Computation of Cash Shortage

Your client, a successful small business has never given much attention to a
sound internal control. In its employ is Alex Coopit, the company’s cashier-
bookkeeper. Alex handles cash receipts, makes small disbursements from the
cash receipts, maintains accounting records, and prepares the monthly bank
reconciliation.

The bank statement for the month ended March 31,2014, shows a cash balance
of P590,000. The following checks are outstanding on March 31:
No. 7163 P 8,623
No. 7284 7,320
No. 7285 10,612
No. 8722 6,322
No. 8724 12,280
No. 8733 6,200

The company’s general ledger shows a cash balance of P696,499 on March

31,2014.

Realizing that being the cashier-accountant of the company he can easily

misappropriate collections and conceal it, Alex removed all the cash on hand in
excess of P127,301, and then prepared the following reconciliation in an effort to
conceal this theft.

BANK RECONCILIATION

Balance per accounting records P 696,499

Add: Outstanding checks
No. 8722 P 6,322
No. 8724 12,280
No. 8733 6,200 20,802
Total 717,301
Deduct: Cash on hand 127,301
Balance per bank statement, March 31 P 590,000

1. How much was taken by the cashier-accountant?

2. What is the amount of cash that should be on hand at November
15,2014?
Computation of Cash Shortage

FE COMPANY, organized on March 1, 2014, has a very poor internal control

system. The company’s cashier is also its accountant. After 9 months of
operations, the company’s manager suspects that the cashier-accountant has
been misappropriating company collections. You have been engaged to audit the
company’s accounts to determine the extent of fraud, if any.

You started the audit on November 15. On that date, the cash on
hand per your surprise count was P 5, 140. Also on that date,
the bank confirmed that the balance of the company’s current
account was P 26, 328. Your examination of the records reveals
that a check for P 1,852 was outstanding on November 15. The
company’s mark-up is 40% of sales.

Further examination of the company’s records reveals the

following balances at November 15, 2014:

Ordinary share capital P

300,000
Share premium
20,000
Real property purchased for cash
200,000
Mortgage payable 80,000
Furniture & fixtures (of the acquisition cost,
P6,000 remains unpaid as of Nov. 15)
29,000
Notes payable-bank
32,000
Accounts payable-trade
46,284
Expenses paid (excluding purchase)
60,756
Merchandise inventory at cost
93,920
Accounts receivable-trade 85,380
Total sales 340,000

1. How much was paid for inventory purchases?

2. How much was collected from customers?
3. How much is the cashier’s accountability at November
15, 2014?
 4. What is the adjusted bank balances as of November
15, 2014?
5. The cash shortage as of November 15, 2014 totalled

Computation of Working Capital and Current Ratio

JAM COMPANY’s unadjusted trial balance at December 31,2014, included the
following accounts:
Debit Credit
Cash P 69,200
Accounts receivable 102,650
Merchandise inventory 947,160
Accounts payable P 789,715
Accrued expenses 13,214

Jam Co’s year end is December 31. At the end of 2014, it held its cash book
open so that its statement of financial position would show a more favourable
financial condition. Your audit revealed the following items:

1. The December cash book included January cash receipts of P 65,460 of

which P 36,010 represents cash sales and P 29,450 represents
collections from customers, net of 5% cash discounts.
2. The December check register included payments of accounts to
suppliers of P 37,240 on which discounts of P 1,240 were taken.
3. The merchandise inventory account balance was determined by physical
count on December 31, 2014.

1. What are Jam’s working capital and current ratio at December 31, 2014,
based on balances per company books?
2. What are Jam’s correct working capital and current ratio at December
31, 2014

Computation of Cash Shortage

In connection with the audit of the financial statements of JEM COMPANY for the
year ended October 31, 2014, you conducted a surprise count of undeposited
receipts on October 31,2014. It was witnessed by the company’s cashier whose
accountability on October 31 was determined to be P 80,000. Your count
revealed the following:

Currency and coins P 48,840

Unused postage stamps 440
Checks:
Date Payee Maker
1-22 Cash Cashier P 4,000
 10-19 Jem Company DWU,Inc. 9,400
10-28 Jem Company PSU Co. 7,840
10-31 CCP Co. Jem Company 3,600
Office Supplies paid out of receipts 6,400
Total per count 80,520

1. What is the cash shortage on October 31, 2014?

2. A cash shortage may be concealed by transporting funds from one
location to another or by converting negotiable assets to cash. Because
of this, which of the following is vital?

