cacumunm ise AUDITING PROBLEMS 74 6, Adjusted bank receipts in December 767.800 Answer: D 7, Adjusted book disbursements in December 415.480 Answer: C 8, Adjusted bank balance, December 31 477.270 Answer: B LEW 1-26 Proof of Cash; Bank to Book Balances Format Shown below is the May 31, 2018, bank reconciliation prepared by your client's staff. RECONCILIATION May 31, 2018 Bank balance P652,000 Add: Deposit in transit 10,000 Total P662,000 Less: Outstanding checks No. 640 P10,000 652 8,000 653 _2,000 __20,000 Adjusted bank balance 642,000 Book balance P570,800 Add: Proceeds of note receivable collected in May P70,000 Deposit on May 31 not recorded on books until June _2,000 72,000 rank 642,800 ss: Bank service charge 800 Adjusted book balance 642.000 Scanned with CamScannerCHAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS 75 ‘The June 2018 bank statement is shown below: pasig Bank period covered: May 31, 2018 - June 30, 2018 Account No.: 0021261 Date Checks Deposi june 1 8,000 10,000 june 8 2,000 June 11 14,000 20,000 June 13 1,000 DM 1,000 June 16 4,000 June 2 12,000 56,000 June 27 18,000 June 29 1,000 EC 1,000 EC June 30 200 sv June 30 3,000 DM SV - Service Charges DM - Debit Memo EC - Error Corrected CM - Credit Memo The paid checks accompanying this bank statement (all clearing in June) are the following: No.652 8,000 No.654 P14,000 No.657 12,000 No.653 2,000 No.655 P 4,000 No.658 P18,000 The check register reveals that the last check issued in June is No. 659 for P5,000 and that check no. 656 is for P2,600. Cash received for the period June 22 through June 30 of P70,000 was deposited in the bank on July 1. The debit memos on June 13 and June 30 represent customers’ NSF checks returned by the bank. The June 13 NSF check was immediately redeposited without entry. The June 30 NSF check was redeposited on July 1 without entry. Scanned with CamScannereioumurentmen AUDITING PROBLEMS 76 2 1. Whatis the total bank receipts in June? A. P87,000 c. P77,000 B. P88,000 D. P78,000 2, What is the total bank disbursements in June? A. P59,200 C. P58,200 B. P58,000 D. P63,200 3. Whatis the balance per bank statement on June 30, 2018? A. P676,800 C. P732,400 B. P627,200 D. P729,200 4, What is the total book receipts in June? A. P88,000 C. P146,000 B. P220,000 D. P218,000 5. Whatis the total book disbursements in June? A. P53,000 C. P56,400 B. PS7,400 D. P63,200° 6. Whatis the book balance on June 30, 2018? A. P732,200 C. P732,400 B. P729,200 D. P676,800 SOLUTION 1-26 1. Bank receipts in June (arrived at by footing the Deposits column of the bank statement) ‘88,000 Answer: B 2. Bank disbursements in June (arrived at by footing the Checks column of the bank statement) 63.200 Answer: D Scanned with CamScannerCHAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS 77 Bank balance, May 31 3. Add: Bank receipts in June 652,000 88,000 = i 740,000 Less: Bank disbursements in June b , I 63,200 Bank balance, June 30 Answer: A 200 PROOF OF CASH June 1-30, 2018 Balance June Balance May34 Receipts Disbursements June 30 Bank balances _ —-P652,000 P8B,000 + P63,200 676,800 Deposits in transit: May 31 10,000 (10,000) June 30 70,000 70,000 Outstanding checks: May 31 (20,000) (20,000) June 30 17,600 (17,600) Bank service charges: May 31 800 800 June 30 (200) 200 Bank collection in May (70,000) 70,000 May deposit recorded by the company in June (2,000) 2,000 "N (1,000) (1,000) Already redeposited A a Not yet redeposited (3,000) 3,000 Bank error corrected on the same date (1,000) _(1,000) ____ Book balances 570,800 218,000 56.400 P732,400 4. Total book receipts in June P218.000 Answer: D 5. Total book disbursements in June 36,400 Answer: C Scanned with CamScannerssumarnnneed: AUDITING PROBL Ey 78 PzZa2.409 pRosLenl 1-27 Proof of Cash: Bank to Book Balances Format information was