Audit of Cash and Receivables

PROBLEM 1: (KAS) =)) You have been assigned to audit the cash account of GUSTOPUMASA Company. The following are the information that you have obtained in the process: BANK BALANCE – May 31, 2014 UNDEPOSITED COLLECTIONS BANK SERVICE CHARGE COLLECTION OF NOTE BY THE BANK OUTSTANDING CHECKS: CHECK#0612 P 3,000 CHECK#0708 5,000 CHECK#0908 2,000 BOOK BALANCE – May 31, 2014

P 90,800 5,000 100 (8,000)

(10,000) P 77,900

Additional data: a. For June: Total collections from customers P165,000 Total checks drawn 98,000 Bank charges 123,800 Bank credits 169,000 b. CHECK#0612 was erroneously entered in the payment voucher at P30,000 instead of P3,000. c. CHECK#0614 was issued to replace CHECK#0708 which was damaged and returned by the payee. Both were recorded in the amount drawn but entry was made to cancel the first check that was issued. d. The bank statement in june included a check drawn by GOSTUPOMASA Company for P1,500. e. The service charge for june was P 150 and was charged by the bank to another account. f. Undeposited collections on June 30, 2014 amounts to P8,000 g. The bank collected a note during the month of june which amounts to P7,000 but was ot received on time to be recorded by GUSTOPUMASA. h. The outstanding checks as of June 30, 2014 were: CHECK#0708 P5,000 CHECK#0911 1,300 CHECK#0939 2,300 CHECK#1001 4100 1. How much is the unadjusted balance per books as of June 30, 2014? a. 152,800 b. 152,750 c. 144,900 d. 165,700 2. How much is the adjusted cash balance as of May 31, 2014? a. P85,800 b. P58,800 c. P63,800 d. P90,800

3. How much is the adjusted book receipts for June 2014? a. 170,500 b. 182,000 c. 172,000 d. 173,000 4. How much is the bank disbursement for June 2014? a. 120,150 b. 76,150 c. 125,150 d. 98,150 5. Adjuste cash balance as of June 30, 2014? a. P132,650 b. 137,650 c. 137,800 d. 134,650

PROBLEM 2: (AR) You have been assigned to audit the accounts receivable and related accounts of PRETTYPLEASE Company. The balance of the Accounts Receivable control account is P788,000. The entries that were poste in the Doubtful Accounts Expense were: a. A debit on December 31 for the amount of the credit to the Allowance for Doubtful Accounts b. A credit for P1,296 on December 3, 2014 because PUMASANA Comapny remitted in full for the accounts charged off on October 31, 2014. Debit Credit January 1, 2014 October 31, 2010 Uncollectible accounts Company naksuno P1,296 Company lakasdos 3,280 Company sawakastres 2,256 P6,032 December 31, 2014 P39,400 Table 1: The Allowance for Doubtful Accounts schedule Age 0 – 30 days 31 – 90 days 91 – 180 days Over 181 days

8,600 P48,000

Rate 1% 2% 3% 4,000 – definitely uncollectible 8,000 – 50% uncollectible 12, 000 – 20% uncollectible Table 2: Aging Schedule of Accounts Receivable Addional information:

Balance 372,960 307,280 88,720 24,000

Balance P14,632

a. A credit balance of P8,000 in the 0 – 30 days. It represents an advance on sales contract. b. A credit balance of P2,000 in the 31 – 60 days for which mechandise will be accepte by the customer. c. Legder accounts are still open as of December 31, 2014. d. The Accounts Receivable cotrol account is not in agreement with the subsiiary ledger. Note:  Adjust the control account to the sum of the subsidiaries after the corrections are made. 6. How much is the adjusted balance of Accounts Receivable as of December 31, 2014? a. 794,000 b. 793,200 c. 798,960 d. 802,960 7. How much is the adjusted balance of the Allowance for Doubtful Accounts as of December 31, 2014? a. 63,552 b. 23,057 c. 18,937 d. 19,057 8. How much is the net adjustment to the Allowance for Doubtful Accounts? a. 24,493 debit b. 15,552 credit c. 28,943 debit d. 29,063 debit 9. How much is the Doubtful Accounts Expense for the year 2014? a. 13,961 b. 58,456 c. 18,411 d. 13,841 10. How much is the net ajustment to the Doubtful Accounts Expense account? a. 20,352 debit b. 24,263 credit c. 24,143 credit d. 19,693 credit