UM Tagum College

Arellano Street, Tagum City, 8100 Philippines

Audit of Cash PROF. JON D. INOCENTES , CPA

Shown below is the bank reconciliation for Fitch Company for November 2013:
Balance per bank, Nov. 30, 2013 150, 000
Add: Deposit in transit 24, 000
Total
Less: Outstanding Check 28, 000
Bank credit recorded in error 10, 000 38, 000
Cash balance per books, November 30, 2013 136, 000
The bank statement for December 2013 contains in the following data:
Total deposits 110, 000
Total charges, including NSF check of P8, 000 and service
Charge of P 400 96, 000
All outstanding checks on November 30, 2013, including the bank credit, were cleared in the bank in December 2013.
There were outstanding checks of P30, 000 and deposits in transit of P38, 000 on December 31, 2013.
Required:
1. How much is the cash balance per bank on December 31, 2013?

a. 154, 000 c. 164, 000

b. 150, 000 d. 172, 00

2. How much is the December receipts per books?

a. 124, 000 c. 110, 000

b. 96, 000 d. 148, 000

3. How much is the December disbursement per books?

a. 96, 000 c. 89, 600

b. 79, 600 d. 98, 000

4. How much is the cash balance per books on December 31, 2013?

a. 150, 000 c. 180,400

b. 170,400 d. 162, 000

5. The adjusted cash in bank balance as of December 31, 2013?

a. 141, 600 c. 172, 000

b. 162, 000 d. 196, 000

Your audit senior instructed you to prepare a four column proof of cash receipts and disbursements for the month of
December 2011.
Unadjusted bank balance P 96,800
Add: Deposit in transit 18,000
Unadjusted bank balance P 96,800
Add: Deposit in transit 18,000
Total 114,800
Less: Outstanding check
No. 276 P2,400
282 7,200
284 4,800
285 1,600 16,000
Adjusted bank balance P 98,800
Unadjusted book balance P 58,640
Add: CM-note collected 40,320
Total 98,960
Less: DM bank charges 160
Adjusted Balance P 98,800

The December bank statement, which has a beginning The company`s cash receipts and cash disbursements
balance of P96,800 is reproduced below. journals for the month of December 2011 are
Tense Bank provided below
Account Name: Aenon Prince Company CASH RECEIPTS CASH DISBURSEMENTS
Date Debits Credits Date OR NO. Amount Date Check No. Amount
12-01 P18,000 12-01 415 P 40,000 12-01 286 P16,000
12-02 P 7,200 40,000 12-05 416 48,000 12-03 287 24,000
12-04 24,000 12-10 417 56,000 12-10 288 32,000
12-06 48,000 12-17 418 64,000 12-14 289 20,000
12-08 400,000 CM83 12-20 419 72,000 12-20 290 28,000
12-10 40,000 DM97 12-30 420 80,000 12-23 291 36,000
12-11 56,000 12-31 421 88,800 12-26 292 40,000
12-16 20,000 12-28 293 44,000
12-18 64,000 ______ 12-31 294 48,000
12-21 72,400 Total P440,800 P 304,000
12-28 36,000 80,000
12-31 4,000DM98 64,000 CM84 The company`s Cash in Bank Ledger appears below:
Totals 131,200 842,400 DEBIT CREDIT
Dm97- Customer’s DAIF Check Bal. 12/01/11 P 58,640 1 2/31/11 CDJ P304,000
DM 98- Service charges 12-01 GJ 40,320
CM83-note collected cy bank 12-10 GJ CM 83 400,000
CM84- Account collected by the bank 12-31 CRJ 440,800
QUESTIONS:
Based on the application of the necessary audit procedures and appreciation of the above data, you are to provide
the answers to the following:
6. How much is the outstanding checks as of December 31,2011?
a. P208,000 c. 232,800
b. 216,800 d. 224,000
7. How much is the adjusted book receipts for December 2011?
a. P985,200 c. P771,600
b. P.913,200 d. P 904,80
8. How much is the adjusted book disbursements for December 2011?
a. P332,000 c. P348,000
b. P 347,840 d. P 339,200
9. How much is the adjusted cash balance as of December 31,2011?
a. P664.000 c. P680,000
b. P688,800 d. P 672,800
10. How much is the cash shortage as of December 31,2011?
a. P24,240 c. P15,840
b. PP23,840 d. P 0

Your audit client, Help Corporation, provided for uncollectible accounts receivable under the allowance
method since the start of its operations to December 31, 2017. Provisions were made monthly at 2 percent
of credit sales; bad debts written off were charged to the allowance account; recoveries of bad debts
previously written off were credited to the allowance account; and no year-end adjustments to the
allowance account were made. Help's usual credit terms are net 30 days.

