AUDIT- CASH AND CASH EQUIVALENTS

PROBLEM 1
1. A. Unadjusted cash on hand
NSF check
Post dated check received
Adjusted Cash on hand

2. A. Unadjusted Petty cash fund

Employees' vales
Currency marked "collections for charity"
Unreplenished petty cash vouchers
Adjusted Petty cash fund

3. A. BPI current account

Unreleased check
Delivered Post dated check
Adjusted BPI current account

4. A. Cash on hand
Petty cash fund
BPI current account
Security Bank current account no. 1
Security Bank current account no. 2
PNB time deposit
Adjusted cash and cash equivalents

5. A. Cash has inherent risk related to its existence since it is susceptible to theft
6. B. Aside from being highly susceptible to theft, even if the ending balance is immaterial,
cash is significant as it is also affect some accounts and the Statement of cashflows

PROBLEM 2 Coins and bills

1 Quantity Amount
10 ₱100.00 ₱1,000
80 50 4,000
70 20 1,400
54 10 540
410 1 410
324 0.5 162
64 0.25 16

Checks
Drawer Date Amount
Ms. Jessie Dec. 30 ₱2,400
 Robert Dec. 30 28,000
Jay Ar sales manageDec. 31 3,360
Francis Dec. 31 35,600
Ryan Dec. 31 16,600

PCF Vouchers
Account Date Amount
Advances Dec. 23 ₱14,000
Postage Dec. 27 3,240
Transportation Dec. 29 300
Repairs Dec. 29 1,600

Total cash
Less:
Petty cash 20,000
Unclaimed salaries 3,360
Total collection per official receipts 86,600
Unreceived collection from Robert 28,000
Cash shortage

2. AJE * Advances to officers and employees

Postage expense
Transportation expense
Repairs
Petty cash fund

Unused postage
Postage expense

Cash
Salaries payable

Travel expense
(P600-240+9,000+800)
Petty cash fund ( personal check of sales manager
Advances to officers and employees

Cash
Account receivable

Receivable from custodian

Cash

3. C. Petty cash fund custodian has the responsibility to manage and report funds
 related to Petty Cash Fund
4. C. If not replenishment and adjusting entries made, the balance of the fund
is higher than actual and expenses is lower since not all expenses are recognized.
5. B. Petty cash fund are used for small expenses. Monthly interest expense are large
expense settled through cash.
PROBLEM 3
1. B. Unadjusted Deposit in transit ₱ 175,250
Post dated check received -50,000
Adjusted deposit in transit ₱ 125,250

2. D. Unadjusted Outstanding checks ₱ 246,750

Unreleased check -14,750
Post dated check issued -37,210
Adjusted outstanding checks ₱ 194,790

3. B. Unadjusted bank balance ₱ 350,000

Deposit in transit - adjusted 125,250
Outstanding checks - adjusted 194,790
Error: Bank credit -30,000
Adjusted balance ₱ 250,460

4. C. Unadjusted balance ₱ 293,500

Unreleased check 14,750
Post dated check issued 37,210
Note collected by bank 15,000
Post dated check received -50,000
Adjusted Book balance 310,460
less: Adjusted bank balance -250,460
Cash shortage ₱ 60,000

5. D. The year-end bank statement is the initial document you need to verify
the bank balance. It shows the actual amount the bank has recorded which be
reconcile with book balance through bank reconciliation.
6. A Auditor should verify directly to the bank for it reliability of the information.
7. D. Credit memo is not directly related to deposit in transit since it is used to adjust the book b
while deposit in transit are for adjustments in bank balance.
8. A. Confirmation from the bank is not a primary procedures to check outstanding checks
because outstanding checks are confirm through company's records not in bank's record.
9. C. Cut-off bank statement is a partial bank statement that shows transactions
for a short period sent to auditor used to verify transactions and ensure accurate year-end
10. B. Auditors use a cutoff bank statement to confirm items like deposits in transit and
outstanding checks that are listed in the client’s bank reconciliation.

