274 Chapter 9 AUDIT OF CASH ON HAND AN! 7 erent risk, more audit time is degree of inh h t than is indicated by its peso amount. The h account is frequently larger than for Furthermore, the susceptibility of assets because most other D IN BANK Since cash generally has a higher devoted to the audit of the account amount of cash flowing in and out of the cas! any other account in the financial statement. fi cash to defalcation is greater than for other types ol assets must be converted to cash to make them usable. il i which res As discussed in the preceding chapters, the following re ed fina in the improper payment of or failure to receive cash may the tests of controls and substantive tests of transactions. Failure to bill a customer Billing a customer at a price | Abstraction of cash receipts from customers bet Dupligate payment of a vendor’s invoice Improper payments of officers’ personal expenses Payment for merchandise or goods that were not received : Payment to an employee for more hours than he or she has worked Payment of interest to a related party for an amount far exceeding the going rate y lic: than called for by company policy er fore they are recorded SAAVEYNS The first three misstatements could be uncovered as part of the audit of the revenue and cash receipts cycle, the next three in the audit of the acquisition and payment cycle, and the last two in the tests of the payroll and personnel cycle and the financing and investing cycle, respectively. Entirely different types of misstatements are normally discovered in, applying substantive test of details of balances. Examples are a. Cash received by the client subsequent to the statement of financial position date but recorded as cash receipts in the current year b. Deposits recorded as cash receipts near the end of the year, deposited in the bank in the same month but still reported as a deposit in transit in the bank reconciliation Understatement of the outstanding checks in the bank reconciliation Payments on notes payable debited directly to the bank balance by the banks but not entered in the client’s records ae The appropriate methods for discovering the preceding misstatements by testing the client’s bank reconciliation will become clearer as we proceed. At this point, it is important only that the reader distinguish between tests’ of controls andpstantive tests of transactions th; ee mine whether the book bala je Substantive Tests of Cash 275 lat are relat ed to the nes Fi Cash ace © reconciles to the bank balance. and fess that \d the conceptual and Proced, a To blen ural aspect, 7 ances 25 W1 ell as for other accounts, the aud mo Of substantive tests for cash visusse .d in the context of the financial statem, ram presented is keyed to and ‘ent assertions discussed later. audit Objectives and Procedures , An audit program of representative year-end sub: vat | rt .~ ¥€ stantive testin; di in the ination of cash is presented in Fi, uw Eee te ender of this chapter. ure 9.1, These procedures are discussed in Figure 9.1 Substantive Testing of Cash Assertions Audit Objectives Audit Procedures | _____] |, Baistence or occurence | A. To determine whether cash | 1. Obtain analysis of cash exists at year-end and balance and reconcile to Cash-related transactions the general ledger. Sceur within the year. 2. Confirm bank balances as B. To determine that all cash of statement of financial balances of the client are position date. Feflected on the statement | 3. Perform cash count Of financial position at procedures for cash on year-end. hand. 4, Obtain (prepare) bank reconciliations as of the statement of financial position date. 5. Trace all transfers occurring between banks ear year-end. i Completeness C. Todetermine whether all | 6. Obtain a cutoff bank . cash transactions are statement containing Tecorded in the proper transactions several days accounting period, ‘subsequent to the statement of financial position date. Examine items returned with the cutoff bank statements. 7. Prepare proof of cash and reconcile cash transactions occurring during a specified period as they are recorded by the bank and the client.276 Chapter 9 - Audit Procedures Assertions Audit Objectives 3 Verify the client's cutoff of + ” ‘cash receipts and cash disbursements. 9, Review bank statements Rights and obligations D. Todetermine that cash and the bank replies to M are available for 5 ver wou restrictions or if confirmation letters. with restrictions, properly indicated in the statement of financial position. - : 'V. Valuation or allocation E, Todetermine if cash e a 10. ist ee # ei i es cash subject fo court's sdatsea! restraining order, in foreign banks and in foreign currency. This is in addition to the foregoing procedures which will enable the auditor to verify proper valuation of cash. V. Presentation and F. Todetermine whether cash | 11. Investigate any checks disclosure is presented in accordance representing large or with generally accepted unusual payments to accounting principle, related parties. - 42. Evaluate proper financial statement presentation and disclosure of cash, Discussion of Substantive Audit Procedures 1, Obtain analysis of cash balance and reconcile to the general ledger. This schedule will typically list the bank, the account number, account