obtained in an audit of the cash ‘The following account of CHELSEE COMPANY asof| December 31, 2018. Assume that the CPA has satisfied himself as to the propriety ofthe cash book, the bank statements, and the returned checks, except aS noted: 1. The bookkeeper’s bank reconciliation at November 30, 2018. Balance per bank statement P194,000 ‘Add: Deposit in transit _11,000 Total P205,000 Less: Outstanding checks No.1434 P1,400 1562 7,500 1571 5,800 1584 8,000 1591 300 _23.000 Balance per books 182,000 2. Asummary of the bank statement for December 2018. Balai ‘ bs vaste brought forward P 194,000 Total 1.487.000 Charges P1,681,000 Balance, December 31, 20 18 P3560 Scanned with CamScannerCHAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS 79 10. . Outstanding checks at Dece! . Included in cancelled checks returned with the December bank statement were the checks listed below. The Chelsee Company discounted its own 60-day note for ~P90,000 with the bank on December 1, 2018. The discount rate was 6 percent. The accountant recorded the proceeds asa cash receipt at the face value of the note. ;. The accountant records customers’ dishonored checks as a reduction of cash receipts. When the dishonored checks. are redeposited they are recorded as a regular cash receipt. Two NSF checks for P1,800 and P2,200 were returned by the bank during December. Both checks were redeposited and were recorded by the accountant. . Cancellations of Chelsee Company checks are recorded by a reduction of cash disbursements. . December bank charges were P200. In addition, a P100 service charge was made in December for the collection of a note receivable in November. These charges were not recorded on the books. Check no. 1434 listed in the November outstanding checks was drawn in 2016. Since the payee cannot be located, the president of Chelsee Company agreed to the CPA's suggestion that the check be written back into the accounts by a journal entry. mber 31, 2018, totaled P49,400, including checks 1434 and 1584. nt disclosed that the bank had recorded 19. The accountant had Decemiber 31, 2018, and The cutoff bank stateme! adeposit of P24,000 on January 2, 20 recorded this deposit on the books on then mailed the deposit to the bank. Scanned with CamScannercommune: AUDITING PROBLEMS 80 Cancelled Checks Returned with the December Bank Statement Date Amount 1562 11/28/18 P-750 1571 11/28/18 5,800 1583 12/04/18 1,500 1588 12/12/18 8,000 - 12/19/18 — 2,000 This check was in payment of an invoice for P7,500 and was recorded in the cash book as 7,500. This check was in payment of an invoice for P5800 and was recorded in the cash book as P5,800. Examination of this check revealed that it was unsigned. A discussion with the client disclosed that it had been mailed inadvertently. before it was signed. The check was endorsed and deposited by the payee and processed by the bank even though it was a legal nullity. The check was recorded in the cash disbursements journal. This check replaced 1584, which was returned by the payee because it was mutilated. Check 1584 was not cancelled on the books. This was a counter check drawn at the bank by the president of the company as a cash advance for Scanned with CamScannerCHAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS 81 travel expense. The president overlooked informing the bookkeeper about the check. ns 12/20/18 3,000 —‘ The drawer of this check was the Chelsea Company. 4595 12/20/18 3,500 This check had been labeled NSF and returned to the payee because the bank had erroneously believed that the check was drawn by Chelseen. Subsequently, the payee was advised to redeposit the check. 1599 01/05/19 100,000 This check was given to the payee on December 30, 2018, as a postdated check with the understanding that it would not be deposited until January 5. The check was not recorded on the books in December. 