Computation of Cash Shortage

The following table summarizes the cash receipts and disbursements of LOI
COMPANY for the last six months of 2014:

Month Receipts Disbursements

July P 102,000 P 60,000
August 70,000 110,000
September 120,000 68,000
October 172,000 92,000
November 260,000 122,000
December 280,000 180,000
P 964,000 P 668,000

Additional information:

1. Bank balance, July 1, 2014 P 200,000

2. Bank balance, December 31, 2014 524,000
3. Outstanding checks, December 31, 2014 42,000
(No checks were outstanding on July 1)
4. Undeposited receipts, December 31, 2014 24,000
(included in the December receipts)
5. Bank deposits, July 1 through December 31 914,000

1. What is the total shortage?

 Computation of Cash Shortage

The LEINOR COMPANY does not have adequate controls over its cash
transactions. During an audit, you found the following data concerning its cash
position at December 31, 2014.

1. On the company’s records the cash balance is P 173,500

2. A credit of P 2,500 for a note collected by the bank does not appear on the
company’s records.
3. The bank statement balance is P 135,000.
4. Outstanding checks are as follows:

Number Amount
1428 P 5,200
1431 3,600
1445 4,080
1446 3,460
The cashier made the following reconciliation:

Balance per bank statement P 135,000

Deduct: Outstanding checks:
No. 1431 P 3,600
1445 4,080
1446 3,460 10,140
P 124,860
Add: Undeposited collections (per count) P46,140
Collected note 2,500 48,640
Cash per books, December 31,2014 P 173,500

1. What is the total shortage?

2. How did the cashier attempt to conceal the shortage?
Computation of Cash Shortage

You started the audit of the financial statements of ARCIE, INC. on January
15,2015, for the year ended December 31,2014. The general ledger shows cash
account balance of P247,200 as at December 31,2014.

The following items are included in the December 31, 2014, reconciliation
prepared by the cashier:

Cash per records, December 31,2014 P 247, 200

Cash per bank statement, December 31, 2014 264, 095
Outstanding checks 25,325
Check of Tsikoy Co., charged by bank in
error on December 28,1014; corrected by
bank on January 2,2015 750
Deposit in transit 3,500

From January 2, 2105, to January 15, 2015, the date of your cash count, total
cash receipts appearing in the cash records amounted to P 53,500. During the
same period, the bank had credited total deposits of P47, 965. The following
cash and cash items were on hand at the close of business on January 15, 2015:

Currency P 1,425
Customers’ checks 1,950
Expense vouchers 375
P 3,750

Your further investigation revealed the following:

a. Cash received on account from customers:

DATE AMOUNT ENTRY MADE

07/05/14 P 4,000 Allowance for bad debts 4,000
Accounts receivable 4,000
12/10/14 P 3,000 Inventory 3,000
Accounts receivable 3,000
12/15/14 P 3,500 Not recorded
 b. Unrecorded but deposited checks received from customers from January
2,2015, to January 15,2015, totaled P 2,000.
c. The cashier presented receipts for collections from customers on
January 10,2015, totalling P 4,500; these were unrecorded and
undeposited.

1. What adjusting entries would you provide for items (a) through (c)?
2. What is the total cash shortage as of December 31, 2014?
3. What is the total cash shortage as of January 15,2015?

Computation of Cash Shortage

Presented below is the cash receipts book of APPLE,INC:

CASH RECEIPTS BOOK

June 1-30, 2014

Accounts Cash Sales Net

Date Receivables Sales Discount Cash
June 1 Cash Sales P 800 P 800
10 BA P 3,200 P 64 3,136
15 BO 6,000 120 5,880
20 BE 4,800 96 4,664
20 Cash Sales 2,400 2,400
25BU 10,800 216 10,504
26 BO 4,000 4,000
26 BE 12,000 240 11,680
30 BO 3,600 3,600
30 BA 800 800
P 45,200 P 3,200 P 936 P 47,464

The following are the company’s accounts receivable subsidiary ledgers. All the
debits represent sales. The credit terms are 2%-10 days, net 30 days.

