Composition of Cash and Cash Equivalent

Composition of Cash and Cash Equivalent In connection with your audit of Caloocan Corporation for the year ended December 31, 2010, you gathered the following: Current account at Metrobank Current account at BPI Payroll account Foreign bank account-restricted(in equivalent pesos) Postage stamps Employee’s post dated check IOU from controller’s sister Credit memo from a vendor for a purchase return Traveler’s check Not-sufficient-fund check Money order Petty cash fund (P4,000 in currency and expense Receipts for P6,000) Treasury bills, due 3/30/11 (purchased 12/29/10) Treasury bills, due 1/31/11 (purchased 2/1/10)

P 2,000,000 ( 100,000) 500,000 1,000,000 1,000 4,000 10,000 20,000 50,000 15,000 30,000 10,000 200,000 300,000

Question: Based on the above information and the result of your audit, compute for the cash and cash equivalent that will be reported on the December 31, 2010 statement of financial position.

Composition of Cash and Cash Equivalent In the course of your audit of the Las Pinas Corporation, its controller is attempting to determine the amount of cash to be reported on its December 31, 2010 statement of financial position. The following information is provided: 1. Commercial savings account of P 1,200,000 and a commercial checking account balance of P 1,800,000 are held at PS Bank. 2. Travel advances of P 360,000 for executive travel for the first quarter of the next year (employee to reimburse through salary deduction). 3. A separate cash fund in the amount of P 3,000,000 is restricted for the retirement of a long term debt. 4. Petty cash fund of P 10,000. 5. An I.O.U. from a company officer in the amount of P 40,000. 6. A basic overdraft of P 250,000 has occurred at one of the banks the company has no deposits at this bank. 7. The company has two certificates of deposit, each totalling P 1,000,000. These certificates of deposit have maturity of 120 days. 8. Las Pinas has received a check dated January 2, 2011 in the amount of P 150,000. 9. Las Pinas has agreed to maintain a cash balance of P 200,000 at all times at PS Bank to ensure future credit availability. 10. Currency and coin on hand amounted to P 15,000. Question: Based on the above information and the result of your audit, how much will be reported as cash and cash equivalents at December 31, 2010?

Computation of adjusted cash balance The cash account of the Makati Corporation as of December 31, 2010 consists of the following:

On deposit in current account with Real Bank Cash collection not yet deposited to the bank A customer’s check returned by the bank for Insufficient fund A check drawn by the Vice-President of the Corporation Dated January 15, 2011 A check drawn by a supplier dated December 28, 2010 For goods returned by the Corporation A check dated May 31, 2010 drawn by the Corporation against the Piggy Bank in payment of customs duties. Since the importation did not materialize, the check was returned by the customs broker. This check was an outstanding check in the reconciliation of the Piggy Bank account. Petty Cash fund of which P 5,000 is in currency; P 3,600 in form of employees’ I.O.U.s; and P 1,400 is supported by approved petty cash vouchers for expenses all dated prior to closing of the books on December 31, 2010 Total Less: Overdraft with Piggy Bank secured by a Chattel mortgage on the inventories Balance per ledger

P 900,000 350,000 150,000 70,000 60,000

410,000

10,000 1, 950,000 300,000 P 1,650,000

Question: At what amount will the account “cash” appear on the December 31, 2010 statement of financial position?

Computation of adjusted cash and cash equivalents You noted the following composition of Malabon Company’s “cash account” of December 31, 2010 in connection with your audit: Demand deposit account Time deposit -30 days NSF check of customer Money market placement (due June 30, 2011)

P 2,000,000 1,000,000 40,000 1,500,000

Savings deposit in a closed bank IOU from employee Pension fund Customer’s check dated January 1, 2011 Customer’s check outstanding for 18 months Total

100,000 20,000 3,000,000 50,000 40,000 P 7,760,000

Additional information follows: a) Check of P 200,000 in payment of accounts payable was recorded on December 31, 2010 but mailed to suppliers on January 5, 2011. b) Check of P 100,000 dated January 15, 2011 in payment of accounts payable was recorded and mailed on December 31, 2010. c) The company uses the calendar year. The cash receipt journal was held open until January 15, 2011, during which time P 400,000 was collected and recorded on December 31, 2010. Question: The cash and cash equivalent to be shown on the December 31, 2010 statement of financial position is

