You Gathered The Following:: Audit of Cash and Cash Equivalents Problem No. 1

Auditing Problems
AUDIT OF CASH AND CASH EQUIVALENTS
PROBLEM NO. 1
In connection with your audit of Caloocan Corporation for the year ended December 31, 2015 , you
gathered the following:
1. Current account at Metrobank P2,000,000
2. Current account at BPI (100,000)
3. Payroll account 500,000
4. Foreign bank account – restricted (in equivalent pesos) 1,000,000
5. Postage stamps 1,000
6. Employee’s post dated check 4,000
7. IOU from controller’s sister 10,000
8. Credit memo from a vendor for a purchase return 20,000
9. Traveler’s check 50,000
10. Not-sufficient-funds check 15,000
11. Money order 30,000
12. Petty cash fund (P4,000 in currency and expense receipts for 10,000
P6,000)
13. Treasury bills, due 3/31/16 (purchased 12/31/15) 200,000
14. Treasury bills, due 1/31/16 (purchased 1/1/15) 300,000
Based on the above information and the result of your audit, compute for the cash and cash
equivalent that would be reported on the December 31, 2015 balance sheet.
PROBLEM NO. 2
In the course of your audit of the Las Piñas Corporation, its controller is attempting to determine
the amount of cash to be reported on its December 31, 2015 balance sheet. The following
information is provided:
1. Commercial savings account of P1,200,000 and a commercial checking account balance of
P1,800,000 are held at PS Bank.
2. Travel advances of P360,000 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 P3,000,000 is restricted for the retirement of a long
term debt.
4. Petty cash fund of P10,000.
5. An I.O.U. from a company officer in the amount of P40,000.
6. A bank overdraft of P250,000 has occurred at one of the banks the company uses to deposit
its cash receipts. At the present time, the company has no deposits at this bank.
7. The company has two certificates of deposit, each totaling P1,000,000. These certificates of
deposit have maturity of 120 days.
8. Las Piñas has received a check dated January 2, 2016 in the amount of P150,000.
9. Las Piñas has agreed to maintain a cash balance of P200,000 at all times at PS Bank to ensure
future credit availability.
10. Currency and coin on hand amounted to P15,000.
Based on the above and the result of your audit, how much will be reported as cash and cash
equivalent at December 31, 2015?
PROBLEM NO. 3
The cash account of the Makati Corporation as of December 31, 2015 consists of the following:
On deposit in current account with Real Bank P 900,000

Cash collection not yet deposited to the bank 350,000
A customer’s check returned by the bank for insufficient fund 150,000
A check drawn by the Vice-President of the Corporation dated January 15, 2016 70,000
A check drawn by a supplier dated December 28, 2015 for goods returned by 60,000
the Corporation
A check dated May 31, 2015 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 410,000
Auditing Problems
Petty Cash fund of which P5,000 is in currency; P3,600 in form of employees’

I.O.U. s; and P1,400 is supported by approved petty cash vouchers for
expenses all dated prior to closing of the books on December 31, 2015 10,00
0
Total 1,950,000
Less: Overdraft with Piggy Bank secured by a Chattel mortgage on the 300,000
inventories
Balance per ledger P1,650,000
At what amount will the account “Cash” appear on the December 31, 2015 balance sheet?
PROBLEM NO. 4
You noted the following composition of Malabon Company’s “cash account” as of December 31,
2015 in connection with your audit:
Demand deposit account P2,000,000
Time deposit – 30 days 1,000,000
NSF check of customer 40,000
Money market placement (due June 30, 2016) 1,500,000
Savings deposit in a closed bank 100,000
IOU from employee 20,000
Pension fund 3,000,000
Petty cash fund 10,000
Customer’s check dated January 1, 2016 50,000
Customer’s check outstanding for 18 months 40,00
0
Total P7,760,000
Additional information follows:

a) Check of P200,000 in payment of accounts payable was recorded on December 31, 2015 but
mailed to suppliers on January 5, 2016.
b) Check of P100,000 dated January 15, 2016 in payment of accounts payable was recorded and
mailed on December 31, 2015.
c) The company uses the calendar year. The cash receipts journal was held open until January
15, 2016, during which time P400,000 was collected and recorded on December 31, 2015.
The cash and cash equivalents to be shown on the December 31, 2015 balance sheet is
PROBLEM NO. 5
You were able to gather the following from the December 31, 2015 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 P40,000 returned by bank on December 26, 2015 due to insufficient
fund but subsequently redeposited and cleared by the bank on January 8, 2016.
b. Customer’s check for P20,000 dated January 2, 2016, received on December 29, 2015.
c. Postal money orders received from customers, P30,000.
The petty cash fund consisted of the following items as of December 31, 2015.
Currency and coins P 2,000

Employees’ vales 1,600
Currency in an envelope marked “collections for charity” with names 1,200
attached
Unreplenished petty cash vouchers 1,300
Auditing Problems
Check drawn by Mandaluyong Corporation, payable to the petty cashier 4,000

P10,100
Included among the checks drawn by Mandaluyong Corporation against the BPI current account
and recorded in December 2015 are the following:
a. Check written and dated December 29, 2015 and delivered to payee on January 2, 2016,
P80,000.
b. Check written on December 27, 2015, dated January 2, 2016, delivered to payee on
December 29, 2006, P40,000.
The credit balance in the Security Bank current account No. 2 represents checks drawn in excess
of the deposit balance. These checks were still outstanding at December 31, 2015.
The savings account deposit in PNB 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 from the balance
sheet date.
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

You Gathered The Following:: Audit of Cash and Cash Equivalents Problem No. 1

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Auditing Problems

AUDIT OF CASH AND CASH EQUIVALENTS

On deposit in current account with Real Bank P 900,000

Petty Cash fund of which P5,000 is in currency; P3,600 in form of employees’

Additional information follows:

Currency and coins P 2,000

Check drawn by Mandaluyong Corporation, payable to the petty cashier 4,000

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