1. What is the correct amount of outstanding checks on December 31? A. P41,400 C. P48,000 B. P33,250 D. P40,000 2. What is the amount of cash recelnr per book in December? A. P1,496,900 CP 1,495,100 B. P1,504,900 D. P1,487,000 3. What is the amount of cash disbursements per book in December? A. P1,254,850 Cc. P1256. eo B. P1,252,850 D. PL 248,8: Scanned with CamScannercanumuTaRe AUDITING PROBLEy4. 82 4, Whatis the cash in bank balance per book as of December 317 A. P426,050 C. P430,050 B. P428,250 D. P343,050 2 5, Whatis the adjusted cash balance as of December 31? A. P343,000 Cc. P347,000 B. P340,200 D, P344,200 TION 1-27 _ 1. Outstanding checks, December 31 (49,400 - P1,400 - P8,000) 40,000 Answer: D Balance December Balance Nov.30 Receipts Disbursements Dec. 31 Per bank statement 194,000 P1,487,000 1,325,000 P356,000 Outstanding checks: Nov. 30 (23,000) (23,000) Dec. 31 40,000 (40,000) Deposits in transit: Nov. 30 11,000 (11,000, Dec. 31 24,000 24,000 Interest on note discounted (P90,000 x 6% 60/360) 900 900 NSF checks (4,000) (4,000) Bank service charge (300) 300 Cancellation of check no. 1434 1,400 (1,400) “meee 50 6,750, Cancellation of check no, 1584 8,000 (00) ‘Counter check drawn by president: (2,000) 2,000 Check of Chelsea charged in " error Postdated check presented for 3,000) 3,000 payment Per book balances Aim sao ens BOS Scanned with CamScannerHAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS 83 Book receipts in December “Answer: A 1.496.900 . Book disbursements in December “Answer: D P1.248,850 |. Book balance on December 31 “Answer: C 430,050 5 ; Book Bank Unadjusted balances P43 rei 0,050 F256 00, Deposits in transit 24,000 Interest on note discounted (900) Bank service charge (300) Cancellation of check no. 1434 1,400 Error in recording check no. 1562 6,750 Cancellation of check no, 1584 8,000 Counter check (2,000) Check of Chelsea charged in error 3,000 Postdated check presented for payment (100,000) Adjusted balance 343,000 343,000 Answer: A PROBLEM 1-28 Proof of Cash: Book to Bank Balances Format The following information was obtained in connection with the audit of PINKY COMPANY's cash account as of December 31, 2018. Outstanding checks, Nov. 30, 2018 P16,250 Outstanding checks, Dec. 31, 2018 12,500 Deposit in transit, Nov. 30, 2018 12,500 Cash balance per general ledger Dec. 31, 2018 37,500 Actual company collections from Its customers Scanned with CamScanner84 CAEUAMIMITIONRENERE. AUDITING PROBL Es during December 152,500 Company checks paid by bank in December 130,000 Bank service charges recorded on company books in December 2,500 Bank service charges per December bank statement 3,259 Deposits credited by bank during December 145,000 November bank service charges recorded on company books in December 1,500 The cash receipts book of December is underfooted by P2,500. The bank erroneously charged the company’s account for a P3,750 check of another depositor. This bank error was corrected in January 2019, 1. How muchis the deposit in transit on December 31, 2018? A. P5,000 C. P22,500 B. P20,000 D. P17,500 2. The total unrecorded bank service charges as of December 31, 2018, is A. P750 C. P1,750 B. P2,250 D. P4,250 3. Whatis the total bonk receipts in December? A. P150,000 C. P155,000 B. P152,500 D. P147,500 4. Whatis the total amount of, company checks issued in December? A. P130,000 C. P133,750 B. P123,000 D. P126,250 5. What is the total book disbursements in December? A. P123,750 C. P126,250 B. P128,500 D. P128,750 Scanned with CamScannerCHAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS 85 6. What is the book balance on November 30, 2018? A. P16,250 C. P37,500 B, P21,250 D. P35,000 7. Whatis the bank balance on November 30, 20187 A. P23,000 C. P43,500 B. P18,500 