Computation of adjusted cash balance The Cash account in the ledger of Pateros Company had a balance of P 844,800 at December 31, 2010. An examination of the account, however, disclosed the following:   

The sales book was left open up to January 5, 2011, and cash sales totalling P 120,000 were considered as sales in December. Checks of P 74,400 in payment of liabilities were prepared before December 31, 2010, recorded in the books, but not mailed or delivered to payees. Post-dated checks totalling P 62,400 are being held by the Cashier as part of Cash. The company’s experience shows that post-dated checks are eventually realized.

 

Customer’s check for P 12,000 deposited with but returned by Bank, “NSF” on December 27, 2010. The Cash account includes P 320,000 earmarked for the purchase of personal computers which will soon be delivered.

Question: The cash balance to be shown on the statement of financial position at December 31, 2010 should be

Computation of adjusted cash balance You were able to gather the following from the December 31, 2010 trial balance of Mandaluyong Corporation in connection with your audit of the company: Cash on hand P 500,000 Petty cash fund 10,000 BPI current account 1,000,000 Security Bank current account No. 01 1,080,000 Security Bank current account No. 02 (80,000) PNB savings account 1,200,000 PNB time deposit 500,000 Cash on hand includes the following items: a. Customer’s check for P 40,000 returned by bank on December 26, 2010 due to insufficient fund but subsequently redeposited and cleared by the bank on January 8, 2011. b. Customer’s check for P 20,000 dated January 2, 2011, received on December 29, 2010. c. Postal money orders received from customer’s P 30,000

The petty cash fund consisted of the following items as of December 31, 2010. Currency and coins P 2,000 Employees’ vales 1,600 Currency in an envelope marked “collections for Charity” with names attached 1,200 Unreplenished petty cash vouchers 1,300 Check drawn by Mandaluyong Corporation, payable to the petty cashier 4,000 Included among the checks drawn by Mandaluyong Corporation against the BPI current account and recorded in December 2010 are the following: a. Check written and dated December 29, 2010 and delivered to payee on January 2, 2011, P 80,000. b. Check written on December 27, 2010, dated January 2, 2011, delivered to payee on December 29, 2010, P 40,000. The credit balance in the Security Bank account No. 2 represents checks drawn in excess of the deposit balance. These checks were still outstanding at December 31, 2010. The savings account deposit in PNB has been set aside by the board of directors for acquisition of new equipment. This accounts is expected to be disbursed in the next 3 months after the end of the reporting period. Questions: Based on the above and the result of your audit, determine the adjusted balances of following: 1. Cash on Hand 2. Petty cash fund 3. BPI current account 4. Cash and cash equivalents

Bank reconciliation: Computation of adjusted cash in bank balance The books of Manila’s Service, Inc. disclosed a cash balance of P 687,570 on December 31, 2010. The bank statement as of December 31 showed a balance of P 547,800. Additional information that might be useful in reconciling the two balances follows: a) Check number 748 for P 30,000 was originally recorded on the books as P 45,000. b) A customer’s note dated September 25 was discounted on October 12. The note was dishonoured on December 29 (maturity date). The bank charged Manila’s account for P 142,650, including a protest fee of P 2,650. c) The deposit of December 24 was recorded on the books as P 28,950, but it was actually a deposit of P 27,000. d) Outstanding checks totalled P 98,850 as of December 31. e) There were bank service charges for December of P 2,100 not yet recorded on the books.

f) Manila’s account had been charges on December 26 for a customer’s NSF check for P 12, 960. g) Manila properly deposited P 6,000 on December 3 that was not recorded by the bank. h) Receipts of December 31 for P 134,250 were recorded by the bank on January 2. i)

A bank memo stated that a customer’s note for P 45,000 and interest of P 1,650 had been collected on December 27, and the bank charged a P360 collection fee.

