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Audit On Cash Lecture Problem

The document provides information about Erika Company's cash account balance as of December 31, 2018 including details about different cash accounts and outstanding checks. It also provides additional information about checks recorded but not yet mailed as of December 31 and cash receipts recorded through January 15, 2019. Based on this information, the adjusted demand deposit balance is 1,450,000, the adjusted petty cash balance is 8,000, and the cash and cash equivalents to be reported on the statement of financial position is 1,960,000. The records of Easy Company show cash balances, bank credits and debits, notes collected, service charges, NSF checks, deposits in transit, and outstanding checks for March and April. Based

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Aprilyn Batayo
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188 views2 pages

Audit On Cash Lecture Problem

The document provides information about Erika Company's cash account balance as of December 31, 2018 including details about different cash accounts and outstanding checks. It also provides additional information about checks recorded but not yet mailed as of December 31 and cash receipts recorded through January 15, 2019. Based on this information, the adjusted demand deposit balance is 1,450,000, the adjusted petty cash balance is 8,000, and the cash and cash equivalents to be reported on the statement of financial position is 1,960,000. The records of Easy Company show cash balances, bank credits and debits, notes collected, service charges, NSF checks, deposits in transit, and outstanding checks for March and April. Based

Uploaded by

Aprilyn Batayo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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On December 31, 2018, Erika Company’s “cash account” balance per ledger of P3,600,000

includes:

Demand 1,500,000
Time deposit – 30 days 500,000
NSF check of customer 20,000
Money market placement (due date June 30, 2019) 1,000,000
Savings deposit in closed bank – restricted 50,000
IOU from an employee 30,000
Pension fund 400,000
Petty cash fund 10,000
Customer check dated January 31, 2019 60,000
Customer check outstanding for 18 months 30,000
3,600,000
Additional information:

a) Check of P100,000 in payment of accounts payable was recorded on December 31, 2018
but mailed to creditors on January 15, 2019.
b) Check of P50,000 dated January 31, 2019 in payment of accounts payable was recorded
and mailed December 31, 2018.
c) The company uses the calendar year. The cash receipts journal was held open until
January 15, 2019, during which time P200,000 was collected and recorded on December
31, 2018.

After examining the above information, you are to answer the following questions:

1. How much is the adjusted demand deposit balance?


a. 1,450,000 c. 1,500,000
b. 1,400,000 d. 1,200,000

2. How much is the adjusted petty cash fund account balance?


a. 0 c. 8,000
b. 10,000 d. None of these

3. How much is the cash and cash equivalents to be shown on the December 31, 2018
statement of financial position?
a. 1,860,000 c. 1,960,000
b. 1,450,000 d. None of these
The records of Easy Company showed the following:

Cash in bank balance, March 31 200,000


Book credits for April 720,000
Book debits for April 800,000
Bank statement balance, March 31 330,000
Bank debits 530,000
Bank credits 700,000

Note collected by bank:


March 60,000
April 100,000
Service charge:
March 8,000
April 2,000
NSF check:
March 20,000
April 30,000
Deposit in transit:
March 31 80,000
April 30 220,000
Outstanding check:
March 31 178,000
April 30 372,000

QUESTIONS:
1. How much is the adjusted cash balance for the month of March?
a. 232,000 c. 356,000
b. 348,000 d. 483,000

2. How much is the adjusted receipts for the month of April?


a. 800,000 c. 815,000
b. 810,000 d. 840,000

3. How much is the adjusted disbursements for the month of April?


a. 700,000 c. 724,000
b. 720,000 d. 732,000

4. How much is the adjusted cash balance for the month of April?
a. 345,000 c. 415,000
b. 348,000 d. 421,000

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