D. P16,250 8 Whatis the total bank receipts in December? A. P120,000 C. P145,000 B. P140,000 D. P150,000 9, What is the total bank disbursements in December? A. P154,500 C. P129,500 B. P132,500 D. P137,000 10, What is the bank balance on December 31, 2018? A. P21,500 C. P31,000 B. P26,500 D. P33,250 SOLUTION 1-28 ee 1. Deposit in transit, November 30 P 12,500 ‘Add: Company collections in December 152,500 Total 165,000 Less: Deposits credited by bank in December 145,000 Deposit in transit, December 31 P20,000 Answer: B 2. Bank service charges per December bank statement 3,250 Less: December bank service charges recorded ‘on company books in December (2,500 ~ P1,500) ice Unrecorded December bank service charges P2250 Answer; B Scanned with CamScanner(PA EXAMINATION REVIEWER: AUDITING PROBLENg 86 i ber ‘Actual company collections in Deceml 3 Less: Linderfootng of December cash receipts book Book receipts in December Answer: A |. Outstanding checks, December 31 Add: ‘Checks paid by bank in December Total Less: Outstanding checks, November 30 Checks issued in December Answer: D . Checks issued in December (see no. 4) ‘Add: Bank service charges recorded in December Book disbursements in December Answer: D . Book balance, December 31 ‘Add: Book disbursements in December (see no. 5) Total Less: Book receipts in December (see no. 3) Book balance, November 30 Answer: A Pinky Co. PROOF OF CASH For the Month of December 2018 Balance December Nov.30 Receipts Di Book balances P16,250 P150,000 P128,750 Outstanding checks: Nov. 30 16,250 16,250 Dec. 31 (12/500) Deposits in transit: Nov..20 (12,500) 12,500 Dec. 31 (20,000) Scanned with CamScanner P152,509 P126,250 2,500 P128,250 P 37,500 166,250 Balance Dec. 31 37,500 12,500 (20,000)Ye HAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS 87 pank service charges: ‘Nov. 30 (1,500) (1,500) Dec. 31 2,250 (2,250) ber book receipts 2,500 2,500 bank charge in December ss 3,050 (3.050) Bank balances 18.500 P145,000 P137,000 26.500 7. Bank balance, November 30, 2018 18,500 Answer: B 8, Total bank receipts in December 145,000 Answer: C 9, Total bank disbursements in December 137,000 . Answer: D th, Bank balance, Decembet 31, 2018 726.500 Answer: B i PROBLEM 1-29 Proof of Cash: Unadjusted to Adjusted Balances Format In your audit of HARRY INC.'s cash account as of December 31, 2018, you ascertain the following information: The bookkeeper’s bank reconciliation on November 30, 2018, is as follows: Balance per bank statement, November 30 P24,298 Add: Deposits in transit 3.648 Total P27,946 Less: Outstanding checks No. 3408 P440 Scanned with CamScannercnceumuTan nevewe AUDITING PROBL, ly 88 No. 3413 - ae No. 3414 , No. 3416 3,924 No. 3417 800 12.284 Balance P15,662 Add: Bank service charge for November ___36" Balance per general ledger, November 30 15.698 ‘Entered in Check Register in December The Cash Receipts Journal shows total receipts for December of 371,766. The Check Register reflects total checks issued in December of P377,632. A collection of P5,912 was recorded on company books on December 31 but was not deposited until January 2, 2019. The balance per bank statement at December 31, 2018, is P17,516. This statement shows total receipts of P373,502 and checks paid of 380,284. Your examination reveals the following additional information: 1) Check no. 3413 dated November 24, 2018, was entered in the Check Register as P300. Your examination of the paid checks returned with the December bank statement reveals that the amount of this check is P30. Check no. 3417 was mutilated and returned by the payee. A replacement check (no. 3453) was issued. Both checks were entered in the Check Register but no entry was made to cancel check no. 3417, 2 3 “— bank statement includes an erroneous charge of Scanned with CamScannerCHAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS 89 4) On January 3, 2019, the bank informed your client that a December bank service charge of P42 was omitted from the statement. 