type (current, savings, time deposit) and the year-end balance per books. This balance will then be traced and reconciled to the general ledger as necessary. Confirm bank balances as of statement of financial position date. A direct approach in proving existence of cash is to confirm amounts on deposit by communicating with financial institution officials. Figure 9.2 illustrates a standard bank confirmation form that may be used to this purpose. To assist the financial institution in completing the form, information identifying accounts, loans and their balances are typed by the auditor. Other information such as additional accounts, loans, may be provided by the financial institution. Bank confirmation request should be (a) sent to all banks. Substantive Te in which the client has an account, ive Tests of Cash __277 : ) si ; autor, and retuned directly tothe quai ene PY he client, (6) mailed by the Figure 9.2 Confirmation Form ‘STANDARD FORM TO CONFIRM. ACCOUNT WITH FINANCIAL, wnsmuron FORMATION ORIGINAL Tobe mailed to accountant The Seaview Corporation ; CUSTOMER NAME We have provided to our accou informat / ‘ur accountants the folowing information a Of the close of mmber 31, 2017, regarding oor Hato Eastem Bank and Trust Co, deposit and loart balances re ed ea ‘and Itramuros, Manila information, renee Name the bat 1 noting any exceptions to the information provided. if ea fume ones have been lef blank, please compet this frm by we ne balance in the ‘appropriate space below.” Although detaleg ceaUest Nor expect you to conduct a comprehensive, celled ‘search of your records, i during the process of a ipleting this confirmation additional information about other posit and loan accounts we may have with you comes to your attention, please include such information below. Please use the enclosed envelope to retum the form directly to our accountants 4, Althe close of business on the dat listed above, our records indicated the folk i : | 1, Alte dose of business on th lowing d ! “ACCOUNT NAME ‘ACCOUNT NO. TEREST RATES | CE “General Account 266-7850 None 780,000 Account 266-7850 k |__Payrt None 11,500 2, Weare directly liable to the financial institution for loans at the close of business on the date listed above as follows: MCCOUNT DATE THROUGH | DESCRIPTION 'NO./ DATE INTEREST WHICH INTEREST OF DESCRIPTION BALANCE* DUE RATE ISPADD COLLATERAL igsst 4,000,000 | erts2078 | 5% 72152017 | San Miguel Comp. Shares cette 2,000,000 | sva018 | 6% 12612017 ea~ January 6, 2018 (Client's Authorized Signature) (Date) ‘The information presented above by the customer is in agreement with our records. Although we have not conducted a ‘comprehensive, detailed search of our records, no other deposit or loan accounts have come to our attention except as ow. wwette Abe January 31, 2018 (Financial Institution Authorized Signature) (Date) Controller (Title) EXCEPTIONS ANDIOR COMMENTS: Pease retum i Torn Getto aur accountants: Or Cot CPAS * Onin, balances are intentionally left blank if they are not available atthe 2778 Kye ‘ Sie the fom is prepared.276 Chapter 9 : = bjectives Audit Procedures Assertions = 5 Very te cients cutofiof ‘cash receipts and cash to disbursements. " Review bank statements Il. Rights and obligations D. Todetermine that cash 9. Revie bank reps fo balances are available for ‘ation letters, . use without restrictions or if confirm with restrictions, properly indicated in the statement of financial position. - - TV. Valuation or allocation | €. Todetermine fcash is 10. Aeideareceae a recorded and presented at ele ie eee ip, cash subj the proper amount restraining order, in foreign banks and in foreign currency. This is in addition to the foregoing procedures which will enable the auditor to verify proper valuation of cash. V. Presentation and F. Todetermine whether cash | 11. Investigate any checks disclosure is presented in accordance representing large or with generally aocepted unusual payments to accounting principle. related parties. 12. Evaluate proper financial statement presentation and disclosure of cash. Discussion of Substantive Audit Procedures 1 Obtain analysis of cash balance and reconcile to the general ledger. This schedule will typically list the bank, the account number, account type (current, savings, time deposit) and the year-end balance per books. This balance will then be traced and reconciled to the general ledger as necessary. Confirm bank balances as of statement of financial position date, A direct approach in proving existence of cash is to confirm amounts on deposit by communicating with financial institution officials. Figure 9.2 illustrates a standard bank confirmation form that may be used to this purpose. To assist the financial institution in completing the form, information identifying accounts, loans and their balances are typed by the auditor. Other information such as additional accounts, loans, may be provided by the financial institution. Bank confirmation request should be (a) sent to all banksSubs which the client has an ac, uostantive Tests of Cash 277 . count, guditor, and returned directly to ine mares by the client, (c) mailed by the re 9.2 Confirmation Form Fist STANDARD FORM To con; FIRM ACCOUNT WITH FINANCIAL INSTTUTION CE INFORMATION ORIGINAL Tobe mailed to accountant