CPA REVIEW SCHOOL OF THE PHILIPPINES AP-8708sol

Manila

AUDITING PROBLEMS CPA Review

AUDIT OF CASH
PROBLEM NO. 1 – MSU, INC.

1. C Balance per bank statement P1,463,212

Deposits in transit 57,500
Outstanding checks (132,025)
Error in recording rent check (1,800)
Automatic mortgage payment 45,000
Bank service charges 1,400
Deposit credited to company’s account in error (87,500)
NSF check 8,500
Balance per books P1,354,287

2. B Book Bank
Unadjusted balances P1,354,287 P1,463,212
Deposits in transit 57,500
Outstanding checks (132,025)
Error in recording rent check 1,800
Automatic mortgage payment (45,000)
Bank service charges (1,400)
Deposit credited to company’s account (87,500)
NSF check (8 ,500)

Adjusted balances P1,301,187 P1,301,187

3. A Checking account balance P1,301,187

Petty cash 20,000
Treasury bills 500,000
Total cash and cash equivalents P1,821,187

4. C 5. A

PROBLEM 2

1. Book receipts in December P302,460

Notes collected by bank in November (3,000
Collections in December P299,460

Book disbursements in December P222,846

NSF checks – November (1,052)
Bank service charges – November (100)
Checks issued in December P221,694

Bank receipts in November P299,902

Notes collected by bank in December (8,554)
Correction of November erroneous bank debits (1,200)
Erroneous bank credits in December (6,000
Deposits credited by bank in December P284,148

Bank disbursements in December P220,196

NSF checks – December (1,400)
Bank service charges – December (130)
Erroneous bank debits – December (1,800)
Correction of November erroneous bank credits (2,000
Checks paid by bank in December P214,866

Deposits in transit, November 30 P 10,400

Company collections in December 299,460
Total 309,860
Deposits credited by bank in December (284,148
Deposits in transit, December 31 P 25,712

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Outstanding checks, November 30 P 16,014

Checks issued in December 221,694
Total 237,708
Checks paid by bank in December (214,866
Outstanding checks, December 31 P22,842

Balance December Balance

Nov. 30 Receipts Disbursements Dec. 31
Unadj. book balances P252,858 P302,460 P222,846 P332,472
Bank service charges:
November 30 (100) (100)
December 31 130 (130)
NSF checks:
November 30 (1,052) (1,052)
December 31 1,400 (1,400)
Bank collections:
November 30 3,000 (3,000)
December 31 8,554
8,554
Adj. book balances P254,706 P308,014 P223,224 P339,496

Balance December Balance

Nov. 30 Receipts Disbursements Dec. 31
Unadj. bank balances P261,120 P299,902 P220,196 P340,826
Deposits in transit:
November 30 10,400 (10,400)
December 31 25,712 25,712
Outstanding checks:
November 30 (16,014) (16,014)
December 31 22,842 (22,842)
Erroneous bank debits:
November 30 1,200 (1,200)
December 31 (1,800) 1,800
Erroneous bank credits:
November 30 (2,000) (2,000)
December 31 (6,000)
(6,000)
Adj. bank balances P254,706 P308,014 P223,224 P339,496

2. ADJUSTING JOURNAL ENTRIES

December 31, 2020

1. Accounts receivable 1,400

Cash in bank 1,400

2. Cash in bank 8,554

Notes receivable 8,554

3. Bank service charges 130

Cash in bank 130

PROBLEM 3 – NUNAL COMPANY

1. A Outstanding checks, December 31:

Check no. 806 P 57,000
807 78,000
810 21,000
812 48,000
817 33,000
819
21,000
822 36,000
823 39,000
824 87,000
825 6,000
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826 33,000
Total P459,000

2. A Deposit in transit, November 30 P 25,500

Collections 2,121,900
Total 2,147,400
Less: Deposits 2,033,400
Deposit in transit, December 31 P 114,000

Nov. 30 Receipts Disbursements Dec. 31

Unadjusted book balances P345,000 P2,297,400 P1,228,230
P1,414,170
Bank service charges:
November 30 (150) (150)
December 31 360 (360)
Notes collected by bank:
November 30 30,000 (30,000)
December 31 36,000 36,000
Unrecorded disbursement (815) 18,000 (18,000
Adjusted book balances P374,850 P2,303,400 P1,246,400
P1,431,810

Nov. 30 Receipts Disbursements Dec. 31

Unadjusted bank balances P342,000 P2,493,900 P1,059,090
P1,776,810
Outstanding checks:
November 30 (28,650) (28,650)
December 31 459,000 (459,000)
Deposits in transit:
November 30 25,500 (25,500)
December 31 114,000 114,000
Error corrected (243,000) (243,000)
Erroneous bank charge 36,000 (36,000)

Adjusted bank balances P374,850 P2,303,400 P1,246,440

P1,431,810

Outstanding checks, November 30:

Check no. 792 P 7,500
799 21,150
Total P28,650

3. C 4. B 5. C

PROBLEM NO. 4 – SOLEDAD COMPANY

1. Deposit in transit, November 30 P 37,500

Add: Company collections in December 457,500
Total 495,000
Less: Deposits credited by bank in December 435,000
Deposit in transit, December 31 P 60,000
Answer: D