5) Your examination of the bank credit memo accompanying the December bank statement discloses that it represents proceeds from the note receivable collection in December for P4,000. 6} The outstanding checks at December 31, 2018, are as follows: No. 3408 440 No. 3418 = P2,814 No. 3417 800 No. 3419 5,788 4. “Whatis the total book disbursements for the month of December? A. P377,668 C. P377,632 B. P377,710 D. P377,596 2. What is the book balance at December 31? A. P9,832 C. P9,754 B. P9,868 D.. P9,796 3. The outstanding checks at December 31 totaled A. P8,602 C. P9,042 B. P9,072 D. P9,842 4. Whatis the adjusted bank balance on November 30? A. P16,690 C. P16,804 B. P16,732 D. P16,774 5. The adjusted book receipts for the month of December should be A. P375,724 C. P371,238 B. P371,766 D. P375,766 6. The adjusted book disbursements for the month of December should be A. P377,590 C. P377,674 B. P377,662 D. P377,632 Scanned with CamScannernen AUDITING PROBL Ey ber 31 book balance of Decem! what isthe adjusted c P1408 . p rie? an auditor arabe eet im rated. Confirms that the client has properly separated the custody function from the recording function with respect to cash. . Validates that the client’s bank did not make an error during the period being examined. D. Determines whether any unauthorized disbursements or unrecorded deposits were made for the given time period. orien 1-29 ee 1, Company checks issued in December 377,632 ‘Add: November bank service Charge 6 Total book disbursements in December 377.868 Answer: & . Book balance, November 30 15,698 aaa December book receipts Z = disbursements 387,464 Less: December book Book balance, December 31 37.668 Answer: D P2296 |. Outstanding checks, December 31: Check mo. 3408 31: » aa 18 ¥19 2,814 Total P2,042 Answer: C Scanned with CamScannerCHAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS 91 — December Balance Nov.30 Receipts Disbursements Dec. 3: Book balances P15,698 371,766 377,668 P me Bank service charges: November 30 (36) (36) December 31 42 (42) overstatement of Nov. disbursement (heck #3413) 270 270 Mutilated check (#3417) 800 800 Note collected by bank 4,000 4,000 Adj. book balances P16.732 375.766 377.674 14.824 Balance December Balance Nov.30 Receipts Disbursements Dec. 31 Bank balances 24,298 373,502 P380,284 = P17,516 Deposits in transit: November 30 3,648 (3,648) December 31 5,912 5,912 Erroneous bank charge (480) 480 Bank service charge 42 (42) Outstanding checks: November 30 (11,214) (11,214) December 31 —___ _9,042 _(9,042) Ad}, bank balances © B16,732 P375.766 P377.674 = Pl4.Sad 4 Adjusted bank balance, November 30 P16732 Answer, B 5. Adjusted book receipts in December bia toe Answer’ D 6. Adjusted book disbursements in December P37Z.o24 Answer Scanned with CamScanneroN 92 CADUUTON RENNER AUDIT TING "RObLay, 7. Adjusted book balance, December 31 Baar, Answer: A 8. A proof of cash usually consists of four columns, with Feconcifiay of beginning and end-of-period cash balances and reconctan ts cash receipts and disbursements during the period. The amon of appearing in the ledger and on bank statement should reconcile ton horizontally and vertically. This reconciliation detects Unauthorizeg disbursements and unrecorded deposits for the period. This is Usefy when internal control over cash transactions is weak or inadequate, Answer: D PROBLEM 1-30 Proof of Cash: Unadjusted to Adjusted Balances Format The following data are assembled by the accountant of the HAROLD COMPANY: Nov, 30,2018 = Dec. 31.2018 Cash account balance P 41,175.00 P100,712.50 Bank statement balance 267,705.00 344,542.50 Deposits in transit 20,502.50 