Question: Based on the above and the results of your audit, determine the following: 1. Adjusted cash in bank balance 2. Net adjustment to cash as of December 31, 2010

Bank reconciliation: Computation of adjusted cash in bank balance Navotas Company’s newly hired assistant prepared the following bank reconciliation on December 31, 2010: Book balance Add: December 31 deposit in transit P 1,500,000 Collection of note 5,000,000 Interest in note 300,000 Total Less: Novaliches Company’s deposit to our account 2,200,000 Bank service charge 90,000 Adjusted book balance Bank balance Add: Error on check No. 193 Total

P 2,810,000

6,800,000

2,290,000 P 7,320,000 P 11,260,000 9,000 11,269,000

Less: Preauthorized payments for Water bills NSF check Outstanding check Adjusted bank balance

P 248,000 440,000 3,219,000

3,907,000 P 7,362,000

Check No. 193 was made for the proper amount of P 489,000 in payment of account. However it was entered in the cash payments journal as P 498,000. Navotas authorized the bank to automatically pay its water bill as submitted directly to the bank. Question: Base on the above and the result of your audit, the correct cash in bank balance as of December 31, 2010 is

Bank reconciliation: Computation of adjusted cash in bank balance Shown below is the bank reconciliation for Marikina Company for November 2010: Balance per bank, Nov. 30, 2010 Add: Deposits in transit Total Less: Outstanding checks Bank credit recorded in error Cash balance per books, Nov. 30, 2010

P 150,000 24,000 174,000 P 28,000 10,000

38,000 P 136,000

The Bank statement for December 2010 contains the following data: Total deposits Total charges, including an NSF check of P 8,000 and a service charge of P400

P 110,000 96,000

All outstanding checks on November 30, 2010, including the bank credit, were cleared in the bank in December 2010. There were outstanding checks of P 30,000 and deposits in transit of P 38,000 on December 31, 2010. Question: Base on the above and the result of your audit, answer the following: 1. 2. 3. 4. 5.

How much is the cash balance per bank on December 31, 2010? How much is the December receipts per books? How much is the December disbursements per books? How much is the cash balance per books on December 31, 2010? The adjusted cash in bank balances as of December 31, 2010 is

Proof of cash: Computation of adjusted balances The accountant for the Muntinlupa Company assembled the following data:

Cash account balance Bank statement balance Deposits in transit Outstanding checks Customer’s check deposited July 10, returned by bank on July 16 marked NSF, and redeposited immediately; no entry made on books for return or redeposit Collection by bank of company’s notes receivable

June 30 P 15,822 107,082 8,201 27,718

July 31 P 39,745 137,817 12,880 30,112

8,250 71,815

The bank statement and the company’s cash records show these totals:

80,900

Disbursements in July per bank statement Cash receipts in July per Muntinlupa’s books

P 218,373 236,452

Questions: Base on the application of the necessary audit procedures and appreciation of the above data, you are to provide the answers to the following: 1. 2. 3. 4. 5.

How much is the adjusted cash balance as of June 30? How much is the adjusted bank receipts for July? How much is the adjusted book disbursements for July? How much is the adjusted cash balance as of July 31? How much is the cash shortage as of July 31?

Proof of cash: Computation of unadjusted and adjusted balances In the audit of Pasig Company’s cash account, you obtained the following information: The company’s bookkeeper prepared the following bank reconciliation as of November 30, 2010: Bank balance-November 30, 2010 Undeposited collections Bank service charges Bank collection of customer’s note Outstanding checks:

P 90,800 5,000 100 (8,000) Number Amount 1159 P 3,000 1767 5,000 1915 2,000

Book balance- November 30, 2010

(10,000) P 77,900

Additional data are given as follows: a.

b.

Company recordings for December: Total collections from customers Total checks drawn Bank statement totals for December:

P 165,000 98,000

Charges Credits

P 123,800 169,000

c.

