AUD REV, Cash & Cash Equiv

AUDIT OF CASH AND CASH EQUIVALENTS Problem 1

The following pertains to Pau Company on December 31, 2016: Postage stamps Php 5,000 Credit memo from a vendor for a purchase Return 100,000 Current account Kapamilya bank ( 500,000) Current account at Kapuso bank 10,000,000 Employees postdated check 20,000 Foreign bank account-restricted account-restrict ed (in equivalent peso) 5,000,000 IOU from Finance Manager’s brother in law   50,000 Trading securities 75,000 Payroll account 2,500,000 Petty cash fund (Php20,000 in currency and expenses receipts for Php30,000) 50,000 Postal money order 150,000 Traveler’s check  check   250,000 Treasury bills, due 1/31/17 (purchased 1/31/16) 1,500,000 Treasury bills, due 3/31/17 (purchased 12/31/16) 1,000,000 Treasury warrants 1,500,000  Additional  Additional information: information: a. Check of Php1,000,000 in payment of accounts payable was was recorded on December 31, 2016 but mailed to suppliers on January 5, 2017. b. Check of Php500,000 dated January 15, 2017 in payment payment of accounts payable was recorded and mailed on December 31, 2016. c. Check of Php250,000 dated January 15, 2016 in payment of accounts payable was recorded and mailed on January 15, 2016. As of the reporting period, the same has not been encashed by the payee and still outstanding. 1.

How much cash and cash equivalents should Pau Company report on the December 31, 2016 statement of financial position? a. Php15,650,000 c. Php17,170,000 b. Php17,000,000 d. Php18,650,000

Problem 2

Total cash and cash equivalent of Php63,250,000 reported by Mari Company on December 31, 2017 include the following information: a. Two certificates of deposits, each totaling Php5,000,000, having a maturity of 120 days. b. A check is dated January 12, 2018 in the amount of Php1,250,000. c. A commercial paper of Php21,000,000 which due in 90 days. d. Currency and coins on hand amounted to Php770,000. Mari Company has agreed to maintain a cash balance of Php5,000,000 in one of its banks at all times to ensure future credit availability (this amount is legally restricted as to withdrawal and was included in the above balance) 2.

How much is the correct amount of cash and cash equivalents that Mari Company should report in its December 31, 2017 statement o off financial position? a. Php57,000,000 c. Php47,000,000 b. Php31,000,000 d. Php62,000,000

Problem 3

The cash account of Pau Company on December 31, 2016 has a balance of Php4,620,000 and it consists of the following: Balance in savings account with a bank closed by the BSP Php 720,000 Bills and coins on hand 1,055,600 Checking account balance in Kapuso bank 440,000 Credit memo from supplier’s for purchase returns   130,000 Customer’s check dated January 15, 2016   160,000 Customer’s check dated January 16, 2017   600,000 Customer’s check returned on 12/31/16 for lack of  sufficient fund 1,000,000 IOU of an employee 8,000 Money order 16,000 Petty cash including paid cash vouchers of Php16,500 40,000 Postage stamps 2,400 Traveler’s checks  448,000 ---------------------Total Php 4,620,000 ============ 3.

The correct cash and cash equivalents balance on December 31, 2016 is  _________. a. Php1,959,600 c. Php1,966,400 b. Php1,966,600 d. Php1,983,100.

Problem 4

In connection with your audit of Camil Company for the year ended December 31, 2016, you gathered the following: Savings account at Kapatid Bank Php 4,000,000 Current account at Kapuso Bank ( 200,000) Demand deposit, Kapamilya bank 2,000,000 Cash collection not yet deposited 700,000 Payroll account 1,000,000 Travel advances of Php720,000 for executive travel for the first quarter of the next year (employee to reimburse through salary deduction) 720,000  A separate cash fund in the amount of P6,000,000 is restricted for the retirement of a long term debt 6,000,000 Camil Company has received a check dated January 2, 2017 300,000 Camil Company has agreed to maintain a cash balance at all times at Kapuso bank to ensure future credit availability 400,000  A customer’s check returned by the bank for  insufficient fund 300,000  A check drawn by the Vice-President of the Corporation dated January 15, 2017 140,000  A check dated May 31, 2016 drawn by the Corporation against the kapuso Bank in payment of custom duties. Since the importation did not materialize , the check was returned by the customs broker. This was an outstanding check in the reconciliation of the Kapuso Bank account 820,000 Foreign bank account- restricted (in equivalent pesos) 2,000,000 Credit memo from a vendor for a purchase return 40,000 Traveler’s check  100,000 Money order 60,000

