CPA REVIEW SCHOOL OF THE PHILIPPINES AP-7608 Manila AUDITING PROBLEMS CPA Review AUDIT OF CASH PROBLEM NO.1 You are auditing general cash for the DION COMPANY for the fiscal year ended July 31, 2014, The client has not prepared the July 31 bank reconciliation. After a brief discussion with the ‘owner you agree to prepare the reconciliation, with assistance from one of Dion Company's clerks. You obtain the following information: General Bank Ledger Statement Beginning balance P 46,110 P.57,530 Deposits : : 250,560 Cash receipts journal (e«° 254,560 Checks cleared/(aid (236,150) Cash disbursements journal/is!\""" (218,110) July bank service charge (870) Note paid directly (61,000) NSF check (3.110) Ending balance 82,560 P6960 June 30 Bank Reconciliation Information in General Ledger and Bank Statement Balance per bank P57,530 Deposits in transit 6,000 A Outstanding checks 17,420- Balance per books 46,110 Additional information obtained is: 1. Checks clearing that were outstanding on June 30 totaled P16,920. 1 Ae, N07 . Checks clearing that were recorded in the July disbursements journal totaled P204,670. anh — Book : 3, A'tKEER for P10,600 cleared the bank, but had not been recorded in the cash disbursements journal. It was for an acquisition of inventory. Dion uses the periodic inventory method, 4, A check for P3,960'was charged to Dion Company but had been written on a different ‘company’s bank account." 154 560 5, Deposits included P6,000 from June and P244,560 for July. 6. The bank charged Dion Company's account for 2 nonsufficient check totaling P3,410. The credit manager concluded that the customer intentionally closed its account and the owner left the city. The check was turned over to a collection agency. 4:7.. A note for P58,000, plus interest, wes paid directly to the bank under an agreement signed four months ago. The note payable was recorded at P58,000 on Dion Company's books. Page 1 of 8 Pages= Av 7608 — AUDITOF CASH A CPAR - MANILA, Based on facts given, determine the following: ¢- 1. Outstanding checks on July 31 A. P9,980 B. P10,830 2, Deposits in transit on July 31 A A. P6,890 B. 10,000 ©. P6,000 D. P9110 3. Adjusted cash balance on July 31 A. P6,980 B. P10,940 D. P3,020 PROBLEM NO. 2 You obtained the following information on the current accauint of BAHT COMPANY during your ‘examination of its financial statements for the year ended December 31, 2014, The bank statement on November 30, 2014 showed a balance of P76,500. Among the bank credits in November was a.customer’s note forP25,000 collected for the account of the company which the company recognized in December among its receipts. Included in the bank debits were cost of checkhooks amounting to P00 and a P'10,000 check which was charged by the bank in error against Baht Company account. Also in November, you ascertained that there ‘were deposits in transit amounting to P20,000 and outstanding crecks totaling P42,500. The bank statement for the month of December showed total credits of P104,000 and total charges of 51,000. The company’s books for December shovied total receipts of P183,900, disbursements of P101,800, and a balance of Pi21,400. Bank debit memos for Decel er were: No. 143 for service charges, P400 and No. 145 on a customer's returned check marked “DAIF” for P6,000, (On December 31, 2014, the company placed with the bank a customer's promissory note with a face value of P30,000-for collection. The company treated this note as part of its recelpts although the bank was able to collect on the note only in January 2015 ‘A check for P990.was ints books in December as P9,900. corded in the company cash pa 70) = £010. . How much is the total _undepostted collections as of Decemzer 31, 2014? ‘A. P84,900 B. P54,900 7 = C. Pa4,900 D. P34,900; a 2. How much is the total outstanding checks as of December 31, 20147 A. 47,990 B. P90,490 Cc. P99,400 D. 3. How much is the adjusted cash balance as of November 30, 20147 A. P54,000 B. P64,000 cc. P44,000 D. 4. How much is the adjusted bank receipts for December? . A. P158,900 B. P128,900 Cc. P118,900 D. P108,900 5. How much is the adjusted book disbursements for December? A. P56,490 B. P98,990 c. P107,990 D. P99,290 6. How much is the adjusted cash balance as of December 31, 2014? A, P156,410 B. P93,910 C. P55,009CPAR- MANILA PROBLEM NO. 3 Your audit senior instructed you to prepare disbursements for the month of December 2014. ‘AP7608 ~ AUDIT OF CASH a four-column proof of cash receipts and The bank reconciliation prepared by RINGGIT COMPANY at November 30 js reproduced below: Unadjusted bank balance 96,800 Unadjusted book balance P58,640 Add: Deposit in transit -18,000° Add: CM ~ Note collected 40,320 verse’ Total 114,800 Total 98,960 Less: Outstanding checks: Less: DM ~ Bank charges 160 vt yet tecack No. 276 P2,400 Pe 282 7,200" 284 4,800 285 1,800 16,000 —_ Adjusted bank balance 98.800 Adjusted book balance 98,800 The December bank statement, which shows a beginning balance of P96,800, is reproduced below: May Bank ‘Account Name: Ringgit Company Date Dehits Credits December 1 P18,000 2 P7,200° 40,000 es 24,000 6 48,000 F 8 400,000 cy a3 Note. collected - seuerde 10 note DAIr 40,000 o 27 ee 41 eexeed 56,000 16 20,000 is 64,000 21 72,400 28 36,000 80,000 31 ps __4,000 om 98 64,000 C1 84 Acct Gallected ~ Woh yet recond Totals c D PA3L.200 R Be42.400 : DM 97~ Customer's DAIF check DM 98- Service charges C4 83~ Note collected by the bank (© 84 Account collected by the bank The company’s cash receipts and cash disbursements journals for the month of December 2014 are provided below: Cash Receipts Journal Date OR No. Amount Dec. 1 415 40,000 5 416 48,000 10 417 56,000 7 418 64,000 20 419 72,0008 tide 30 420 80,000 31 421 88,800% "~" Wee ee Total 440,800 AB Cash Disbursements Journal Date Check No. Amount Dec. 1 286 P16,000 - 287 24,000 10 288 32,000 scone 289 20,000 : 20 290 28,000 23 291 36,000" D 26 292 40,000 28 293 44,000 31 294 48,000 Total 304,000 Over NT gg Page 3 of 8 Pages