The Seaview Corporation : CUSTOMER NAME We have provided to our i accountants the folowing information as froncal Of the close of business on December 31, 2017, regard yaanor's Easter Bank and Trust Co, deposit and loan balanoes "Place soakea the sccuacy of he ware amuros, Manila {hformation, noting any exceptions to the information provided. If cr the batances have been left bla nk, please complete this form bj fumishing the balance in the ap rs i »propriate space below." Although ‘we do not request nor expect you to conduct a comprehensive, detailed search of your records, if during the process of ‘Completing this confirmation additional information about other ‘deposit and loan accounts we may have with you comes to your attention, please include such information below. Please use the enclosed envelope to retum the form: directly to our accountants. 1. ‘Atthe close of business on the date listed above, Our rex 20rds indicated the follow it ‘ACCOUNT NAME ACCOUNT NO. INTEREST RATES ANE General Account 266-7850 None | 30,000 Payroll Account 266-7850 None. 11.500 2, We are directly lable to the financial institution for loans atthe close of business on the date listed above as follows: ‘ACCOUNT DATE THROUGH DESCRIPTION NO. DATE | INTEREST | WHICH INTEREST OF DESCRIPTION BALANCE* DUE RATE 1S PAID COLLATERAL asst 4,000,000 | 6/15/2078 5% 7as/2017 [San Miguel Corp. Shares credit Line 2,000,000. | 31/2018 6% 12312017 Biae~ January 6, 2018 (Client's Authorized Signature) (Date) ‘The information presented above by the customer is in agreement with our records. Although we have not conducted a comprehensive, detailed search of our records, no other deposit or lan accounts have come to our attention except as a ibe January 31, 2018 (Financial Institution Authorized Signature) (Date) Controller (Title) EXCEPTIONS AND/OR COMMENTS: E 7 Cruz & Cortel, CPAS Please retum this form directly to our accountants: * Oninarly, balances are intentionally left blank if they are not available at the Eu wa Avenue {ime the form is prepared,278 Chapter 9 3. Perform cash count procedures for cash on hand. Existence of undeposited collections, petty cash ee verified by conducting a surprise count of these funds. cash count sheet that the auditor may use. .ds and other funds may be Figure 9.3 illustrates a follow these procedures: In conducting the cash count the auditor should : ‘ held by the client until all 1) Control all cash and negotiable instruments funds have been counted. 2) Insist that the custodian of the cash be present throughout the ot 3) Obtain a signed receipt from the custodian on return of the funds to the client. 4) Ascertain that all undeposited checks are payable to the order of the. client either directly or through endorsement. Figure 9.4 illustrates the working papers to determine the adjusted balance of Petty Cash Fund. 4. Obtain (prepare) bank reconciliations as of the statement of financial position date. If client provides the auditor with the reconciliation of the balance per the bank statement at the statement of financial position date with the balance per the company’s accounting records, he should examine such in detail to satisfy himself that is has been properly prepared. A careful review of the client's reconciliation is important because a cash shortage may be concealed by omitting a check from the outstanding checks list or by purposely making an error in addition on the reconciliation. The examination of the client-prepared bank reconciliation should also include: a. Tracing bank balances to bank confirmation responses b. Verifying the validity of the reconciling items c. Scanning the bank statements for erasures and alteration Figures 9.5, 9.6, and 9.7 illustrate the forms of bank reconciliation. The forms most frequently used by auditors are those shown in Figure 9.5 (Bank to Books) and Figure 9.7 (Adjusted balances).Substanti —pere83 Cash Count Shee ‘antive Tests of Cash 279 Compa Name of Fund Cash Count Date Denomination = as 100.00 Quantity ~ ‘Amount Total 50.00 a 20.00 10.00 FRACTIONAL DENOMINATIONS P 500 7.00 0.25 0.10 0.05 TOTAL BILLS AND FRACTIONAL DENOMINATIONS CASHITEMS reds and PHOS for deposit Suchers nol yet replenished “pavances of 1.0.U-'S Obes fneunt of Fund Per Count Aareuntof Fund Per Books or Receipts ‘ieence if any {ey ty hat he stove tnd of Pas crn my presence O AMIPM and the sam stethew ea tooier [ee each lam accountable for except as noted below: ge pe te ches ine Other Funds: (Simultaneously counted or physically controlled) (Signature of Cashier) Prepared by: Reviewed by Initial Date Initial Date Figure9.4 Adjusted Balance of Petty Cash Fund X Company Petty Cash Fund 42/34/2017 Balance per ledger Px Add (Deduct) Adjustments AJE (1) to take up unreplenished expenses (xx) (2) to take up advances to employees 1) Balance as adjusted Px280 _ Chapter 9 Figure 9.5 Bank Reconciliation Statement (Bank Balance to Book Balance Method) X Company - Bank Reconciliation Statement December 31, 2017 Balance per bank statement ‘Add: Book debits not yet credited by the bank (eg., undeposited collections) Bank debits not yet credited by the company (eg., service charges for the month of December, NSF checks retumed in December) Total Less: Book credits not yet debited by the bank (eg,, outstanding