 20167 2 What s the cash balance per bank statgment on June 20, 20167 3. What the correct total dobitvthe reconciliation forthe bank sido on Jane 30, 2016? ‘4. Whatis the net adjustment on the Company s cash records cn une 30, 2016? Problem 2.7 Manipulated bank reconcitatior ‘The Lising Company did not execs adequate internal contro over is cash transactions. During on aude, you found the following dota concerning the cech positon a3 of June 30, £2016. On te company s records ine balance of cash cn hand and in bank was P 34.700, ‘Accedit of P 500 for a note collected by the bank does nal appear onthe compeny’s records. The bank statement balance i P 27,000. Outstanding checks areas follows ‘Number Amoure 1072 i080 1973, 720 1974 216 1975 692 ‘The cashes prepared the following reconciaton: Balance per bark siatement 27,000 Deduct: Outstanding checks: No. 1973, No. 1974 No. 1875, ‘Ads: Cash on hand (1s count is correct) Callctod nete ‘Cash per company records. June 30, 2016 Requres 41. What isthe amount ofthe shortage? 2. How did the cashier attempt tc conceal te shortage? Problem 2-8 Bonk reconcitaion Yeo erage Se cso 12 ‘s of KEAN ENTERPRIS Fr records of ‘company, you gathered the following information: —_——_ TROND NTERPRISES stared operation on October 2, 2016 with KEAN investing P fanPO0 cash. Monthly bank reconciiation statements have not been prepared; however, Taal statements for October, November. and December were made avaiable (0 YOu. ‘bank siatement im Decomber, 2016 showed an ending balance of P30,500, Eoin Ga) rede a ets ang 4 soe = ore a Ser is an EN och coun of he cashier's acwourabiy armoured to P50 You were tod bythe Caster tat P5.000 of thos, chee, wore ash sls en Decor 2, 114 {pasted en January 3, 2017. The balance, im cumency and coins, represen's pety cash ‘Additional data 1+ Acsouns receivable subir ledgers had total balance of P70,000 at Decerber 2. ‘Supple’ unpaid invoices for merchorkise amounted to P50, 000. 3. The bank statement in October showed a bank creat for PSB.0D0, dated Octabor 2, 2016. Inquay fom te coshier cisclosed that te amount represents proceeds of 8 ‘90-cay, dscounted bank nate. P80, 000 of ths loan was paid by check in December. 2016. 4. Merchancise inventory at December 31, 2016 amounted to 30,000, 5. Operating ‘wxpenser pais dining the pened amounted 10 ®180000; white merchandise purchasies amounts to P250,000 6. The gross proft rates 50% z REQUIRED: Compute ths cash shortage at December 31, 2016. Problem 2.9 Prootot Cash Date forthe JAY-ANN COMPANY are assembled 93 folows: sav206 1291/2018 Cash eccount bslance 1,000 P3,750 Bark stalemart balance 6699 10.350 Daposi in tans ‘400 '300 ‘Checks oustanding 1,909 1,500 Bark service charges for month, not shawn on the company books 0 40 Bark chores or NSF. checks, not shown on the compary backs 200 300 Collections by bank from JAY-ANN Compary customers. rot shawn 5.000 6.000 on thy-Cacipany books. ‘apes or bank and company cash data afer the foowing totals Deposit and credt memes per bank statement 13,800 Cancelled cnecks and debt memos par Bank statement 10.140 luinernve Say topes, Cash racojpis por cash book 8,000 aps na yun midine, alaneg ©250 AsbursemPen, per cash book 10,000 tavaa yun REQUIRED Prepare a reconclaton of receipt, dsbursements, and bank balance for December Probiem 2-10 Frootot cas ‘You have been instructs by your supervisr on an audit of GPB Company to prepare @ four-coturn proof of cash receipts and dsbursemen forthe month of June, 2016. The bank reconcliaton statment prepared by the lent in Nay is reproduced below. Moy 2018 Reconciliation Bank Balance 32,500 Book Balance Plus proceeds of notes Plus Undeposted Colectons, recelvable colectad by the May 31 bankin May Total Plus deposit made n bank 28540 3,500 on May 31 not recorded on books uni June Totat - Less Outstanding Checks ‘Less May bank service Charges, 140 P5900 124 ‘400 toa 100 __1,000 Adjusted Bank Balance 32,109 Adjusted Book Balance 32,100 Upon inquiry about the cken's une 30 bank reconciaton, you were informed that thas been fost and tha! the clans teo busy a his time to prepare anoiher. Your supervisor tells you to get te June bank statement and paid checks and to prepare the June 30 reconciliation co that you may complete ho Jin proof of cash, The June bank statement $00 41000, 2.800, [ara] SC-Sonice Charges E-Fivor EC - Ero: Cormctea [BN - Debit memo “ive Debit memo on June 30 represents customer NSF creck retuned by the bank. The chock was rodepazited by the clone tho bank on July + ‘Ces receive for tho perod June 21 tough June 30 of P 3,500 was dapeeted in the thank on oly “The poid checks ascompenying this bank statement al clearing in June) were: o.152 P00 So. 15s 100 w) No. 154 700 lig No.159 P20) (3 Wo. 157 P50 Uf) No.1 -P900 The check regtterreveikid that the last check in June was No. 189 for P250 and that (Check no. 186 was for P10, REQUIRED ‘2, Unadiusted Book Dabursemonts in June 30, 2016. b. Unadusted Book Recepis n June 30, 2010, ©. Unadjusted book balance 2s of une 30, 2016. Moen Problem 1 robe . Cash Equivalevtt = Othe: ae ‘ a) 2000000 - = > _ ovo lidvilidy G) 500000 ~_ = 4) - _ 600000 Receivavie y OD np = 2000 00 ~ 9 Rai 5 iS _ 400000 Short term Inveytmenty 4) 19000 ~ - . b ~ 2 20000 Receivable rom vevider 1) 3do00 ~ - \ » _ Isogo Recewvabie, k) 30000 ~ 7 1) 000 ~ Bey Ege a. 200 000 ~ hn) ~ bee) 300000 Sort dem Inve nent jo _ 5c0000 Long tym Inveyd mend fg _ 800000 Reserved Kedermprion Fund 543000 oan C+——1 7.009 800 » Problem 1-9 xkepag walang voucrer cng isang quomagation check, isama i tise ere “acounied for” kasi ai PA Syd Mak ayang 5a wg4 Joy NA cay Voucher, I av Acountability — Acounted for @ Imprest Balance pag U. Vouchers (10g) Impreyt Balanie 4ooO Curreny = 990. kduavies +9 €9 beh Monty ia Envy, 500 Vouchers nag Shevbage coe) Replenisn. 1100 ih 2092), Monty in Env 500 Gi —_—_———_—_— Accom. (neck 240 urine te, hia aea0 Replenishynent Check 100

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