Check no. 1159 dated November 25, 2010, was entered as P 3,000 in payment of a voucher for P 30,000. Upon examination of the checks returned by the bank, the actual amount of the check was P 30,000. d. Check no.2113 dated December 20, 2010 was issued to replace a mutilated check (no. 1767), which was returned by the payee. Both checks were recorded in the amount drawn, P 5,000, but no entry was made to cancel check no. 1767. e. The December bank statement included a check drawn by Sipag Company for P 1,500. f. Undeposited collections on December 31, 2010 – P 8,000. g. The service charge for December was P 150 which was charged by the bank to another client. h. The bank collected a note receivable of P 7,000 on December 28, 2010, but the collection was not received on time to be recorded by Pasig. i. The outstanding checks on December 31, 2010, were: Check No. Amount Check No. Amount 1767 P 5,000 2910 P 2,300 2856 1,300 2925 4,100 Question: Base on the above and the result of your audit, determine the following: 1. Unadjusted cash balance per books as of December 31, 2010 2. Adjusted cash balance as of November 30, 2010 3. Adjusted book receipts for December 2010 4. Adjusted bank disbursement for December 2010 5. Adjusted cash balance as of December 31, 2010 Proof of cash: Computation of unadjusted and adjusted balances Your audit senior instructed you to prepare a four column proof of cash receipts and disbursements for the month of August, 2010. The bank reconciliation prepared by San Juan Company at July 31 is reproduced below: (All book adjustments were recorded in August). Bank balance

P 52,000

Add: Deposit in transit, July 31

Total Less outstanding checks No. 436 No. 450 No. 451 No. 454 Adjusted balance

900

52,900 P 200 1,800 1,400 600

4,000 P 48,900

Book balance Add: Proceeds of note receivable collected by bank in July Deposit made in bank on July 31 not recorded in books until August Total Less bank service charge

P 40,000 8,000 1,000 49,000 100

P 48,900

Upon inquiry about the client’s August 31 bank reconciliation, you were informed that it has been lost and that client is too busy at this time to prepare another. Your senior told you to get the august bank statement and paid checks ant to prepare the August 31 reconciliation so that you may compete the August proof of cash.

The August bank statement is reproduced below: Knights Bank Account Name: San Juan Company Date July 31

Debits

Credits August 1

1,800

900 August 6 August 9 August 12 August 15 August 20 August 27 August 29 August 31 August 31

1,400 600 140 1,000 700 1,440 100 440 300 1,820

DM

10,000 140 14,000

EC SV DM

100 EC

SV – Service Charge; DM - Debit Memo; EC – Error Corrected; CM – Credit Memo The paid checks accompanying this bank statement ( all clearing in August) were ( checks listed in order of payment by bank). No. 450 P 1,800 No. 455 P 1,000 No.458 P 1,440 451 1,400 456 700 459 1,820 The check register revealed that the last check issued in August was no. 460 for P 1,000 and that check no.457 for P 2,400. Cash received for the period August 21 through 31 of P 9,400 was deposited in the bank on September 1. The debit memo on August 12 and August 31 were customer NSF checks returned by the bank. The check on August 12 was immediately redeposited without entry. The check returned on August 31 was redeposited by the client in the bank on September 1 without entry.

Questions: Base on the application of the necessary audit procedures and appreciation of the above data, you are to provide the answers to the following: 1. 2. 3. 4. 5.

How much is the unadjusted book receipts in August? How much is the unadjusted book disbursements in August? How much is the adjusted book receipts in August? How much is the adjusted book disbursements in August? How much is the adjusted cash balance as of August 31, 2010?

. Computation of cash shortage You were engaged to audit the accounts of Taguig Corporation for the year ended December 31, 2010. In your examination, you determined that the Cash account represents both cash on hand and cash in bank. You further noted that the company’s internal control over cash is very poor. You started the audit on January 15, 2011.Based on your cash count on this date, cash on hand amounted to P 19,200. Examination of the cash book and other evidence of transactions disclosed the following: a. b. c. d. e.

f. g. h.