32,200.00 Outstanding checks 69,295.00 75,280.00 Bank service charges 1,800.00 1,500.00 NSF check * 20,625.00 Company's notes receivable collected by bank 179,537.50 202,250.00 * Redeposited in the same month. No entries made to take up the return and redeposit. The bank statement and the company’s cash records show the following totals: Canceled checks and debit memos Per bank statement P545,932.50 Scanned with CamScannerCHAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS +93 Cash receipts per cash book 411,592.50 Checks written per cash book 529,792.50 Deposits and credit memos per bank statement 622,770.00 1. Whatis the total book receipts in December? A. P613,842.50 C. P411,592.50 B. PS91,130.00 D. P580,330.00 2. Whatis the total book disbursements in December? A. P531,592.50 C. P584,092.50 B. P529,792.50 D. P531,292.50 3. Whatis the adjusted book balance on November 30? A. P220,712.50 C. P218,912.50 B. P222,512.50 D. P217,412.50 4. The adjusted bank receipts in December should be A. 634,168.50 C. P632,667.50 B. P622,770.00 D. P634,467.50 5. The adjusted book disbursements in December should be A. P545,932.50 C. P5S48,917.50 B. - P552,517.50 D. P5S1,917.50 6. Whats the adjusted book balance on December 31? A. P301,462.50 C. P322,087.50 B. P302,662.50 D. P280,537.50 Tiew 1-30 ee 1. Cash receipts per cash book 411,592.50 ‘Add: Notes collected by bank in November Total book receipts In December 591,130.00 Answer: B Scanned with CamScanner94 . CADAMMATIN RENNER AUDITING PROBLEMS 2. Checks written per cash book P529,792.59 ‘Add: Bank service charge in November — 1,800.09 Total book disbursements in December P331.592.59 Answer: A Balance December Balance ‘Nov.30 Receipts Disbursements Dec. 31 Balance per bank statement P267,705.00 622,770.00 545,932.50 P344,542.50 Deposits in transit Nov. 30 20,502.50 (20,502.50) Dec. 31 32,200.00 32,200.00 Outstanding checks Nov. 30 (69,295.00) (69,295.00) Dec. 31 75,280.00 __(75,280.00) Adj. balances P218.91250 634,467.50 551,917.50 301,462.50 Balance December Balance Nov. 30 Receipts Disbursements Dec. 31 Balance per books P 41,175.00 591,130.00. P531,592.50 P100,712.50 Bank service charges: November (1,800.00) (1,800.00) December 1,500.00 (1,500.00) NSF check 20,625.00 20,625.00 Collections of notes receivable: November 179,537.50 (179,537.50) December 202,250.00 202,250.00 Adj balances —--PRTB.STZSO © P634.457.50 EBT GIS 630146250 3. Adjusted book balance, November 30 218,912.50 Answer: C 4. Adjusted bank receipts in December P634,467,50 Answer: D 5. Adjusted book disbursements in December 951,917.50 Answer: D Scanned with CamScannerCHAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS 95 6. Adjusted book balance, December 31 Answer: A PROBLEM 1-31 Proof of Cash: Book to Bank Balances Format The auditor of TSIKOY COMPANY gathered the following information: 1. The November 30 bank statement balance included bank service charges of P2,000. 2. The November 30 cash balance in the general ledger was 244,500. 3. Outstanding checks on November 30 were P63,000 while undeposited receipts were P36,000. 4. The bank service charges a$ shown on the bank statement totaled P3,000. 5. The December 31 cash balance in the general ledger was P319,750, which recognized P482,750 for December receipts and P405,500 for checks written during December. In transit to the bank were receipts of P28,750. Checks of P15,000 written prior to December and checks of P60,500 written in December had not yet cleared the bank. 1. Whatis the total book disbursements for December? A. P403,500 C. P407,500 B. P404,500 D. P405,500 2. What is the November 30 bank balance? A. P271,500 C. P268,500 B. P269,500 D. P266,500 Scanned with CamScannerew oN 9% COMBAT ENE AUDITING PROBL S 3. Whatis the total bank receipts in December? A. P490,000 C. P497,250 B. P482,750 