BA BO
June 3 3,200 June 10 3,200 June 2 6,000 June 15 6,000
4 4,800 30 800 9 4,000 26 4,000
15 3,600 30 3,600

BU BE
June 2 6,000 June 10 10,800 June 15 4,800 June 20 4.800
10 4,800 30 800 16 12,000 26 12,000

1. What is the correct amount of cash receipts in June?

2. What is the cash shortage on June 30?
Computation of Cash Shortage

The JUNNEL COMPANY had weak internal control over its cash transactions.
Facts about its cash position at November 30,2014 were as follows:

The cash books showed a balance of P94, 508, which included undeposited
receipts. A credit of P500 on the bank’s records did not appear on the books of
the company. The balance per bank statement was P 77,750. Outstanding
checks were no. 8420 for P581, no. 8422 for P750, no. 8430 for P1,266, no.
8621 for P954, no. 8623 for P1,034, and no. 8632 for P726.

The cashier stole all undeposited receipts in excess of P18,972 and prepared the
following reconciliation:

Balance per books, Nov. 30, 2014 P94,508

Add: Outstanding checks
8621 P 954
8623 1,034
8632 726 2,214
96,722
Less: Undeposited receipts 18,972
Balance per bank, Nov. 30, 2014 77,750
Less: Unrecorded credit 500
True cash, Nov. 30, 2014 77,250

1. What is the correct amount of cash that should be on hand for deposit
on November 30, 2014?
2. How much was stolen by the cashier?
3. The cashier attempted to conceal his theft by
I. Not listing all outstanding checks
II. Underfooting outstanding checks shown on the reconciliation.
III. Adding an item to the bank balance that should be deducted
from the book balance.
4. Taking only the information given, which of the following internal
control deficiencies allowed the cashier to steal cash and conceal his
theft?
5. What is the adjusted cash balance as of November 30, 2013?
Computation of Cash Shortage
The bookkeeper-cashier of the TANYING COMPANY abscond on the evening of April 16, 2014,
apparently with a large portion of the company’s cash. He had taken with him certain accounting
records, including the cash journals and the general ledger. You are called upon to ascertain, if
possible, the shortage with which the missing employee may be charged.

You obtained the following information from the available subsidiary journals, ledgers, and other data.

Balances at close of business, April 16,2014:

Accounts receivable P 442,550

Accounts payable 207,300
Cash in bank, less checks outstanding 98,830

Transactions, January 1-April 16, 2014:

Sales, per receivable check P 5,876,170

Cash sales none
Sales allowances in customers’ accounts 18,330
Cash purchase of furniture, per dealer’s invoice 3,000
Total merchandise purchases 3,615,260
Expenses paid, supported by paid invoices and payrolls 1,865,830
Cash dividend declared, P50,000 (of which, P10,000
remains unpaid) 40,000

A check for P100,000 had been cashed by the bookkeeper shortly before his departure. Although the
signature on the check had been obviously forged, it was paid by the bank and returned with other
cancelled checks.

A statement of financial position prepared from the books and other files follows:

Tanying Company
Statement of Financial Position
December 31, 2013
ASSETS

Cash P 32,670
Accounts receivable 226,230
Inventory (at cost) 440,350
Furniture P 74,560
Less: Accumulated depreciation 31,800 42,760
Total assets P 742,010
LIABILITIESAND SHAREHOLDERS’ EQUITY
Accounts payable P 114,720
Share capital 500,000
Retained earnings 127,290
Total liabilities and shareholder’s equity P 742,010

1. What is the total amount paid for merchandise purchases?

2. What is the total amount of collections from sales?
3. What is the total amount of cash disbursements from January 1-April 16,
2014?
4. What is the cashier’s accountability (correct cash balance before shortage) on
April 16, 2014?
5. What is the amount of cash shortage chargeable against the cashier?