2. Bank service charges per December bank statement P9,750

Less: December bank service charges recorded on company books in
December (P7,500 – P4,500) 3,000
Unrecorded December bank service charges P6,750
Answer: A

3. Actual company collections in December P457,500

Less: Underfooting of December cash receipts book 7,500
Book receipts in December P450,000
Answer: C

4. Outstanding checks, December 31 P37,500

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Add: Checks paid by bank in December 390,000

Total 427,500
Less: Outstanding checks, November 30 48,750
Checks issued in December P378,750
Answer: B

5. Checks issued in December (see no. 4) P378,750

Add: Bank service charges recorded in December 7,500
Book disbursements in December P386,250
Answer: A

6. Book balance, December 31 P112,500

Add: Book disbursements in December (see no. 5) 386,250
Total 498,750
Less: Book receipts in December (see no. 3) 450,000
Book balance, November 30 P 48,750
Answer: B

SOLEDAD COMPANY
PROOF OF CASH
For the Month of December 2020

Balance December Balance

Nov. 30 Receipts Disbursements Dec. 31
Book balances P48,750 P450,000 P386,250 P112,500
Outstanding checks:
Nov. 30 48,750 48,750
Dec. 31 (37,500) 37,500
Deposits in transit:
Nov. 30 (37,500) 37,500
Dec. 31 (60,000) (60,000)
Bank service charges:
Nov. 30 (4,500) (4,500)
Dec. 31 6,750 (6,750)
Underfooting of
December book receipts 7,500 7,500
Erroneous bank charge
in December 11,250 (11,250)

Bank balances P55,500 P435,000 P411,000 P79,500

7. Bank balance, November 30, 2020 P55,500

Answer: A
8. Total bank receipts in December P435,000
Answer: C
9. Total bank disbursements in December P411,000
Answer: A
10. Bank balance, December 31 P79,500
Answer: D

PROBLEM NO. 5 – RAKI RAKI, INC.

1. ADJUSTING JOURNAL ENTRY

Office supplies expense 388

Travel expense 240
Office equipment repairs 170
Advances to employees (P400 + P230) 630
Cash short/over (P4,000 – P3,800) 200
Petty cash fund 1,628

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2. Petty cash fund per ledger P4,000

Less: Net adjustment (see no. 1) 1,628
Adjusted petty cash P2,372

Or

Currency P1,272
Replenishment check 1,100
Adjusted petty cash P2,372

PROBLEM NO. 6 – SANDOVAL COMPANY

Nov. 30 Receipts Disb. Dec. 31

Bank balances P 16,500 P173,700 P 65,200 P125,000
Undeposited collections:
Nov. 30 500 (500)
Dec. 31 6,300 6,300
Outstanding checks:
Nov. 30 (5,300) (5,300)
Dec. 31 46,300 (46,300)
Erroneous bank charges:
Nov. 30 2,000 (2,000)
Dec. 31 (3,000) 3,000
Erroneous bank credits
Nov. 30 (500) (500)
Dec. 31 (600) (600)
Adjusted bank balances P 13,200 P176,900 P102,700 P 87,400

Nov. 30 Receipts Disb. Dec. 31

Book balances P 20,200 P178,000 P 95,800 P102,400
Underfooting of receipts 9,000 9,000
Overfooting of disbursements (4,000) 4,000
Bank collection 5,000 5,000
Corrected book balances P 20,200 P192,000 P 91,800 P120,400
Adjusted bank balances 13,200 176,900 102,700 87,400
Shortage as of Nov. 30 P 7,000
Unaccounted receipts P 15,100
Unsupported/unrecorded disbursements P 10,900
Shortage as of December 31 P 33,000

1. B 2. D 3. B 4. C 5. C

PROBLEM NO. 7 – KEMIRARA COMPANY

Book Bank
Unadjusted balances P184,200 P194,550
Outstanding checks (P15,660 – P150) (15,510)
Amnesia Co. check charged by bank in error 450
Deposit in transit 2,160
Collection from a customer charged to
Allowance for Doubtful Accounts 1,200
Collection from a customer charged to
Inventory account 900
Unrecorded collection 2,190
Bank credit for refund of interest 60
Check returned and replaced 150
Corrected balances P188,700 P181,650
SHORTAGE AS OF DEC. 31, 2020 (Req. 2) (7,050) ---
Adjusted balances (Req. 1) P181,650 P181,650

Requirement 3

Cashier’s accountability:
Cash receipts per cash records, Jan. 2-10, 2021 P25,800
Unrecorded deposited collections, Jan. 2-10, 2021 1,260
Unrecorded undeposited collections, Jan. 9, 2021 2,550
Petty cash fund 450

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Total P30,060
Accounted for as follows:
Count of cash on hand and petty cash fund:
Currency and coins P1,155
Expense vouchers 60
Employees’ IOUs 165
Customers’ checks 870 P2,250
Total deposits per bank
statement P22,800
Correction of bank error (450)
Deposit in transit, Dec. 31 (2,160) 20,190 22,440
CASH SHORTAGE, JAN. 2-10, 2021 P 7,620

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