D. P488,000 4. Whats the total bank disbursements in December? A. P419,000 C. P408,500 B. P405,500 D. P396,000 5. Whats the bank balance on December 31? A. P316,750 C. P322,750 B. P363,500 D. P366,500 SOLUTION 1-31 a 1. Checks written during December 405,500 Add: November bank service charges recoried on company books in December — 2,000 Total book disbursements in December 407,500 Answer: C Balance December Balance Nov. 30 Receipts Disbursements Dec. 31 Balance per books 244,500 P482,750 — P407,500 P319,750 ipts: Nov. 30 (36,000) 36,000 Dec. 31 (28,750) (28,750) Outstanding checks: Nov. 30 63,000 63,000 Dec. 31 (75,500) 75,500 Bank service charges Nov. 30 (2,000) (2,000) Dec. 31 ——_ _______ __3,000 __(3,000) Balance per bank 269.500 490.000 396.000 £363,500 Scanned with CamScannerCHAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS 97 2. Bank balance, November 30 269,500 Answer: B 3, Total bank receipts in December 499,000 Answer: A 4. Total bank disbursements in December 396.000 Answer: 0 5, Bank balance, December 31 363,500 Answer: B LEM 1-32 : Unadjusted to Adjusted Balances Format Proof of Ca: RODELIO CO. has a current account in Pinoy Bank. Your audit of the company’s cash account reveals the following: 1. Balances taken from the company’s general ledger: Cash balance, Nov. 30, 2018 P637,860 Cash balance, Dec. 31, 2018 576,420 Receipts, Dec. 1-31, 2018 306,220 2. Balances taken from the December bank statement: Bank balance, Nov. 30, 2018 P685,180 Bank balance, Dec. 31, 2018 637,220 Disbursements (debits) 356,080 3. Outstanding checks, Nov. 30, 2018 (P26,140 was paid by bank in December ) 64,140 4. Checks written and recorded in December; not included in the checks returned with the December bank statement 36,080 Scanned with CamScanner il ts.sme AUDITING PROBLEMs 98 crncoumuT 5, Deposit in transit, Nov. 30, 2018 15,260 6. Deposit in transit, Dec. 31, 2018 16,140 in December to 1,500 7. ‘Abank credit memo was issued correct an erroneous charge bank in December (company was of the collection) 2,060 made in November 8, Note collected by not informed lier) was ayable to a SUPP December 9. Acheck for P2,020 (Pp k Register in recorded in the Chec! as P3,000 10. Acheck for 2,240 was charged by the bank as P2,420 in December 180 980 11. Rodelio Co. issued a stop payment order to the bank in December. ‘This pertains toa check written in December which was not received by the payee. Anew check was written and recorded in the Check Register in December. The old ‘check was written off by a journal entry also in December. 780 42. Bank service charge, Nov. 30,2018 60 4, What is the total book disbursements in December? . P367,660 C. P369,720 3. P244,780 D. P368,540 2 Wat the tral bank receipts in December? B. P308,120 . pave 20 Scanned with CamScannerCHAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS 99 3. Whatis the total outstanding checks on December 31? A. P100,220 C. P62,220 B. P38,000 D. P74,080 4. What is the adjusted bank balance on November 30? A. P636,300 C. P637,800 B. P685,180 D. P634,800 5. Whatis the adjusted book receipts in December? A. P307,500 C. P303,380 B. P306,220 D. P305,440 6. Whats the adjusted bank disbursements in December? A. P353,980 C. P345,960 B. P365,840 D. P366,020 7. Whatis the adjusted book balance on December 31? A. PS77,500 C. P576,420 B. P5S77,400 D. P579,460 SeLeTION 1-32 Ss 1. Book balance, November 30. 