checks) Bank credits not yet debited by the company (e.g., proceeds of note collected by bank) Balance per books Figure 9.6 Bank Reconciliation Statement (Book Balance to Bank Balance Method) X Company Bank Reconciliation Statement December 31, 2017 Balance per books 7 ‘Add: Book credits not yet debited by the bank {eg., outstanding checks) Bank credits not yet debited by the company (eg., proceeds of note collected by bank) Total Less: — Book debits not yet credited by the bank (eg. undeposited collection)” Bank debits not yet credited by the company {eg,, bank charges for the month of December, NSF checks retumed in December) Balance per bank Pxx be be Px Phe BE lsSubstantive Te pene ive Tests of Cash 281 as lation figure (Adjusted Balances merece x Company Bank Reconciliation Stat December vy, owe usted balance per bank nad Book debits not yet credited by the bank ™ (eg., undeposited collections) , Book credits not yet debited by the bank ° . (eg., outstanding checks) sted bank balance a rasta balance per Books . ; — Bank credits not yet debited by the company {eg., proceeds of note collected by bank) ra Bank debits not yet credited by the company 7 (eg., bank charges) Adjusted book balance 7 5. Trace all transfers occurring between banks near ‘year-end, Tracing bank transfers is an effective cash balances resulting from kitin; of cash between banks, check Procedure to disclose overstatement of ig. Kiting is an irregularity involving transfer drawn on one bank is deposited in another, several days (called the float period) usually pass before the check clears the bank on which it is drawn. During the period, the amount of the check is included in the balance on deposit at both banks. The bank balances are temporarily overstated to conceal a cash shortage or meet short-term cash needs. Figure 9.8 illustrates kiting. Kiting can be prevented by segregation of functions; it can be detected by (a) obtaining and using a bank cutoff statement and as mentioned (b) tracing bank transfers. Figure 9.8 Kiting Metrobank Equitable PC! Bank Date Description Book Bank Book Bank 2016 Dec 30 Bank transfer not recorded ‘on the books 100,000 a7 Jan 3-—-Record bank transfer on the books P100,000 100,000) J 4 Bank transfer clears bank drawn on P(100,000)282__ Chapter 9 ctions several days ini? insai 6. Obtain a cutoff bank- statement containing pe subsequent to the statement of (financial, ‘position date, a specifi A cutoff bank statement is a statement covering 4 SPé ear.” days (usually 7 to 10) following the end of the client’s fiscal y rectly by the bank to the audito ‘ed number of business yr. Upon receii This statement should be sent di Cae of the statement, the auditor should . F (2) Trace all prior year dated checks to the outstanding checks listed on the bank reconciliation. - a : (b) Trace deposits in transit on the bank reconciliation to deposits on the cutoff statement. a (©) Scan the cutoff statement and enclosed data for unusual items. 7. Prepare proof of cash and reconcile cash transactions occurring during a Specified period as they are recorded by the bank and the client. A proof of cash is a simultaneous reconciliation of bank transactions and balances with corresponding data per books for a specified time period. A proof of cash is a substantive test that is generally prepared only when internal control over the recording of cash receipts and disbursements is considered weak. This is essentially a fraud detection procedure which may be used for the last month of the year or for selected months during the year. Figures 9.9, 9.10, and 9.11 illustrate the Proof of Cash working papers.Substantive Tests of Cash 283 Proof of F nee? paak Balanves Reconciliation of Receipts and Dish 'o Book Balance Method) peeuaas Ad Company roof of Cash For the month ended December 31, 2017 Be ae Cece mee Dees Balance per bank statement > Receipts Disbursements _ Balance ‘Add (Deduct) Reconciling Items bl Pxx Pxx 4, Deposit in transit (received by the bank in the succeeding month) November 30 x December 31 (a) 2, Outstanding checks (paid by the ™ bd bank in the succeeding month) November 30 December 31 te) (x) 3, Bank charges (recorded by the CS (xx) company in the succeeding month) November os December (a) 4, Notes collected by bank (recorded Ms by the company in the succeeding month) November («) x December (xx) (~) 5, Check of another company erroneously charged by the bank (corrected in the following month) November x («) December (x) ~ 6. Deposit of another company erroneously credited by the bank (corrected in the following month) November (xx) (x) | December pases bx) ae bo), ( Balance per books: Pxx xx Pxx xx284 Chapter 9 Figure 9.10 Proof of Cash (Book Balance to Bank Balance Method) x ompay Proof of For the month ended December 31, 2017 ber Dec. 31 Nov. 30 Decem! Balance Receipts _ Disbursements _ Balance Pax Prx Px Balance per books ‘Add (Deduct) Reconciling Items 1. Deposit in transit (received by the bank in the succeeding month) November 30 (a) mr December 31 (i) 2. Outstanding checks (paid by the bank in the succeeding month) November 30 ro December 31 a 7 3, Bank charges (recorded by the company in the succeeding month) November to) a December (a ms 4. Notes collected by bank (recorded by the company in the succeeding month) ‘November a (x) ; mo 5. Check of another company erroneously charged by the bank (corrected in the following month) November (x) x December . 