PROBLEM 4
1. A. TGAS ₱250,000.00
 Merchanse inventory- ending -30,000
Cost of sale 220,000
Gross profit(220,000*120%) 264,000
Sales 484,000
Accounts Receivable-ending -70,000
Collections from sales ₱414,000

2. D. Cash receipts:
owner's investment ₱150,000
Porceeds from loan 98,000
Collections from customers 414,000
Total cash receipts 662,000
less: cash disbursements
Purchases (250k-15k) 235,000
Loan payment 45,000
Expenses paid 80,000
Store fixtures (50k-5k) 180,000 -540,000
Cash balance, Dec. 31 ₱122,000

3. C. Unadjusted bank balance ₱91,500

Deposit in transit 5,000
Outstanding checks -4,500
Adjusted bank balance 92,000
Cash balance per book 122,000
Cash shortage -₱30,000

4. B. Confirmation request are send to banks to verify the client’s deposit and loan balances

5. A. Confirmation requests are send by auditor to all banks to verify both the client's
deposit balances and any amounts the client owes to the bank.

PROBLEM 5

1 BANK (B) 11/30 (R) Dec.

Unadjusted bal. ₱230,000.00 ₱420,000.00
DIT – 11/30 200,000 -200,000
- 12/31 120,000
OC – 11/30 -80,000
- 12/31
Error, Dr.–11/30 10,000 -10,000
- 12/31
Error, Cr.–11/30 -40,000
- 12/31 -30,000
NSF check red. -10,000
 Adjusted bal. ₱320,000.00 ₱290,000.00

2. Adjusting Entries
a. Cash in bank ₱120,000
Notes receivables

b. Bank service charge ₱3,000

Cash in bank

c. Accounts receivable ₱7,000

Cash in bank

PROBLEM 6
1. A (B) 11/30
2. C. Unadj. bank bal. ₱14,010
3. D. DIT – 11/30 2,740
4. A. - 12/31
OC – 11/30 -4,260
- 12/31
CM-coll.– 11/30 -1,200
- 12/31
DM-BSC – 11/30 950
- 12/31
DAIF checks: (h)
(i) 1,050
(j)
Bank error, Dr.
Receipts used for
payments
Book errors: (m)
(n)
Unadj. book bal. ₱13,290

5. A. A proof of cash is used by auditors to check if cash records match bank statements
especially when there are weaknesses in handling cash receipts and payments which
helps in detecting mistakes and discrepancies.
6. A. A proof of cash is an audit procedure that compares the company’s cash
records with the bank’s records to ensure both are accurate and match.
UIVALENTS

₱372,000
-60,000
-30,000
₱282,000

₱10,300
-1,600
-1,200
-800
₱6,700

₱950,000
50,000
86,000
₱1,086,000

₱282,000
6,700
1,086,000
1,280,000
-40,000
300,000
₱2,914,700

usceptible to theft
nding balance is immaterial,
the Statement of cashflows

Total

₱7,528
 ₱85,960

₱19,140

₱112,628

152,960
₱40,332

₱14,000
3,240
300
1,600
₱19,140

₱730.00
₱730.00

₱15,000
₱15,000

₱10,160

3,360
₱13,520

₱28,000
₱28,000

₱40,332
₱40,332

ge and report funds

ance of the fund
expenses are recognized.
erest expense are large

need to verify
as recorded which be

of the information.
nce it is used to adjust the book balance

o check outstanding checks

ny's records not in bank's record.
hows transactions
ns and ensure accurate year-end balances.
e deposits in transit and
onciliation.
nt’s deposit and loan balances

o verify both the client's

(D) Dec. (E) 12/31 BOOKS (B) 11/30

₱500,000.00 ₱150,000.00 Unadjusted bal. ₱ 227,000.00
Note collected – 11/3 100,000
120,000 - 12/31
-80,000 BSC – 11/30 -2,000
60,000 -60,000 - 12/31
NSF check –11/30 -5,000
-20,000 20,000 - 12/31
-40,000 NSF check red.
-30,000 Adjusted bal. ₱320,000
-10,000
 ₱410,000.00 ₱200,000.00

₱120,000

₱3,000

₱7,000

(R) Dec. (D) Dec. (E) 12/31

₱281,070 ₱275,450 ₱19,630
-2,740
3,110 3,110
-4,260
3,870 -3,870
1,200
-1,600 -1,600
950
-640 640
-800 800
-1,050
-900 -900
-2,010 2,010
750 750

-300 -300
2,925 -2,925
₱279,540 ₱274,635 ₱18,195

ds match bank statements

eceipts and payments which

company’s cash
ate and match.
(R) Dec. (D) Dec. (E) 12/31
₱270,000.00 ₱407,000.00 ₱90,000.00
-100,000
120,000 120,000
-2,000
3,000 -3,000
-5,000
7,000 -7,000

₱290,000 ₱410,000 ₱200,000