637,860 ‘Add: Book receipts in December 306,220 Total 944,080 Less: Book disbursements in December (SQUEEZE) 367,660 Book balance, December 31 Answer: A 2. Bank balance, November 30 P685,180 ‘Add: Bank receipts in December (SQUEEZE) 308,120 Total 993,300 Less: Bank disbursements in December 356,080 Bank balance, December 31 P637.220 Answer: B Scanned with CamScanner100 CADMUTINLEMEE AUDITING PROBL Ms 3, Checks issued prior to December (P64,140 ~ 26,140) P3g.ogg "Checks issued in December Total outstanding checks, December 31 009 Answer: D Balance December Balance Nov. 30 Receipts Disbursements Dec. 34 Balance per books P637,860 306,220 367,660 576,429 Note collected by bank in December 2,060 2,060 Overstatement of December book disbursement (3,000 - P2,020) (980) 960 Check stopped for payment (780) (780) Bank service charge in November (60) —____(60) ‘Adj. book balances 637.800 P307.500 365.840 579.460 7 Balance December Balance Nov.30 Receipts Disbursements. Dec. 31 Bank balances 685,80 P308,120 356,080 637,220 Outstanding checks: November 30 (64,140) (64,140) December 31 74,080 (74,080) Deposits in transit: November 30 15,260 (15,260) December 31 16,140 16,140 Erroneous bank charge in November 1,500 1,500) Overstatement of ( ) bank disbursement in December ‘Ouitins Ta me ag polit “Adjusted bank balance, November 30 Answer: ¢ P637,800 Scanned with CamScannerCHAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS 5. Adjusted book receipts in December Answer: A 6, Adjusted bank disbursements in December Answer: B 7. Adjusted book balance, December 31 Answer: D BLEM 1-33 201 Proof of Cash: Unadjusted to Adjusted Balances Format Data for the ANNABELLE, INC. are shown below: Nov.30 Dec.31 Cash account balance P 20,340 P 48,540 Bank statement balance 107,060 137,820 Deposits in transit 8,200 12,880 Outstanding checks 27,700 = 30,100 Bank service charges fur the month, not shown on company books 720 600 NSF checks returned by bank, not shown on company books 4,300 8,240 Bank collections from company customers, not shown on company books 72,240 80,900 Additional information: 1. Deposits and credit memos per bank statement P249,100 2. Canceled checks and debit memos per bank statement 218,340 3. Cash receipts per cash book 172,880 4. 211,900 . Checks written per cash book 1. Whats the total book receipts in December? A. P172,880 C. P253,780 B. P245,120 D. P181,540 Scanned with CamScanner a a.ncuron ene AUDITING PROBLY 102 panier? disburseme! ents in December? 2 suis the total BOOK iso C, P211,180 Fe p. P216,920 B d cash balance on November 30? . at is the adjusted © nc 160 a pg9,000 ‘ 37,560 D. P96,160 4, Whatis the adjusted cash ia 7 December 31? A. P120,600 37,080 B. P94,840 D mis 040 5, Whatis the adjusted book receipts in December? A. P253,780 P244,420 B. P236,460 i 9270, 180 6. Whatis the adjusted bank aad in December? A. P215,940 C. P248,440 B. P220,740 D. P204,260 LOTION 1-33 eT 1. Cash receipts per cash book ‘Add: November bank collections 172,880 Total book receipts (debits) in December wat Answer: B 245.120 f 2. Checks written per cash book 211,900 ‘Add: Bai rank “joie charges in November P 720 Total oe returned in November 4,300 isbursements (credits) in December mea Answer: D I Scanned with CamScannerCHAPTER 1 AUDIT OF CASH AND CASH EQUIVALENTS 103 Balance December Balance Nov.30 Receipts Disbursements Dec. 31 Unadj. book balances P20,340 245,120 216,920 P48,540 Bank service charges: November 30 (720) (720) December 31 600 (600) NSF checks: November 30 (4,300) (4,300) December 31 8,240 (8,240) Bank collections: November 30 72,240 (72,240) December 31 80,900 _____ _ 80,900 Adj. book balances PBZ560 253.780 220.740 120.600 Balance Balance Receipts Disbursements Dec. 31 ‘Unadj. bank balances 107,060 P249,100 218,340 P137,820 Deposits in transit: November 30 8,200 (8,200) December 31 12,880 12,880 Outstanding checks: November 30 (27,700) (27,700) December 31 _ —— ‘Adj, bank balances PBZ560 253.780 220,740 120,600 3. - Adjusted cash balance, November 30 87,560 Answer: B 4, Adjusted cash balance, December 31 P120,600 Answer: A 5. Adjusted book receipts in December 253,780 Answer: A 6. Adjusted bank disbursements in December 220.740 Answer: B Scanned with CamScanner