6. Deposit of another company erroneously credited by the bank (corrected in the following month) November 5 x ter = me _ Balance per bank statement oo os a a (a) * (0)1 Proof of Cash Hantive Tests of Cash 285 re 9.1 Fig" (Adjusted Balances Method) X Comp: or the month ended December 31,2017 Ne aes pee Decne ee 31 book balance anv feces Disbursements _ 8: dd (Deduct) Adjustments Pa Be proceeds of note collected by bank (recorded by the company in the succeeding month) Dever x * (x) f Bank charges (recorded by the x - company in the succeeding month) November (x) io Bx pal x for Adjusted book balance Ba x i bank balance Px = = be ‘Add (Deduct) Adjustments Deposit in transit (received by the bank in the succeeding month) November 30 x (0) December 31 % x Outstanding checks (paid by the bank in the succeeding month) November 30 (x) (a) December 31 i (x) Check of another company erroneously charged by the bank (corrected in the following month) November ~ (oy) December (x) x Deposit of another company erroneously credited by the bank (corrected in the following month) i te November (xx) December = Lo a ea Adjusted bank balance Pax Pxx Bax286 Chapter 9 if isbursements. Verify the client’s cutoff of cash receipts and cash dis “ - ent of financial position date to If a cash count can not be done on the statem' vipts, the auditor can trace verify the accuracy of the client's cutoff of cash F He to the credits on the the deposits in transit on the year-end bank reconci ian bank statement on the first business day of the new year. To ensure an accurate cutoff of cash disbursement, eee a determine the number of the last check prepared on eae ‘il checks up to this statement of financial position date and verify whether ditor should verify number have actually been mailed. For cash receipts, the aut a eaaeath the number of the last official receipt and cash sales invor e statement of financial position date. to confirmation letters. s and note the existence of any order to determine the Review bank statements and banks’ replies The auditor should review any bank overdraft and n funds that may be subject to withdrawal restrictions In effect(s) (if any) on financial statement presentation. Verify existence of cash in bank under receivership, cash in foreign banks or in foreign currency. This can be done through examination of minutes, loan agreements and confirmations. . Investigate any checks representing large or unusual payments to related parties. Any large or unusual checks payable to directors, officers, employees, affiliated companies should be carefully reviewed to determine if whether the transactions were properly authorized, recorded and adequately disclosed in the financial statements. . Evaluate proper financial statement presentation and disclosure of cash, Review financial statements to make sure (a) material savings accounts and certificates of deposit are disclosed separately from cash in the bank, (b) cash restricted to certain uses and compensating balances are adequately disclosed, and (c) bank overdrafts are included as current liabilities.- Substantive Tests of Cash 287 qstrative Audit Case 9.1: Petty Cash Fund and Undeposited Collecti ‘ollections Reyes is the cashier of the Luzon santos. Tan ee cae CPAs, you were ean As representative of the te moming f January 42018. You began to count a Reaper east alkane of Miss Reyes. In the course of your counting, you fou 4 AM. in the presence and coins together with checks, vouchers and other Fa Currencies in paper bills pelow: items, which are mentioned Lina Bills 7 gone hundreds, 25 fifties, 50 twenties, 120 tens Coins P5.00 - 4rolls and $5 loose 50 0 TOO Heels) andl ieee ape (100 pieces to a roll) 0.25 - 2rolls and 2loose (500 Pieces to a roll’ ) b1 3m tod aloe pseu 5 (400 pieces to a roll) Checks na laker Date Rose Manalo, ~ ee Amount Asst. Manager 12/23/17 Luzon Glass Co. P600 Miss L. Reyes, 7 Cashier 12/26/17 Luzon Glass Co, 400 10.U.s A. David, Janitor 12/20/17 P350 R. Tirao, Clerk 12/22/17 250 Pedro Munar, Bookkeeper 12/24/17 150 Petty Cash Vouchers for Replenishment Payee Date Account Charged Amount L. Cruz, Messenger 12/16/17 Advances to Employees P100.00 Rosario & Co. 12/18/17 Supplies 145.00 Victory Liner 12/18/17 Freight-in 182.50 Bureau of Posts (stamps) 12/18/17. Supplies 300.00 A. Vallo, Carpenter 12/20/17. Repairs 450.00 B. Tello 12/21/17 Miscellaneous Expense 154.00288 Chapter 9 Your investigation also disclosed the following: 0 / 1. The balance of petty cash fund per books is en per sales records 2. Cash sales of January 2, 2018 amounted to P a sry P7,650 a while cash receipts book and deposit slip showe b deposited in the bank on January 3, 2018. eS) 3. The following employees’ pay envelopes Dia ea ind the money removed. Each envelope was marked “ul N. Roy 332.50 G. Gloria 247.50 REQUIRED: 1. Prepare working papers showing your cash count. 2. Prepare necessary adjusting journal entries wi December 31, 2017. 