January collections per duplicate receipts, P 75,200. Total duplicate deposit slips, all dated January, P 44,000. This amount includes a deposit representing collections on December 31. Cash book balance at December 31, 2010 amounted to P 186,000. Representing bth cash on hand and cash in bank. Bank statement for December showed a balance of P 170,000. Outstanding checks at December 31: November checks December checks No. 280 P 1,800 No. 331 P 2,400 290 6,600 339 1,600 345 20,000 353 3,600 364 10,000 Undeposited collections at December 31, 2010 amounted to P 20,000 An amount of P 4,400 representing proceeds of a clean draft on a customer was credited by bank, but is not yet taken up in the company’s books. Bank service charges for December, P 400.

The company cashier presented to you the following reconciliation statement for December, 2010, which he has prepared: Balance per books, December 31, 2010 Add: Outstanding checks No. 331 P 2,400 339 1,600 345 2,000 353 3,600 364 1,000 Total Bank service charge Undeposited collections Balance per bank, December 31, 2010

P 180,600

10,600 191,200 (400) (20,400) P 170,400

Questions: Base on the above and the result of your audit, answer the following: 1. 2. 3. 4.

How much is the adjusted cash balance as of December 31, 2010? How much is the cash shortage as of December 31, 2010? How much is the cash shortage for the period January 1 to 15, 2011? Which of the following is not a method used by the cashier to cover up the shortage as of December 31, 2010?

Computation of cash flows and shortage

The Valenzuela Corporation was organized on January 15, 2010 and started operation soon thereafter. The Company cashier who acted also as the bookkeeper had kept the accounting records very haphazardly. The manager suspects him of defalcation and engaged you to audit his account to find out the extent of the fraud, if there is any. On November 15, when you started the examination of the accounts, you find the cash on hand to be P 25,700. From inquiry at the bank, it was ascertained that the balance of the Company’s bank deposit in current account on the same date was P 131,640. Verification revealed that the check issued for P 9,260 is not yet paid by the bank. The corporation sells at 40% above cost. Your examination of the available records disclosed the following information: Share capital issued at par for cash Real state purchased and paid in full Mortgage liability secured by real state Furniture and fixtures (gross) bought on which there is still balance unpaid of P 30,000 Outstanding notes due to bank Total amount owed to creditors on open account Total sales

P 1,600,000 1,000,000 400,000 145,000 160,000 231,420 1,615,040

Total amount till due from customers Inventory of merchandise on November 15 at cost Expenses paid excluding purchases

426,900 469,600 303,780

Questions: Base on the above and the result of your audit, compute for the following as of November 15, 2010: 1. Collection from sales 2. Payments for purchases 3. Total cash disbursements 4. Unadjusted cash balance 5. Cash shortage

Computation of cash in bank Cash in bank balance of Novaliches Co. on January 1, 2010 was P 1,400,000 representing 35% paidup capital of its authorized share capital of P 4,000,000. During the year you ascertained the following postings to come accounts, as follows:

Petty cash fund Accounts receivable trade Subscription receivable Delivery equipment Accounts payable trade Bank loan Accrued expenses Subscribed share capital Unissued share capital Authorized share capital Sales Purchases Expenses (including depreciation of P 100,000 and accrued expenses of P 30,000)

Debit P 40,000 9,000,000 1,200,000 1,000,000 5,600,000 700,000

Credit P 5,800,000 1,000,000 8,600,000 1,600,000 30,000 1,200,000

2,600,000 4,000,000 9,000,000 8,600,000 1,800,000

Question: The cash in bank balance at December 31, 2010 is

Cash flow computations In connection with your audit, Quezon Metals Company presented to you the following information : Quezon Metals Company Comparative Statements of Financial Position December 31, 2010 and 2009

ASSETS Current Assets: Cash Available for sale securities Accounts receivable Inventory Prepaid expenses Total Current Assets Property, plant, and equipment Accumulated depreciation Total Assets Liabilities and Equity Current Liabilities: Accounts payable Accrued expense Dividends Payable Total Current Liabilities Notes payable-due 2012 Total Liabilities Equity: Share capital Retained earnings Total Equity