PROOF OF CASH: UNADJUSTED TO ADJUSTED BALANCES

Data for the ANNABELLE, INC. are shown below:

Nov.30 Dec.31
Cash account balance P 20,340 P 48,540
Bank statement balance 107,060 137,820
Deposits in transit 8,200 12,880
Outstanding checks 27,700 30,100
Bank service charges for the month,
not shown on company books 720 600
NSF checks returned by bank, not
shown on company books 4,300 8,240
Bank collections from company
Customers, not shown on company books 72,240 80,900

Additional information:

1. Deposits and credit memos per bank statement P249,100

2. Canceled checks and debit memos per bank statement 218,340
3. Cash receipts per cash book 172,880
4. Checks written per cash book 211,900

1. What is the total book receipts in December?

2. What is the total book disbursements in December?
3. What is the adjusted cash balance on November 30?
4. What is the adjusted cash balance on December 31?
5. What is the adjusted book receipts in December?
6. What is the adjusted bank disbursements in December?
PROOF OF CASH: UNADJUSTED TO ADJUSTED BALANCES
RODELIO CO. has a current account in Pinoy Bank. Your audit of the company’s cash
account reveals the following:

1. Balances taken from the company’s general ledger:

Cash balance, Nov. 30, 2014 P 637,860
Cash balance, Dec.31, 2014 576,420
Receipts, Dec. 1-31, 2014 306,220

2. Balances taken from the company’s general ledger:

Cash balance, Nov. 30, 2014 P 685,180
Cash balance, Dec.31, 2014 637,220
Disbursements (debit) 356,080

3. Outstanding checks, Nov. 30, 2014 (P 26,140 was

paid by bank in December) 64,140

4. Check written and recorded in December; not

included in the checks returned with the
December bank statement 36,080

5. Deposits in transit, Nov. 30, 2014 15,260

6. Deposits in transit, Dec. 31, 2014 16,140

7. A bank credit memo was issued in December to

Correct an erroneous charge made in November 1,500

8. Note collected by bank in December (company was

Not informed of the collection) 2,060

9. A check for P2,020 (payable to a supplier) was

Recorded in the Check Register in December
As P3,000 980

10. A check for P2,240 was charged by the bank

As P2,420 in December 180

11. Rodelio Co, issued a stop payment order to the

bank in December. This pertains to a check
written in December which was not
received by the payee. A new check was
 written and recorded in the Check Register
in December. The old check was written off
by journal entry also in December. 780

12. Bank service charge, Nov. 30, 2014 60

1. What is the total book disbursements in December?

2. What is the total bank receipts in December?
3. What is the total outstanding checks on December 31?
4. What is the adjusted bank balance on November 30?
5. What is the adjusted bank receipts in December?
6. What is the adjusted bank disbursements in December?
7. What is the adjusted book balanxce on December 31?

PROOF OF CASH: Book to Bank Balances Format

The auditor of TSIKOY COMPANY gathered the following information:

1.The November 30 bank statement balance included bank service charges of

P2,000.

2.The November 30 cash balance in the general ledger was P244,500.

3.Outstanding checks on November 30 were P63,000 while undeposited receipts

were P36,000.

4.The bank service charges as shown on the bank statement totaled P3,000.

5.The December 31 cash balance in the general ledger was P 319,750, which
recognized P 482,750 for December receipts and P 405,500 for checks
written during December. In transit to the bank were receipts of P28,750.
Checks of P15,000 written prior to December and checks of P 60,500 written
in December had not yet cleared the bank.

1.What is the total book disbursements for December?

2.What is the November 30 bank balance?
3.What is the total bank receipts in December?
4.What is the total bank disbursements in December?
5.What is the bank balance on December 31?
PROOF OF CASH: UNADJUSTED TO ADJUSTED BALANCES

The following data are assembled by the accountant of the HAROLD COMPANY:

Nov.30, 2014 Dec. 31, 2014

Cash account balance P 41,175.00 P 100,712.50
Bank statement balance 267,705.00 344,542.50
Deposits in transit 20,502.50 32,200.00
Outstanding checks 69,295.00 75,280.00
Bank service charges 1,800.00 1,500.00
NSF check* 20,625.00
Company’s notes receivable
collected by bank 175,537.50 202,250.00

*Redeposited in the same month. No entries made to take up the return and
redeposit.

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

Canceled checks and debit memos

per bank statement P
545,932,50
Cash receipts per cash book 411,592.50
Checks written per cash book 529,792.50
Deposits and credit memos per bank statement 622,770.00

1.What is the total book receipts in December?