3. Determine the amount at which the Pet statement of financial position as of December 31, 2017. ithout explanation as of tty Cash Fund will be stated in the Solution: Wlustrative Audit Case 9.1 EXHIBIT 1.1 Requirement (1) Luzon Glass Company Cash Count Sheet January 4, 2018 Denomination Quantity Amount Total BILLS P100.00 9 P 900.00 50.00 5 4,250.00 20.00 50 4,000.00 10.00 120 1,200.00. P 4,350.00 COINS P 5.00 205. P1,025.00 1.00 815 815.00 025 4,002 250.50 0.10 1,540 154,00 0.05 800 40.00 2,284.50 TOTAL BILLS AND COINS P 6,634.50 CASH ITEMS Checks for deposit Date Maker Payee 1223117 R. Manalo Luzon GlassCo. P 600.00 1226/17 L. Reyes Luzon Glass Co. 400.00 1,000.00 :jshed vouchers eee Payee wen? Rosario & Co, tet? Viotory Liner 12t8it7 Bureau of Posts 122017 A. Vallo qg24t7 B. Tello .s or IOUS Mere Payee 4267 L. Cruz 42237 A. David 42027 R.Tirao 4224ii7 P. Munar otal Amount of Fund Per Count otal Amount of Fund Per Books or Receipts Petty Cash Fund per ledger Unclaimed Wages per opened envelopes Undeposited collections Cash sales, 1/2/18 Less: Amounted deposited, 1/3/18 Shortage Supplies Freight-in Supplies Repairs Miscellaneous P8,650.00 7,650.00 | certify that the above fund of P9,716.00 was counted in my pre i sar, Tan and Associates, CPAs on January 4, 2018 at 600 AM and wee rturec one one ot Substantive Tests of Cash 289 P 145.00 182.50 300.00 450.00 —154.00 1,231.50 P 100.00 350.00 250.00 50.00 850.00 P 9,716.00 9,000.00 580.00 1,000.00 10,580.00 PL 864.00) . and was returned to me intact. Lina Reyes LINA REYES Prepared by: | Reviewed by: | Cashier Trial [ Date | Initial | Date Requirement (2) Adjusting Journal Entries - 12/31/17 1, Supplies expense (P145.00 + P300.00) 445.00 Freight-in 182.50 Repairs and maintenance 450.00 Miscellaneous expense 154.00 Petty cash fund 1,231.50 2. Advances to employees 850.00 Petty cash fund" 850.00 3. Cash in bank 580.00 Salaries payable 580.00300_Choper9 Review Questions and Problems 9-1. 9-3. 94. ank reconciliation, they are lark ed with that te list Peaitacoia i erned Wi a ec arecks “ray include ‘a nonexistent or fictitious Pe Se ratonlare concemed with the possibility of omission a and revise it into an deposit in transit.” Criticize the above quotal accurate statement. (AICPA adapted) ing a client's “ di verifyi : ‘When auditors are he possibility the cashier in During the first few months of the yeal> Genalyn Olan even she wi 2 small company, was engaged in lapping operations. 7 .@” by March 31, and she able to restore the amount of cash Daa wil the year-end audit refrained from any fraudulent acts after that date. probably lead to the discovery of her lapping activities? Explain. i ject independent audit is not the Although the primary objective of an reas eee eney Ge discovery of fraud, the auditors in their work on © consideration the high relative risk associated with this asset. One evidence of this attitude is evidenced by the CPA’s alertness for signs of lapping. REQUIRED: a. Define lapping. : . b. Explain the audit procedures that CPAs might utilize to uncover lapping. pp (AICPA adapted) In the audit of West, Inc., for the year ended December 31, you discover that the client had been drawing checks as creditors’ invoices became due but had not been mailing the checks immediately. Because of a working, capital shortage, some checks have been held for two or three weeks. The client's controller informs you that unmailed checks totaling P48,500 were on hand at December 31 of the current year. He states that these December-dated checks had been entered in the cash disbursements journal and charged to the respective creditors’ accounts in December because the checks were prenumbered. However, these checks were not actually mailed until early January. The controller wants to adjust the cash balance and accounts payable at December 31 by P48,500 because the Cash account had a credit balance. He objects to submitting to his bank your audit report showing an overdraft of cash.95. 9-6. pese Substanti er stantive Tests of Cash 301 s the justi by the indicated amount of outstae gre, 2S" balance and accounts payable utstanding checks, During the audit of Evolution ” Buildi following year-end bank reconciliation prea se Ay fn are given the e client: Evolution Building Supply - Bank Reconciliation December 31 Balance per 12/31 Add: Deposits in transit P 97,468 + 8,934 Less: Checks outstanding P Paiva Balance per ledger, 12/31 P64,886 According to the client’s accounting records, checks totaling P62,964 were issued between January 1 and January 14 of the following year. You have obtained a cutoff bank statement dated January 14 containing paid checks amounting to P100,880, Of the checks outstanding at December 31 checks totaling P7,200 were not returned in the cutoff statement, and of those issued per the accounting records in Jat i P16,400 were not returned. nha REQUIRED: a) Prepare a working Paper comparing (1) the total of all checks returned by the bank or still outstanding with (2) the total per client’s records of checks outstanding at December 31 plus checks issued from January 1-14. 