2010 P 476,000 236,000 1,248,000 1,112,000 140,000 3,212,000 2,144,000 (304,000) 1,840,000 P 5,052,000 2010

2009 P 392,000 1,016,000 956,000 84,000 2,448,000 1,636,000 (212,000) 1,424,000 P 3, 872,000 2009

P 848,000 392,000 160,000 1,400,000 500,000 1,900,000

P 792,000 304,000 1,096,000 1,096,000

2,400,000 752,000 3,152,000

2,200,000 576,000 2,776,000

Total Liabilities and Equity

P 5,052,000

P 3,872,000

Quezon Metals Company Condensed Comparative of Income Statements For the Years December 31, 2010 and 2009

Net Sales Cost of Goods Sold Gross Profit Expense Net Income

2010 P 14,244,000 11,156,000 3,088,000 2,084,000 P 1,004,000

2009 P 13,016,000 10,272,000 2,744,000 1,944,000 P 800,000

Additional information for Quezon:

a) b) c)

All accounts receivable and accounts payable relate to trade merchandise. The proceeds from the notes payable were used to finance plant expansion. Share capital was sold to provide additional working capital.

Questions: 1. Cash collected from accounts receivable, assuming all sales are on account 2. Cash payments made on accounts payable to suppliers, assuming that all purchases of inventory are on account. 3. Cash payments for dividends. 4. Cash receipts that were not provided by operations. 5. Cash payments for assets that were not reflected in operations. Proof of cash; Accounts receivable hypothecation; Computation of adjusted balances You were able to obtain the following information in connection with your audit of the Cash account of the Pasay Company as of December 31, 2010: November 30 P 480,000 504,000 244,000 150,000

December 31 P 420,000 539,000 300,000 120,000

a. b. c. d.

Balances per bank Balances per book Undeposited collections Outstanding checks

e.

The bank statement for the month of December showed total credits of P 240,000 while the debits per books totalled P 735,000. NSF checks are recorded as a reduction of cash receipts. NSF checks written are later redeposited are then recorded as regular receipts. Data regarding NSF checks are as follows: 1. Returned by the bank in Nov. and recorded by the company in Dec., P 10,000. 2. Returned by the bank in Dec. and recorded by the company in Dec., P 25,000. 3. Returned by the bank in Dec. and recorded by the company in Jan., P 29,000. Check of Pasaway Company amounting to P 90,000 was charged to the company’s account by the bank in error on December 31. A bank memo stated that the company’s account was credited for the net proceeds of Anito’s note for P 106,000. The company has hypothecated its account and increases the amount of the loan for 80% of the hypothecated accounts receivable. The company performs accounting and collection of the accounts. Adjustments of the loan are made from daily sales reports and deposits. The bank credits the company account and increases the amount of the loan for 80% of the reported sales. The loan agreement states specifically that the sales report must be accepted by the bank before the company is credited. Sales reports are forwarded by the company to the bank on the first day following the date of sale. The bank allocates each deposit 80% to the payment of the loan, and 20% to the company account. Thus, only 80% off each day’s

f.

g. h. i. j.

sales and 20% of each collection deposits are entered on the bank statement. The company accountant records the hypothecation of new accounts receivable (80% of sales) as a debit to Cash and a credit to the bank loan as of the date of sales. One hundred percent of the collection on accounts receivable is recorded as a cash receipt; 80% of the collection is recorded in the cash disbursements book as a payment on the loan. In connection with the hypothecation, the following facts were determined:  Included in the undeposited collections is cash from the hypothecation of accounts receivable. Sales were P 180,000 on November 30, and P 200,000 at December 31. The balance was made up from collections which were entered on the books in the manner indicated above.  Collections on accounts receivable deposited in December, other than deposits in transit, totalled P 725,000. k. Interest on the bank loan for the month of December charged by the bank but not recorded in the books, amounted to P 38,000. Questions: 1. How much is the adjusted cash balance as of November 30, 2010? 2. How much is the adjusted book receipts for December, 2010? 3. How much is the adjusted book disbursements for December 2010? 4. How much is the adjusted cash balance as of December 31, 2010? 5. How much is the cash shortage as of December 31, 2010?

