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Cash and Cash Equivalents Quiz 2 With Solutions
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TEST BANK FOR Intermediate Accounting IFRS Edition Volume 1 By Kieso Weygandt and Warfield A+
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Solution Manual for Intermediate Accounting, 1st Edition, by Donald E. Kieso, Jerry J. Weygandt and Terry D. Warfield.
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Solution Manual for Intermediate Accounting, 1st Edition, by Donald E. Kieso, Jerry J. Weygandt and Terry D. Warfield.
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1 of 5CPA REVIEW SCHOOL OF THE PHILIPPINES
Manila
AUDITING PROBLEMS
AUDIT OF CASH - QUIZZERS
PROBLEM NO. 1
In connection with your examination, the Pound Company presented to you the following
information regarding its Cash in Bank account for the month of December, 2005:
a) Balances per bank statements: November 30, P107,800, and December 31,
P115,200.
b) Balances of cash in bank account in company’s books: November 30, P82,725, and
December 31, P113,400.
c) Total receipts per books were P1,110,950 of which P6,050 was paid in cash to a
creditor on December 24.
d) Total charges in the bank statement during December were P1,094,850.
e) Undeposited receipts were: November 30, P45,300 and December 31, P50,600.
f) Outstanding checks were: November 30, P13,375, and December 31, P9,650, of
which a check for P2,500 was certified by the bank on December 26.
g) NSF checks returned, recorded as reduction of cash receipts, were:
Returned by bank on December, recorded also in December, P5,200.
Returned by bank on December but recorded in January, P4,300
h) Collections by bank not recorded by Company were P60,750 in November and
P58,200 in December.
i) Bank service charges not entered in company’s books were: November 30, P3,750
and December 31, P2,100.
j) A check for P4,750 of Found Company was charged to Pound Company in error.
k) A check drawn for P4,200 was erroneously entered in the books as P2,400.
QUESTIONS:
Based on the above and the result of your audit, answer the following:
1. How much is the adjusted cash balance as of November 30, 2005?
a. P107,800 b. P139,725 c. P75,875 d. P137,225
2. How much is the adjusted book receipts for December, 2004?
a. P1,102,350 b. P1,113,600 c. P1,056,950 d. P1,108,400
3. How much is the adjusted book disbursements for December, 2004?
a. P1,084,725 b. P1,078,675 c. P1,089,925 d. P1,084,725
4. How much is the adjusted cash balance as of December 31, 2004?
a. P158,650 b. P153,900 c. P165,200 d. P163,400
5. How much is the cash shortage of December 31, 2004?
a. P1,800 b. P9,500 c. P4,750 d. P0
, 2 of 5
PROBLEM NO. 2
Your audit senior instructed you to prepare a four column proof of cash receipts and
disbursements for the month of August, 2005.
The bank reconciliation prepared by Franc Company at July 31 is reproduced below: (All
book adjustments were recorded in August).
Bank balance P52,000 Book balance P40,000
Add:
Proceeds of note
receivable collected by
Add deposit in transit, July 31 900 bank in July 8,000
Deposit made in bank on
July 31 not recorded in
books until August 1,000
Total 52,900 Total 49,000
Less outstanding checks: Less bank service charge 100
No. 436 P200
450 1,800
451 1,400
454 600 4,000 .
Adjusted balance P48,900 Adjusted balance P48,900
Upon inquiry about the client’s August 31 bank reconciliation, you were informed that it has
been lost and that the client is too busy at this time to prepare another. Your senior told
you to get the August bank statement and paid checks and to prepare the August 31
reconciliation so that you may complete the August proof of cash.
The August bank statement is reproduced below:
Kapuso Bank
Account Name: Franc Company
Date Debits Credits
July 31
August 1 1,800 900
August 6 1,400
August 9 600 10,000
August 12 140 DM 140
August 15 1,000
August 20 700 14,000
August 27 1,440
August 29 100 EC 100 EC
August 31 440 SV
August 31 300 DM
1,820
SV – Service Charges; DM – Debit Memo; EC – Error Corrected; CM – Credit Memo
The paid checks accompanying this bank statement (all clearing in August) were (checks
listed in order of payment by bank).
No. 450 P1,800 No. 455 P1,000 No. 458 P1,440
451 1,400 456 700 459 1,820
454 600
The check register revealed that the last check issued in August was no. 460 for P1,000
and that check no. 457 was for P2,400.
Cash received for the period August 21 through 31 of P9,400 was deposited in the bank on
September 1.
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