2.What is the total book disbursements in December?
3.What is the adjusted book balance on November 30?
4.The adjusted bank receipts in December should be?
5.The adjusted book disbursements in December should be
6.What is the adjusted book balance on December 31?
Computation of Cash Receipts and Disbursements

In connection with your audit of the cash account of ANNE CORP., you gathered
the following information.

a. Balance per bank, December 1,2014 P 145,000

b. Total bank receipts (credits) in December 346,000
c. Balance per bank, December 31,2014 114,500
d. Outstanding checks, November 30, 2014 (including
P12,000 paid by bank in December) 67,000
e. Outstanding checks, December 1, 2014 (including
checks issued in November) 94,162
f. Deposit in transit, November 30, 2014 39, 458
g. A customer’s check received on December 4,2014,
was returned by bank on December 7 marked
“NSF.”It was redeposited on December 8,2014.
the only entry made was to take up the collection
on December 4, 2014 11,143

1. What is the total book receipts in December?

2. What is the total bank disbursements in December?
3. What is the total boo disbursements in December?
Petty Cash Fund; Bank Reconciliation

Your audit of the cash account of JUNIE CORP. disclosed the following
information:

1. Cash in bank balance per books, Dec. 31, 2014 P 35,000

2. Bank statement balance, December 31,2014 60,000

3. Note collected by bak in December (principal plus

interest of P800, less collection fee of P200) 27,600

4. Debit memo for a checkbook ?

5. Deposits in transit, Dec. 31,2014 15,200

6. Transposition error mde by bank

In recording deposit of December 28:
Correct amount P45,000
Recorded as 54,000 9,000

7. Erroneous bank debit 26,700

8. Included in the Cash in bank account is petty cash fund

of P 10,000. You count on December 31,
2014, revealed the following fund items:
Currency and coins P 3,000
Supplies 2,400
Transportation 100
IOUs 4,000 9,500
 9. Erroneous bank credit 11,000

10. Outstanding checks (including a certified

Check of P10,000) 39,400

1. What is the principal amount of the note collected by bank in

December?
2. What is the adjusted cash in bank balance at December 31,2014?
3. The cost of checkbook is?
4. What is the amount of petty cash shortage at December 31,2014?
5. What is the adjusted petty cash balance?

Bank Reconciliation

The cash receipts and the cash payments of LIEZEL COMPANY for April 2014
follow:

Cash Receipts (CR) Cash Payment (CP)

Date Cash Debit Check No. Cash Credit
April 2 P 208,700 4113 P 44,550
8 20,350 4114 7,350
10 27,950 4115 96,500
16 109,350 4116 33,200
22 92,700 4117 73,600
29 53,000 4118 50,000
30 16,850 4119 31,600
Total P 528,900 4120 83,750
4121 5,000
4122 120,650
Total P 546,200

The cash account of Liezel Company shows the following information at April 30 ,2014:

CASH
Date Item Ref. Debit Credit Balance
April 1 Balance P 95,550
30 CR 6 528,900 624,450
30 CP 11 546,200 78,250

Liezel Company received the following statement on April 30, 2014:

Bank Statement for April 2014

Beginning balance P 95,550

Deposits and other Credits:
April 1 P 16,300 EFT
4 208,700
9 20,350
 12 27,950
17 109,350
22 68,400 BC
23 92,700 543,750
Checks and other Debits:
April 7 P 44,550
13 69,500
14 45,150 US
18 7,350
21 10,950 EFT
26 73,600
30 50,000
30 1,000 SC (335,300)
Ending Balance P 304,000

Explanation: EFT - electronic funds transfer

US - unauthorized signature
BC - bank collection
SC - service charge

Additional data for the bank reconciliation include the following:

a. The EFT deposit was a receipt of monthly rent. The EFT debit was a
monthly insurance payment.

b. The unauthorized signature check was received from Lester Soon.

c. The P 68,400 bank collection of a note receivable on April 22 included
P 9,250 interest revenue.

d. The correct amount of check number 4115, a payment on account

P 69,500. (Leizel’s accountant mistakenly recorded nthe check for
P 96,500.)

1. What is the amount of deposits in transit on April 30?

2. What is the amount of outstanding checks on April 30?
3. What is the amount of bank receipts in April?
4. What is the amount of bank disbursement in April?
5. What is the correct cash balance as of Aril 30?