Proof of cash; Accounts receivable hypothecation; Computation of adjusted balances You obtained the following information on the current account of Paranaque Company during your examination of its financial statements for the year ended December 31, 2010. The bank statement on November 30, 2010 showed a balance of P 306,000. Among the bank credits in November was customer’s note for P 100,000 collected for the account of the company which the company recognized in December among its receipts. Included in the bank debits were cost of check books amounting to P 1,200 and a P 40,000 check which was charged by the bank in error against Paranaque Co. account. Also in November you ascertained that there were deposits in transit amounting to P 80,000 and outstanding checks totalling P 170,000. The bank statement for the month of December showed total credits of P 416,000 and total charges of P 204,000. The company’s books for December showed total debits of P 735,600, total credits of P 407,200 and a balance of P 485,000. Bank debit memos for December were No. 121 for service charges, P 1,600 and No. 122 on a customer’s returned check marked “Refer to Drawer” for P 24,000. On December 31, 2010 the company placed with the bank a customer’s promissory note with a face value of P 120,000 for collection. The company treated this note as part of its receipts although the bank was able to collect on the note only in January, 2011. A check for P 3,000 was recorded in the company cash payments books in December as P 39,600.

Questions: Base on the application of the necessary audit procedures and appreciation of the above data, you are to provide the answers to the following: 1. 2. 3. 4. 5. 6.

How much is the undeposited collections as of December 31, 2010? How much is the outstanding checks as of December 31, 2010? How much is the adjusted cash balance as of November 30, 2010? How much is the adjusted bank receipts for December? How much is the adjusted book disbursements for December? How much is the adjusted cash balance as of December 31, 2010?

Proof of cash; Identification of reconciling items and computation of adjusted balances Your audit senior instructed you to prepare a four column proof of cash receipts and disbursements for the month of December, 2010. The bank reconciliation prepared by Cubao Company at November 30 is reproduced below: Unadjusted bank balance P 96,800 Unadjusted book balance P 58,640 Add: deposit in transit 18,000 Add: CM-Note collected 40,320 Less: outstanding checks Less: DM bank charges 160 No. 276 P 2,400 282 7,200 284 4,800 285 1,600 16,000 Adjusted balance P 98,800 Adjusted balance P 98,800 The December bank statement, which has a beginning balance of P 96,800 is reproduced below: May Bank Account Name: Cubao Company Date Debits Credits December 01 P 18,000 December 02 P 7,200 40,000 December 04 24,000 December 06 48,000 December 08 400,000 CM83 December 10 40,000 DM97 December 11 56,000 December 16 20,000 December 18 64,000 December 21 72,400

December 28 36,000 80,000 December 31 4,000 DM98 64,000 CM84 Totals P 131,200 P 842,400 DM97- Customer’s DAIF check CM83 – Note collected by the bank DM98- Service Charges CM84 – Account collected by the bank The company’s cash receipts and cash disbursements journals for the month of December 2010 are provided below: Cash receipts Journal OR No. Amount 415 P 40,000 416 48,000 417 56,000 418 64,000 419 72,000 420 80,000 421 88,800

Date Dec. 01 05 10 17 20 27 31 Total

P 440,800

Cash Disbursements Journal Check No. Amount 286 P 16,000 287 24,000 288 32,000 289 20,000 290 28,000 291 36,000 292 40,000 293 44,000 31 294 48,000 Total P 304,000 Date Dec. 01 03 10 14 20 23 26

The company’s Cash in Bank ledger appears below: Balance 12/01/10 12/10/10 12/31/10

GJ GJ (CM83) CRJ

Cash in Bank P 58,640 12/31/10 CDJ 40,320 400,000 440,800

P 304,000

Questions: Base on the application of the necessary audit procedures and appreciation of the above data, you are to provide the answers to the following: 1. 2. 3. 4. 5.

How much is the outstanding checks as of December 31, 2010? How much is the adjusted book receipts for December, 2010? How much is the adjusted book disbursements for December, 2010? How much is the adjusted cash balance as of December 31, 2010? How much is the cash shortage as of December 31, 2010?