Petty cash fund (Php8,000 in currency and expense receipts for Php11,900) Treasury bills, due 2/28/17 (purchased 12/15/2016)

20,000 400,000

 Additional information related to Demand deposit at Kapamilya Bank: a. Check of Php200,000 in payment of accounts payable was recorded on December 31, 2016 but mailed to suppliers on January 5, 2017. b. Check of Php100,000 dated January 5, 2017 in payment of accounts payable was recorded and mailed on December 31, 2016. c. The company uses the calendar year. The cash receipts journal was held open until January 15, 2017, during which time Php400,000 was collected and recorded on December 31, 2016. Based on the above information and the result of your audit. Compute for the cash and cash equivalents that will be reported on the December 31, 2016 statement of financial position, ______________. Problem 5

The cash account in the ledger of Pau Company had a balance of Php1,689,600 at December 31, 2016. An examination of the account, however, disclosed the following: a. The sales book was left open up to January 5, 2017, and cash sales totaling Php240,000 were considered as sales in December. b. Checks of Php148,800 in payment of liabilities were prepared before December 31, 2016, recorded in the books , but not mailed or delivered to payees. c. Post-dated checks totaling Php124,800 are being held by the cashier as part of cash. The company’s experience shows that post -dated checks are eventually realized. d. Customer’s check for Php24,000 deposited with but returned by bank, “NSF” on December 27, 2016. e. The cash account includes Php640,000 earmarked for the purchase of personal computers which will be soon delivered. The cash balance to be shown on the statement of financial position at December 31, 2016 should be ____________. Problem 6

You were able to gather the following from the December 31, 2016 trial balance of Mari Corporation in connection with your audit of the company: Cash on hand Php 1,000,000 Petty cash fund 20,000 Kapuso bank current account 2,000,000 Kapatid bank current account No. 1 2,160,000 Kapatid bank current account No. 2 ( 160,000) Kapamilya savings account 2,400,000 Kapamilya time deposit 1,000,000 Cash on hand includes the following items: a. Customer’s check for Php80,000 returned by bank on December 26, 2016 due to insufficient fund but subsequently redeposited and cleared by the bank on January 8, 2017. b. Customer’s check for Php40,000 dated  January 2, 2017, received on December 29, 2016. c. Postal money orders received from customers, Php60,000. The petty cash fund considered of the following items as of December 31, 2016. Currency and coins Php 4,000 Employees’ vales  3,200

Currency in an envelope marked “collections for charity” with names attached Unreplenished petty cash vouchers Check drawn by Mari Corporation, payable to the petty cashier

2,400 2,600 8,000 ------------------20,200 ===========

Included among the checks drawn by Mari Corporation against the Kapuso bank current account and recorded in December 2016 are the following: Check written and dated December 29, 2016 and delivered to payee on January 2, 2017, Php160,000. Check written on December 27, 2016, dated January 2, 2017, delivered to payee on December 29, 2016, Php80,000. 



The credit balance in the Kapatid bank current account no. 2 represents checks drawn in excess of the deposit balance. These checks were still outstanding at December 31, 2016. The savings account deposit in Kapamilya Bank has been set aside by the board of directors for acquisition of new equipment. This account is expected to be disbursed in the next 3 months after the end of the reporting period. Based on the above and the result of your audit, determine the adjusted balances of the following: 1. Cash on hand a. Php820,000 c. Php940,000 b. Php1,060,000 d. Php880,000 e. answer not given 2.

3.

4.

Petty cash fund a. Php12,000 b. Php14,400

Kapuso bank current account a. Php2,000,000 b. Php2,240,000

Cash and cash equivalents a. Php5,834,400 b. Php6,149,800

c. d. e.

Php4,000 Php9,800 answer not given

c. d. e.

Php2,160,000 Php2,080,000 answer not given

c. d. e.