The credit balance in the allowance for doubtful accounts was P260,000 at January 1, 2017. During 2017,
credit sales totaled P18,000,000, interim provisions for doubtful accounts were made at 2 percent of credit
sales, P180,000 of bad debts were written off, and recoveries of accounts previously written off amounted
to P30,000. Help installed a computer system in November 2017 and an aging of accounts receivable was
prepared for the first time as of December 31, 2017. A summary of the aging is as follows:
Balance in Estimated %
Classifications by Month of Sale Each Category Uncollectible

November-December 2017 P2,280,000 2%

July-October 2017 1,200,000 15%
January-June 2017 800,000 25%
Prior to January 1, 2017 260,000 80%
Based on the review of collectibility of the account balances in the "prior to January 1, 2017" aging
category, additional receivables totaling P120,000 were written off as of December 31, 2017. Effective with
the year ended December 31, 2017, Help adopted a new accounting method for estimating the allowance
for doubtful accounts at the amount indicated by the year-end aging analysis of accounts receivable.
QUESTIONS:
Based on the above and the result of your audit, answer the following:

11. How much is the adjusted balance of the allowance for doubtful accounts as of December 31, 2017?
a. P537,600 b. P350,000 c. P633,600 d. P753,600

12. How much is the doubtful accounts for the year 2017?
a. P427,600 b. P577,600 c. P547,600 d. P457,600

13. The recorded allowance for doubtful accounts should be increased by

a. P283,600 b. P187,600 c. P67,600 d. P0
In connection with your examination of the financial statements of Ringo, Inc. for the year ended December
31, 2010, you were able to obtain certain information during your audit of the accounts receivable and
related accounts.
 The December 31, 2010 balance in the Accounts Receivable control accounts is P837,900.
 An aging schedule of the accounts receivable as of
December 31, 2010 is presented below:
Age Net debit balance Percentage to be applied after corrections have been
made
60 days & under P387,800 1 percent
61 to 90 days 307,100 2 percent
91 to 120 days 89,800 5 percent
Over 120 days 53,200 Definitely uncollectible, P9,000; the remainder is
estimated to be
P 837,900 25% uncollectible.

• Two entries made in the Doubtful Accounts Expense account were:

1. A debit on December 31 for the amount of the credit to the Allowance for Doubtful Accounts.
2. A credit for P6,100 on November 30, 2010, and a debit to Allowance for Doubtful Accounts because of a
bankruptcy. The related sales took place on October 1, 2010.
• The Allowance for Doubtful Accounts schedule is presented below:
Debit Credit Balance
January 1, 2010 P19,700
November 30, 2010 P6,100 13,600
December 31, 2010
(P837,900 x 5%) P41,895 P55,495

• There is a credit balance in one account receivable (61 to 90 days) of P11,000; it represents an advance on
a sales contract. QUESTIONS:Based on the above and the result of your audit, answer the following:

14. How much is the adjusted balance of Accounts Receivable as of December 31, 2010?

a. P837,900 c. P833,800
b. P839,900 d. P822,800

15. How much is the adjusted balance of the Allowance for Doubtful Accounts as of December 31, 2010?

a. P25,475 c. P25,255
b. P25,780 d. P41,895

16. How much is the Doubtful Accounts expense for the year 2010?

a. P21,180 c. P41,985
b. P20,655 d. P20,875

17. How much is the net adjustment to the Doubtful Accounts expense account?

a. P14,920 credit c. P20,875 credit

b. P14,615 credit d. P15,140 debit