7 b) Suggest four possible explanations for the situation disclosed in your working paper. State what action you would take in each case, including any adjusting entry you would propose. Listed below are eight interbank cash transfers for SPF Co., indicated by the letters a through A, for late December 2018 and early January 2019. Disbursing Bank Receiving Bank (Month/Day) (Month/Day) Per Bank Per Books Per Bank Per Books Amount 12129 12/29 12729 12729 P104,000 102 12/30 1231 120 32,000 1/04 12/31 1102 1/02 48,000 1/04 12/31 1/02 12/31 88,000302__Chapter 9 Receiving Bank isbursing Bank olan). (Month/Day) Books Amount PerBank Per Books ‘Per Bank a Tone e - ‘M04 1/01 1/03 eT 5201 f. 102 101 et 1/02 84,000 1/03 1702 20, ho BI 103 12330 103 ™ whether cash is understated, a brief example of what h as the one illustrated For each of transfers a through h (1) indicate ™ .d (2) provide overstated, or correct as a result; an d could cause the situation. Answer in a form su here. Understated, Overstated, or 7 Transfer Correct Example _ a. Correct Book entries: The transfer was recorded in the accounting records as a check written on the disbursing bank on December 29 and a corresponding cash receipt recorded to receiving bank on that date. Bank entries: The check was taken to the receiving bank on December 29 and deposited. The accounts are both in the same bank, and accordingly the transaction was recorded in both accounts as of that date. 9-7. Audit of Cash Funds A surprise count. of the Pampanga Company’s imprest petty cash fund, carried on its records at P5,000 was made on November 10, 2017. The Company acts as agent for an express company in the issuance and sale of money orders. Blank money orders are held by the cashier for issuance upon payment of the designated amounts by employees. Settlement with the express company is made weekly with its representative, who calls at the Pampanga Company office. At that time, he collects for orders issued, accounts for unissued orders, and leaves additional blank money orders, serially numbered. °9-8. ; Substantive Tests of Cash _303 ‘The count of the items presented b as follows: y the cashier as composing the fund was Currency (bills & coins) Cashed checks P2,200 Vouchers (made out in pencil and 7 500 signed by recipients) . NSF checks (dated June 10 and 15, 2017) ao Copy of petty cash receipt vouchers: Return of expense advance Sale of money orders\(No. Al 1-20) Blank money orders claimed to have been purchased for P100 each from the express company (No. A21-29) 600 At the time of the count, there were also on hand the following: Unissued money orders, No. A30-40 Unclaimed wage envelopes (sealed and amounts not shown) P200 100 300 The following day, the custodian of the fund produced vouchers aggregating P400 and explained that these vouchers had been temporarily misplaced the previous day. They were for wage advances to employees. REQUIRED: a. Show the proper composition of the fund at November 10, 2017. b. State the audit procedures necessary for the verification of the items in the fund. : ~ (AICPA Adapted) Bank Reconciliation Error Your first assignment,as a summer trainee with a local CPA firm is to prepare the bank reconciliation for a client firm, which provides you with the following information for June: Client checks written but which have not yet cleared the bank. ‘ P 6,000 Client deposits placed into night depository June 30, not appearing on bank statement... 16,000 Check written on the account of a customer of the . oan client, returned by the client’s bank marked “NSF’ rei Balance per June bank statement for the client account304 Chapter 9 9-9. 120 Bank service charges for June Proceeds from a note owed by a cust jomer ‘0 the client bank (includes P60 interest not y' 1.860 recorded by the client).. ae Check written by client for a 944 advertising bill returned with the other canceled checks. poad The client recorded the check and expense for P94, the correct amount, in the journal, but the check was written for P854. The client has already been notified by the advertiser, who decided to cash the check and bill the client for the remainder due. Balance per ledger account. REQUIRED: + 1. Prepare the bank reconciliation for June. 2. Prepare the required adjusting entry(ies) implied by the reconciliation. Accounting for Cash Shortage The Form Company did not exercise adequate internal control over its cash transactions. During an audit you found the following data concerning its cash position as of June 30, 2017. On the company’s records the balance of cash on hand and in bank was P34,700. A credit of P500 for a note collected by the bank did not appear on the company’s records. The bank statement balance was P27,000. Outstanding checks were as follows: Number Amount. 192 P1,040 193 720 194 816 195 692 The cashier prepared the following reconciliation: Balance per bank statement P27,000 Deduct: Outstanding checks No. 193 P720 No. 194 816 No. 195 692 2,028 24,972 Add: Cash on hand (this count is correct) P9,228 Collected note 500 9,728 Cash per company records, June 30, 2017" 34,7009-10. Substantive Tests of Cash 305 REQUIRED: a, Prepare a correct reconciliation, b. What is the amount of the shortage? c. How did the cashier attempt to conc 7 Paper nceal the shortage? d. In the light of this situation, what internal amit Id you propose? improvements wou! (PhilCPA Adapted) Bank Reconciliation Based on Bank Statement and Cash Account You have been assigned the aud it of cash of Jonas Com Th ave s , pany. The following information were uncovered in the course of your examination. a, Jonas Company received its June 30 bank statement: Statement summary: Balance June 1 .. P23,01 Deposits and other credits. ited Checks and other debits (12,120) Interest earned on this statement. 