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On-Line Quiz 3 Substantive Test for Cash

Problem 1
You are conducting an audit of the Arena Company for the year ended
December 31, 2015. The internal control procedures surrounding cash
transactions were not adequate. Ester Santos, the bookkeeper-cashier,
handles cash receipts, maintains accounting records, and prepares the
monthly reconciliations of the book account
The bookkeeper-cashier prepared the following reconciliation at the end
of the year:
Balance per bank statement
P350,000
Add: Deposit in transit
Note collected by bank
190,250
Balance
Less: outstanding checks
246,750
Balance per general ledger
P293,500

P175,250
15,000
P540,250

In the process of your audit, you gathered the following:


a.

At December 31, 2015, the bank statement and the general ledger
showed balances of P350,000 and P293,500, respectively
b.
The cut-off bank statement showed a bank charged on January 2,
2016 for P30,000 representing a correction of an erroneous bank credit
c.
Included in the list of the outstanding checks were the following:

A check payable to a supplier, dated December 29, 2015, in


the amount of P14,750, released on January 5, 2016

A check representing advance payment to a supplier in the


amount of P37,210, the date of which is January 4, 2016 and
released in December 2015.
d.
On December 31, 2015, the company received and recorded
customers postdated check amounting to P50,000
Questions:
1. The adjusted deposit in transit at December 31, 2015:
2. The adjusted outstanding checks at December 31, 2015:
3. The adjusted cash to be presented in the balance sheet as at
December 31, 2015:
4. the cash shortage:

5. The net adjustment to the cash account:


6. The net adjustment to the accounts payable accounts:
Problem 2
You are engaged to audit the books of Ofong Enterprise. From the records of
the company, you gathered the following information:
Ofong Enterprises started its operation on October 2, 2015 with Merecido
investing P150,000 cash. Monthly bank reconciliation statements have not
been prepared; however, bank statements for October, November, and
December were made available to you.
Your analysis of these bank
statements showed total bank credits (deposits) of P575,000 including
Merecidos initial investment and a bank loan, details of which are in the
additional data. The bank statement in December 2015 showed an ending
balance of P30,380.
Examination of the paid checks disclosed that checks totaling P4,500 were
issued by the company in December, 2015, and were presented for
payments only in January 2016. Cash count of the cashiers accountability
amounted to P6,300. You were told by the cashier that P5,000 of these, in
checks, were cash sales on December 28, 2015, deposited on January 3,
2016. The balance, in currency and coins, represents petty cash fund.
Additional data:
a. Accounts receivable subsidiary ledgers had a total balance of P70,000
at December 31, 2015.
P5,000 of this was ascertained to be
uncollectible.
b. Suppliers unpaid invoices for merchandise totaled P15,000, while an
account for store fixtures bought for P50,000 had an unpaid balance of
P5,000.
c. Merchandise inventory at December 31, 2015 amounted to P30,000
but P5,000 of these were spoiled with no resale value.
d. The bank statement in October showed a bank credit for P98,000,
dated October 2, 2015. Inquiry from the cashier disclosed that the
amount represents proceeds of a 90-day, discounted bank note.
P80,000 of this loan was paid by check in December 2015.
e. Operating expenses paid during the period totaled P180,000; while
merchandise purchases amounted to P250,000.
f.

The gross profit rate is 120% of cost.

Questions:
1. The unaccounted cash receipt is

2. The unsupported and unrecorded disbursement is


3. Total shortage is
4. The cash per ledger before adjustment is

5. The adjusted cash balance is

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