Quiz Audit of Cash

AUDITING PROBLEMS
Quiz No. 01
Instructions: Solve each of the following problems as required with computations presented in good form.
PROBLEM 1. The following bank reconciliation was prepared by the assistant controller of Hawkley, Inc.,
one of your audit clients:
Hawkley, Inc.
First National Bank and Trust
Bank Reconciliation
December 31, 2020
12/31/20 Balance per bank statement ₱12,000

Add deposits in transit 23,000
35,000
Deduct outstanding checks:
20813 1,600
21879 450
21883 1,100
21884 7,600
21885 323
11,073
12/31/20 Balance per general ledger ₱24,927
=======
Additional data:
1. You obtained a cutoff bank statement, dated 1/9/21 directly from First National Bank and Trust
and it revealed the following:
Deposits:
1/2/21 ₱6,000
1/3/21 4,000
1/4/21 7,000
1/5/21 6,000
1/6/21 8,000
1/9/21 5,000
Checks:
Check. No. Check Date Check Amount
21879 12/29/20 ₱ 450
21883 12/31/20 1,100
21884 12/31/20 7,600
21885 12/31/20 323
21886 12/31/20 4,557
21887 12/31/20 8,300
21888 1/2/21 1,250
1
Required:
a. Based on the above information and the results of your audit, determine the adjusted cash balance.
PROBLEM 2. The trial balance of BOSS Co. as of December 31, 2021, discloses the following accounts
and their corresponding balances:
Petty Cash Fund ₱ 3,000

Cash in Bank 38,700
Marketable Securities 300,000
Accounts Receivable 698,000
Allowance for Doubtful Accounts ₱108,500
Accounts Receivable – Employees 14,200
Notes Receivable 45,000
Interest Receivable 5,100
Merchandise Inventory, Dec 31 365,000
Prepaid Insurance 15,000
Investment in stock 90,000
Additional information:
1. An examination of the petty cash fund on the morning of January 2, 2022, discloses the following
items in the petty cash drawer.
Coins and currency ₱ 152.00
Postage stamps 29.00
An IOU from Favila, an employee for cash advance 400.00
Check payable to Boss from Yongco, an employee, marked NSF 340.00
Vouchers for the following:
Stamps 200.00
Computer repairs 1,843.50
2. The correct balance of the Cash in Bank account on November 1, 2021, was ₱40,000. Subsequent
transactions during November and December relating to the records of Boss and Blues Bank are
summarized below:
Boss Books Blues Bank Books
November deposits ₱ 73,600 ₱ 71,100
November checks 62,900 61,300
November service charge - 100
November 30 balance 50,700 49,700
December deposits 82,200 82,800
December checks 94,100 92,200
December service charges - 150
Notes collected by bank in December - 10,150
November service charge recorded in December 100 -
December 31 balance 38,700 50,300
Required:
Compute for the following:
a. Correct amount of petty cash.
b. Petty cash shortage/overage.
c. Total bank receipts (credits) in December.
d. Total bank disbursements (debits) in December.
e. Total book disbursements (credits) in December.
2
f. Total deposits in transit in November 30.
g. Total deposits in transit in December 31.
h. Total outstanding checks in November 30.
i. Total outstanding checks in December 31.
j. Correct cash in bank balance in November 30.
k. Correct cash balance in December 31.
l. Correct book receipts in December.
m. Correct bank disbursements in December.
PROBLEM 3. You were engaged to audit the books of KETCHUP Company. Form the records of the
company, you gathered the following information:
Ketchup Company started operations on October 2, 2021 with the owners investing ₱150,000 cash. Monthly
bank reconciliation statements have not been prepared; however, banks statements for October, November,
and December were made available to you. Your analysis of these bank statements showed total bank
credits (deposits) of ₱575,000, including the owners’ initial investment and a bank loan, details of which
are in the additional data. The bank statement in December 2021 showed an ending balance of ₱30,200.
Examination of the paid checks disclosed that checks totaling ₱4,500 were issued by the company in
December 2021, and were presented for payment only in January 2022. Cash count of the cahier’s
accountability amounted to ₱6,300. You were told by the cashier that ₱5,000 of this, in checks, were cash
sales on December 29, 2021, deposited in January 3, 2014. The balance, in currency and coins, represents
petty cash fund.
Additional data:
1. Accounts receivable subsidiary ledgers had a total balance of ₱70,000 at December 31, 2021.
₱5,000 of this was ascertained to be uncollectible.
2. Suppliers’ unpaid invoices for merchandise totaled ₱15,000; while an account for store fixtures
bought for ₱50,000 has an unpaid balance of P5,000.
3. Merchandise inventory at December 31, 2021 amounted to ₱30,000 but ₱5,000 of this was spoiled
with no resale value.
4. The bank statement in October showed a bank credit for ₱98,000, dated October 2, 2021. Inquiry
from the cashier disclosed that the amount represents proceeds of a 90-day, discounted bank note.
₱80,000 of this loan was paid by check in December 2021.
5. Operating expenses paid during the period totaled ₱180,000; while merchandise purchases
amounted to ₱250,000.
6. The gross profit rate is 120% of cost.
Required:
1. Determine the cash shortage at December 31, 2021.
***END OF EXAMINATION***

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AUDITING PROBLEMS

12/31/20 Balance per bank statement ₱12,000

Petty Cash Fund ₱ 3,000

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