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AUDITING PROBLEMS
Proof of Cash (Adjusted Balance Method)

You were able to obtain the following information during SOLUTION GUIDE:
your audit of Euro Company:
Bank
Reconciling items:
(B) (R) (D) (E)
Nov. 30 Dec. 31 11/30 Dec. Dec. 12/31
Undeposited collections P200,000 P120,000 Unadjusted bal.
Outstanding checks 80,000 60,000 DIT – 11/30
Customer’s notes collected by - 12/31
bank 100,000 120,000 OC – 11/30
Bank service charges 2,000 3,000 - 12/31
Erroneous bank debits 10,000 20,000 Error, Dr.–11/30
Erroneous bank credits 40,000 30,000 - 12/31
NSF checks not redeposited 5,000 7,000
Error, Cr.–11/30
Customer's check deposited
- 12/31
December 10, returned by
NSF check red.
bank on December 16
Adjusted bal.
marked NSF, and
redeposited immediately;
Books
no entry made on books for
return or redeposit 10,000 (B) (R) (D) (E)
11/30 Dec. Dec. 12/31
Unadjusted balances: Unadjusted bal.
Books ? 90,000 Note coll.– 11/30
Bank 230,000 ? - 12/31
BSC – 11/30
December Transactions: - 12/31
NSF check–11/30
Bank Books - 12/31
Receipts P420,000 P270,000
NSF check red.
Disbursements 500,000 407,000
Adjusted bal.
REQUIRED:
1. Prepare a 4-column bank reconciliation for the month
of December, using the form that reconciles both the
book and bank balances to a correct cash amount.
2. Adjusting entries as of December 31.
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