Php6,104,000 Php6,132,000 answer not given

Problem 7

Shown below is the bank reconciliation for Mari Company for May 2016: Balance per bank, May 31, 2016 Php 300,000  Add: Deposits in transit 48,000 ---------------------Total Php 348,000 Less: Outstanding checks Php 56,000 Bank credit recorded in error 20,000 -------------------76,000 ---------------------Cash balance per books, May 31, 2016 Php 272,000 ============

The bank statement for June 2016 contains the following data: Total deposits Total charges, including an NSF check of Php16,000 and a service charge of Php800

Php

220,000

192,000

 All outstanding checks on May 31, 2016, including the bank credit, were cleared in the bank in June 30, 2016. There were outstanding checks of Php60,000 and deposits in transit of Php76,000 on June 30, 2016. Based on the above and the result of your audit, answer the following: 1.

How much is the cash balance per bank on June 30, 2016? a. Php308,000 c. Php328,000 b. Php300,000 d. Php344,800 e. answer not given

2.

How much is the June receipts per books? a. Php248,000 c. Php220,000 b. Php192,000 d. Php296,000 e. answer not given

3.

How much is the June disbursements per books? a. Php192,000 c. Php179,200 b. Php159,200 d. Php196,000 e. answer not given

4.

How much is the cash balance per books on June 30, 2016? a. Php300,000 c. Php360,800 b. Php340,800 d. Php324,000 e. answer not given

5.

The adjusted cash in bank balance as of June 30, 2016 is a. Php283,200 c. Php344,000 b. Php324,000 d. Php392,000 e. answer not given

Problem 8

In the audit of Pau Company’s cash account, you obtained the following information: The company’s bookkeeper prepared the following bank reconciliation as of August 31, 2016: Bank balance, Aug 31, 2016 Undeposited collections Bank charges Bank collection of customer’s note Outstanding checks: Number Amount 2059 Php 6,000 2067 10,000 2915 4,000 -------------------Book Balance-August 31, 2016

Php

(

(

181,600 10,000 200 16,000)

20,000) ---------------------Php 155,800 ============

 Additional data are given as follows: 1. Company recordings for September: Total collections from customers Total checks drawn 2.

Php

Bank statement totals for september: Charges Credits

330,000 196,000

247,600 338,000

3.

Check2059 dated August 25, 2016, was entered as Php6,000 in payment of a voucher for Php60,000. Upon examination of the checks returned by the bank, the actual amount of the check was Php60,000.

4.

Check No. 3010 dated September 22, 2016 was issued to replace a mutilated check (No.2067), which was returned by the payee. Both checks were recorded in the amount drawn, Php10,000 but no entry was made to cancel check No. 2067.

5.

The September bank statement included a check drawn by Mike Company for Php3,000.

6.

Undeposited collections on June 30, 2016  – Php16,000.

7.

The service charge for September was Php300 which was charged by the bank to another client.

8.

The bank collected a note receivable of Php14,000 on September 27, 2016, but the collection was not received on time to be recorded by Pau Company.

9.

The outstanding checks on September 30, 2016 were: Check No. Amount Check No. Amount 2067 Php 10,000 3015 Php 4,600 3056 2,600 3043 8,200

Based on the above and the result of your audit, determine the following: 1.

Unadjusted cash balance per books as of September 30, 2016 a. Php305,600 c. Php289,800 b. Php305,500 d. Php331,400 e. answer not given

2.

Adjusted cash balance as of August 31, 2016 a. Php171,600 c. b. Php117,600 d. e.

Php127,600 Php181,600 answer not given

Adjusted book receipts for September 2016 a. Php341,000 c. b. Php364,000 d. e.

Php344,000 Php346,000 answer not given

3.

4.

Adjusted bank disbursement for September 2016 a. Php240,300 c. Php250,300 b. Php152,300 d. Php196,300 e. answer not given

5.

