Name:
Section:
Date Submitted:
Audit of Cash and Cash Equivalents
PROBLEM NO. 1
The cash account of the Makati Corporation as of December 31, 2022 consists of the following.
On deposit in current account with Real Bank
Cash collection not yet deposited to the bank
A customer's check returned by the bank for
insufficient fund
A check drawn by the Vice-President of the Corporation
dated January 15, 2023
A check drawn by a supplier dated Dec. 28, 2022 for
goods returned by the Corporation
A check dated May 31, 2022 drawn by the corporation
against the Piggy Bank in payment of custom duties.
Since the importation did not materialize, the check
was returned by the customs broker. This check
was outstanding check in the reconciliation of the
Piggy Bank account.
Petty Cash fund of which P5,000 is in currency; P3,600
in form of employees' I.O.U.s; and P1,400 is
supported by the approved petty cash vouchers for
expenses all dated prior to closing of the books on
December 31, 2022
Total
Overdraft with Piggy Bank secured by a Chatttel mortgage
on the inventories
Balance per ledger
P
900,000.00
350,000.00
150,000.00
70,000.00
60,000.00
410,000.00
10,000.00
1,950,000.00
300,000.00
P 1,650,000.00
QUESTION:
At what amount will the account "Cash and Cash Equivalents" appear on the December 31, 2022
statement of financial position?
2 points
PROBLEM 2
You are conducting audit of Sto. Tomas Company for the year ended December 31, 2022. The
internal control procedures sorrounding cash transactions were not adequate. Wakan Wakat,
the bookkeeper-cashier, handles cash receipts, maintains accounting records, and prepares the
monthly reconciliation of the bank account.
The bookkeeper-cashier prepared the following reconciliation at the end of the year:
Balance per bank statement
Add: Deposit in transit
Note collected by the bank
Balance
Less: outstanding checks
Balance per general ledger
P
350,500.00
30,000.00
700,000.00
380,500.00
1,080,500.00
493,500.00
P
587,000.00
In process of your audit, you gathered the following:
a. On December 31, 2022, the bank statement and the general ledger showed balances of
P700,000 and P587,000 respectively.
b. The cut-off bank statement showed a bank charge on January 2, 2023 for P60,000
representing a correction of an erroneous bank credit.
c. Included in the list of oustanding check were the following:
1 A check payable to a supplier, dated December 29, 2022, in the amount of P29,500 released
on January 5, 2023.
2 A check representing advance payment to a supplier in the amount of P74,420, the date of
which is January 4, 2023 and released in December 2022.
d On December 31, 2022, the Company received and recorded customer's post-dated check
amounting to P100,000.
QUESTIONS:
Based on the above and result of your audit, answer the following:
1. The adjusted deposit in transit as of December 31, 2022.
2. The adjusted outstanding checks as of December 31, 2022.
3. The adjusted cash to be presented as of December 31, 2022.
4. The cash shortage in 2021.
5. The net adjustment to the cash account in 2022.
2 points
2 points
2 points
2 points
3 points