Audit of Cash: Problem No. 1

AUDIT OF CASH
Problem No. 1
The Cash in Bank account of MSU, INC. in the general ledger showed a December 31, 2021, balance of
P1,354,287. Information that might be useful in preparing a bank reconciliation is as follows:
a. Outstanding checks were P132,025.

b. The December 31, 2021, cash receipts of P57,500 were not deposited in the bank until January 2,
2022.
c. One check written in payment of rent for P24,600 was correctly recorded by the bank but was
recorded by MSU as P26,400 disbursement.
d. In accordance with prior authorization, the bank withdrew P45,000 directly from the checking
account as payment on a mortgage note payable. The interest portion of that payment was
P35,000. MSU has made no entry to record the automatic payment.
e. Bank service charges of P1,400 were listed on the bank statement.
f. A deposit of P87,500 was recorded by the bank on December 13, but it did not belong to MSU. The
deposit should have been made to the checking account of SUM, Inc.
g. The bank statement included a charge of P8,500 for an NSF check. The check was returned with the
bank statement and the company will seek payment from the customer.
h. MSU maintains a P20,000 petty cash fund that was appropriately reimbursed at the end of
December.
i. According to instruction for MSU on December 30, the bank withdrew P1,000,000 from the account
and purchased Treasury Bills for MSU. MSU recorded the transaction in its books on December 31
when it received notice from the bank. Half of the treasury bills mature in two months and the
other half in six months.
Questions:
1. What is the balance per bank statement on December 31, 2021?
2. What is the corrected cash in bank balance on December 31, 2021?
3. What amount of cash and cash equivalents should be reported in the current asset section of the
balance sheet on December 31, 2021?
Problem No. 2
The following information was obtained in connection with the audit of SOLEDAD COMPANY’s cash
account as of December 31, 2021.
Outstanding checks, 11/30/21 P48,750 Outstanding checks, 12/31/21 37,500 Deposit in

transit, 11/30/21 37,500 Cash balance per general ledger 12/31/21 112,500 Actual
company collections from its customers during December 457,500 Company checks paid
by bank in December 390,000 Bank service charges recorded on company books in
December 7,500 Bank service charges per December bank statement 9,750 Deposits
credited by bank during December 435,000 November bank service charges recorded on
company books in December 4,500
The cash receipts book of December is underfooted by P7,500.
The bank erroneously charged the company’s account for a P11,250 check of another
depositor. This bank error was corrected in January 2022.
Questions:
1. How much is the deposit in transit on December 31, 2021?
2. The total unrecorded bank service charges as of December 31, 2021, is
3. What is the total book receipts in December?
4. What is the total amount of company checks issued in December?
5. What is the total book disbursements in December?
6. What is the book balance on November 30, 2021?
7. What is the bank balance on November 30, 2021?
8. What is the total bank receipts in December?
9. What is the total bank disbursements in December?
10. What is the bank balance on December 31, 2021?
Problem No. 3
You are assigned to the petty cash count for the KURDAPIA COMPANY at December 31, 2021. The
contents of the fund are listed below. The custodian of the fund is Annie Bakalbato (Office Secretary).
The balance of the petty cash fund per the company’s general ledger is P60,000. Such fund is being
maintained on an imprest basis.
➢ Bills
Five hundred-peso bills; 26
One hundred-peso bills; 40
Fifty-peso bills; 88
Twenty-peso bill; 60
➢ Coins
One-peso coins; 24 rolls of 20 and 20 loose
➢ An I.O.U. signed by the company treasurer for P7,500.

➢ Postage stamps of various denominations – P1,500 (The voucher is also for P1,500.)
➢ A receipted bill from Balita Express newspaper for advertising – P840.
➢ A receipted bill from Bukbok Bookstore for copy paper – P1,320.
➢ A receipted bill from Petrox Gas Station for gas and oil for the company’s delivery truck –
P13,080.
➢ A check signed by Burgudol, an employee, dated December 28, 2021 – P2,100. ➢ A check
signed by Char Char, sales manager, dated January 20, 2022 – P1,980. ➢ A notation on a sheet
of paper as follows: Proceeds of employees’ donations for office party – P7,260.
➢ A receipted bill from Fresco Restaurant for refreshment served at employees’ part,
December 24, 2021 – P4,020.
How much is the cash shortage/overage?
Problem No. 4
You have been asked by the proprietor of the SANDOVAL CO. to verify the accountability of the cashier
bookkeeper, who was allowed to take a vacation leave a few days ago.
A. The bank reconciliation statements prepared by the cashier-bookkeeper are presented below:
November 30, 2021
Balance per bank statement P21,500
Cash on hand 500
Total 22,000
Outstanding checks:
No. 2520 P 2,000
2521 1,400
2522 1,900 (3,300)
Erroneous bank charge 2,000
Erroneous bank credit (500)
Book balance P20,200
December 31, 2021

Balance per bank statement P 135,000
Cash on hand 6,300
Total 141,300
Outstanding checks:
No. 2674 P31,000
2675 10,300
2676 5,000 (41,300)
Erroneous bank charge 3,000
Erroneous bank credit (600)
Book balance P102,400
B. The Cash in Bank account in the general ledger shows the following debits and credits during
December:
Cash in Bank
Dec. Dec.
1 Balance P20,200 1 Checks issued P2,000 2 Received from customers 4,500 5
Checks issued 5,200 7 Received from customers 5,000 14 Checks issued 31,000
12 Received from customers 20,000 24 Checks issued 46,000 17 Received from
customers 30,000 28 Checks issued 7,600 23 Received from customers 9,000
27 Received from customers 70,000
31 Received from customers 48,500 31 Balance 102,400 Total P198,200 Total
P198,200
C. The following summarized transactions were taken from the bank statement for the month of
December 2021:
Balance, December 1, 2021 P16,500 Total deposits P173,700
The total deposits per bank statement include:

a. Collection of notes receivable P5,000
b. Correction of November erroneous bank charge 2,000
c. December 10 deposit of Lava, Inc. credited
in error to SANDOVAL 600
Total P7,600
Total checks P65,200
The total checks per bank statement include:

a. Correction of November erroneous bank credit P 500
b. December check of Nile Co. charged in error
to SANDOVAL 3,000
Total P3,500
D. Cash on hand per count in the morning of January 2, 2022, amounted to P6,300. E. Before
leaving his company for a one-week vacation, the proprietor had left several signed blank checks
that the cashier-bookkeeper had cashed for his personal use.
Questions:
1. What is the adjusted cash balance on November 30, 2021?
2. The amount of unaccounted receipts in December is
3. The amount of unrecorded/unsupported disbursements in December is
4. What is the total cash shortage as of December 31, 2021?
5. What is the adjusted cash balance on December 31, 2021?

Audit of Cash: Problem No. 1

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AUDIT OF CASH

a. Outstanding checks were P132,025.

Outstanding checks, 11/30/21 P48,750 Outstanding checks, 12/31/21 37,500 Deposit in

➢ An I.O.U. signed by the company treasurer for P7,500.

December 31, 2021

Balance, December 1, 2021 P16,500 Total deposits P173,700

The total deposits per bank statement include:

Total checks P65,200

The total checks per bank statement include:

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