Adjusted cash balance as of September 30, 2016 a. Php265,300 c. Php275,600 b. Php275,300 d. Php269,300

Problem 9

You obtained the following information on the current account of Pau Company during your examination of its financial statements for the year ended December 31, 2017. The bank statement on November 30, 2017 showed a balance of Php306,000. Among the bank credits in November was customer’s note for Php100,000 collected for the account of the company which the company recognized in December among its receipts. Included in the bank debits were cost of checkbooks amounting to Php1,200 and a Php40,000 check which was charged by the bank in error against Pau Company account. Also in November you ascertained that there were deposits in transit amounting to Php80,000 and outstanding checks totaling Php170,000. The bank statement for the month of December showed total credits of Php416,000 and total charges of Php204,000. The company’s books for  December showed total debits of Php735,600, total credits of Php407,200, and a balance of Php485,600. Bank debit memos for December were: No. 008 for service charges and No. 009 on a customer’s returned checks marked “ no sufficient fund” for Php24,000. On December 31, 2017, the company placed with the bank a customer’s promissory note with a face value of Php120,000 for collection. The company treated this note as part of its receipts although the bank was able to collect on the note only in February 2018.  A check for Php3,960 was recorded in the company cash payments books in December as Php39,600. Based on the application of the necessary audit procedures and appreciation of the above data, you are to provide the answer to the following: 1. How much is the undeposited collections as of December 31, 2017? a. Php339,600 c. Php219,600 b. Php179,600 d. Php139,600 e. answer not given 2. How much is the outstanding checks as of December 31, 2017? a. Php191,600 c. Php361,960 b. Php397,600 d. Php363,160 e. answer not given 3. How much is the adjusted cash balance as f November 30, 2017? a. Php216,000 c. Php176,000 b. Php256,000 d. Php157,200 e. answer not given 4. How much is the adjusted bank receipts a. Php635,600 c. b. Php515,600 d. e.

for December? Php475,600 Php435,600 answer not given

5. How much is the adjusted book disbursements for December? a. Php395,600 c. Php225,960 b. Php431,600 d. Php397,160 e. answer not given 6. How much is the adjusted cash balance as of December 31, 2017? a. Php625,640 c. Php220,000 b. Php195,640 d. Php375,640 e. answer not give

Problem 10

The cashier misplaced all the bank statements for the past year. You reviewed the accounting records and discovered that the following journal entry was made to reconcile the June 30, 2016 bank records and accounting records:  Accounts receivable Miscellaneous expense Notes receivable Interest revenue Cash

152,024 1,250 20,000 1,000 132,274

Pre adjustment cash balance in the accounting records was Php768,370, outstanding checks were Php20,750 and no other adjustments were required. What is the bank statement balance at June 30, 2016? a. Php615,346 c. Php656,846 b. Php636,096 d. Php768,370 Problem 5

 Assume the following data of Pau Company of its cash and short-term, highly liquid investments for December 31, 2017: Cash on hand Checking account No. 421, Kapuso bank Checking account No. 724, Kapuso bank

Securities 120-day certificate of deposit BSP-Treasury bills (No. 1) BSP-Treasury bills (No. 2) 180 days commercial paper Money market funds 5.

Date Acquired 12/10/17 11/30/17 10/31/17 12/1/17 11/21/17

Maturity Date 1/31/18 4/30/18 1/20/18 6/20/18 2/10/18

Php

Php

800,000 2,000,000 ( 300,000)

Amount 6,000,000 50,000,000 10,000,000 14,000,000 20,000,000

The correct cash and cash equivalents balance on December 31, 2017 is a. Php38,500,000 c. Php52,500,000 b. Php38,800,000 d. Php52,800,000

Problem 11 The December 31, 2016 trial balance of Mari Company includes the following accounts: Petty cash fund Php 700,000 Current account-Kapuso bank 40,000,000 Current account-Kapamilya bank (overdraft) ( 2,500,000) 120-day money market placement-K bank 10,000,000 Time deposit-KB bank 20,000,000  Additional information: a. The petty cash fund includes unreplenished December 2016 petty cash expense vouchers for Php150,000 and an employee check for Php50,000 dated January 31, 2017. b. A check for Php1,000,000 was drawn against Kapuso bank current account dated and recorded December 27, 2106 but delivered to payee on January 10, 2017. c. The KB bank time deposit is set aside for land acquisition in early January 2017.

What should be reported as “cash and cash equivalents” on December 31, a. Php51,300,000 c. Php41,500,000 b. Php51,500,000 d. Php48,800,000

2016?

Problem 12

Camil Company’s ledger showed a balance in its cash account at December 31, 2016 of Php1,364,500, which was determined to consist of the following: Petty cash fund Php 7,200 Checking account in Kapamilya bank ( check of Php12,000 is still outstanding) 673,500 Notes receivable in the possession of a collecting agency 50,000 Undeposited receipts, including a postdated check for Php10,500 and traveller’s check for Php10,000 356,000 Bond sinking fund cash 255,000 IOUs signed by employees 9,900 Paid vouchers, not yet recorded 12,900 --------------------Total Php 1,364,500 ============  At what amount should “cash on hand and in bank” be reported on Camil Company’s statement of financial position? a. Php1,003,700 c. Php1,258,700 b. Php1,014,200 d. Php1,324,500 Problem 13

The petty cash fund of Pau Company at the end of the fiscal year ended June 30, 2016, is composed of the following: Currencies Php 7,600 Coins 2,400 Paid vouchers: Office supplies 3,500 Postage stamps 4,000 Loans to employees 12,000 Check drawn by the manager, returned by bank marked “NSF”.  5,500 Check drawn by the company, payable to the order of the petty cash custodian , representing her salary 25,000 The amount of petty cash fund that would be shown on the statement of financial position at June 30, 2016 of Pau Company is __________. a. Php10,000 c. Php40,500 b. Php35,000 d. Php60,000 Problem 14

Upon examination of the petty cash fund of Kapuso Company on June 3, 2017, the following items were found: Total bills and coins Php 18,250 Certified check of general manager dated December 15, 2016 15,000 Petty cash vouchers (PCVs) not yet replenished: PCV No.0021 Postage stamps 2,800 PCV No.0022 Supplies 6,500

PCV No.0023 IOU employee Company check representing replenishment of petty cash fund Unused stamps  An envelope containing contributions of employees for the death of a fellow employee (contents intact)

5,000 51,500 1,200

30,000

The petty cash fund was established for an amount of Php100,000. 1.

What is the correct amount of petty cash fund at December, 2016? a. Php99,050 c Php69,750 b. Php84,750 d. Php18,250.

2.

What is the amount of cash shortage or overage? a. Php950 shortage c. Php2,150 shortage b. Php250 overage d. canot be determined

Problem 15

The following account balances are shown in the accounting records of Camil Company:

Cash  Accounts receivable Merchandise inventory  Accounts payable

January 1, 2016 Php 124,000 134,000 172,000 106,000

December 31, 2016 Php

182,000 156,000 96,000

Sales for 2016 amounted to Php1,596,000 while cost of goods sold was Php1,166,000. Cash operating expenses amounted to Php214,000. All sales and purchases were made on credit.  Assuming that there were no other relevant transactions , what is the cash balance at December 31, 2016? a. Php216,000 c. Php512,000 b. Php298,000 d. Php610,000 Problem 16

Camila Company is making a four column bank reconciliation at December 31 from the following data. The amounts per bank statement were: Balance November 30, Php650,000; December Receipts, Php1,300,000; December Disbursements, Php1,100,000. The amounts per books were: Balance November 30, Php763,500; December Receipts, Php1,154,800; December Disbursements, Php 1,123,500; Balance, December 30, Php794,800. November 30

Deposits in transit Outstanding checks The bank overlooked a check for Php7,500 when recording a deposit on Dec 10 Note collected by bank, recorded after receiving the bank statement Service charge, recorded after receiving the bank statement NSF checks, recorded after receiving the bank statement Camila recorded a Php37,400 check received from a customer in December as Php34,700.

? ?

December 31

Php

150,000 84,000

180,000 4,500

6,000

56,000

48,000

1.

The corrected cash balance on December 31 is _____________. a. Php908,500 c. Php923,500 b. Php916,000 d. Php1,007,500.

2.

The corrected December receipts is a. Php1,157,500 b. Php1,330,000

c. d.

Php1,334,800 Php1,337,500

3.

The corrected amount of December disbursements is a. Php1,083,000 c. Php1,125,000 d. Php1,117,000 d. Php1,130,000

4.

Deposits in transit, November 30 a. Php120,000 c. b. Php240,000 d.

Php127,500 answer not given

Outstanding checks , November 30 a. Php67,000 c. b. Php70,000 d.

Php120,000 answer not given

5.