100 Ending balance, June 30... P22,580 Accounts transactions: Deposits Checks P2000 62 #61 P1000 617 #65 P 400 3,000 6-7 #63 2,000 623 #60 1,100 4,500 69 #66 3,000 627 #67 2,100 2,100 6-14 #64 1420 6-28 #59 1,100 211,600 P2120 Cash Account P23,900 | Checks P13,220 Balance June 1 its 12,300 60 P1000 65 P 400 a 3,000 61 «1,000 66 3,000 6-17 4,500 62 900 67 2,100 6-22 2,100 63 2,000 68 1,300 6-30 2,700 64 = 1,420 ¢. Bank reconciliation at May 31: : Bank balance, P23,000, add deposit outstanding, P2,000, deduct check #59 outstanding, P1,100, book balance, P23,900.306 Chapter 9 9-11. REQUIRED: | . a Prepare the June bank reconciliation and give ay ee req Use the bank and book balance fo correct balance Deduction, Transfer: Entries it i Bank. The ies its checking account with Commerce } ee ea aa its December 31 bank et and has requested you as auditor to prepare it for them. The following data are available: iliatic following: (1) cash a. The November 30 bank reconciliation showed the ‘on hand (held back each day by Apple Company See P400 (included in Apple’s Cash account); (2) deposit in transit, 51, P2,000; and (3) checks outstanding, #121, P1,000; #130, 2,000; and #142, 3,000. b. Apple Company Cash account for December: Reconciliation - Collection, . P 64,000 Balance, December 1 .... Deposits: #52 - #55, P186,500; #56, P3,500.. 190,000 Checks: #143 - #176, P191,000; #177, P2,5 #178, P3,000; and #179, P1,500. ~ (198,000) Balance, December 31 (includes P400 cash held each day for change)... . P.56,000 c. Bank statement, December 31: Balance, December 1 . P 67,600 Deposits: #51 - #55 188,500 Checks: #130, P2,000; #142, P3,000; #143 - #176, 191,000... . (196,000) Note collected for Apple Company (including P720 interest) 6,720 Fund transfer received for foreign revenue (not yet recorded by Apple Company) 10,000 NSF check, Customer Belinda. (200) United Fund (per transfer authorization B signed by Apple Co) (50) ank service charges... Balance, December 31 Peel REQUIRED: 1, Identify by number and amount the December 31 its i i and checks outstanding. ieSubstantive Te Prepare the December 3 e Tests of Cash 307 1 by wean balance to correct cash Balance oreconeiiation, Use bank and book 3. Give all journal entries that : your bank reconciliation, Should be made at December 31 based on Preparation of Bank Reconciliation and Audit Adjustment. eas " s va which Eyer Company, you obtain directly from the bank, See apne ae Statement, canceled checks, and e’ate to the company’s bank account, fc Dre on reecnciling the bank balance at December 31, 5017 ae mpany’s books, you observe the facts set forth (1) Balance per bank statement, (2) Balance per books, 12/3 TO (3) Outstanding checks, 12/31/2017 32,108.42 (4) Receipts of 12/31/2017 deposited 1/2/2018 5,317.20 (5) Service charge for November, 2017 —_ per bank memo of 12/15/2017 3.85 P88,489.12 58,983.46 (6) Proceeds of bank loan, 12/15/2017 discounted for 3 months at 25% per annum, omitted from company books 9,875.00 (7) Deposit of 12/23/2017 omitted from bank statement 2,892.41 (8) Check of Tome Products Co., charged back on 12/22/2017 for absence of counter-signature and redeposited with complete signature on 1/5/2018; no entry on the books having been made for the charge back or the redeposit 417.50 (9) Error on bank statement in entering deposit of 12/16/2017 Correct amount P3,182.40 Entered in statement 3,181.40 1.00 (10) Check No. 3917 of Mina Manufacturing Co., charged by bank in error to company account 2,960.00 (11) Proceeds of note of J. Santos Co., collected by bank, 12/10/2017 not entered in cash book: Principal 2,000.00 Interest 20.00 2,020.00 G Less collection charge 5,00 2,015.00308 Chapter 9 9-13. debit memo of 12/23/2017 to charge for settlement of a on heck No. 8: Sanne (12) Erroneou: company’s account Joan, which was paid by Cl same date . it of (13) Error on bank statement in entering deposit 0} 12/4/2017 Entered as 4,817.10 10.00 Correct amount 4,807.10 oH K (14) Deposit of Mina Manufacturing Co., of 12/6/: AE credited in error to this company 2319. RE "7 Neeaae ao Company’s bank account at (a) Prepare a reconciliation of the Mindani December 31, 2017. (Use the adjusted balances method.) (b) Prepare the adjusting journal entries to adjust the Mindanao books to reflect the correct bank balance at December 31, 2017. Proof of Cash Preparation (Adjusted balances method) The following data are to be used in reconciling the May 31, 2017 bank balance of Asia Envelope Company: 2017 April May Cash in bank balance — at end of month 3,561.00 P4,629.72 Bank statement balance — end of month 7,403.50 3,862.20 Bank service charges for the month 6.00 6.80 Checks marked NSF 815.00 118.00 Deposits in transit - end of month 950.00 925.40 Drafts collected by the bank (unrecorded by the company until the month following collection) 1,500.00 202.00 Outstanding checks at end of month 4,463.00 149.68 Checks of Asia Engine Corporation charged to the company’s account in error 349.50 60.00 Check number 6129 erroneously recorded in the check register at P78; the correct amount is (This check is outstanding on 5/31/2017.) 87.00Substantive Tests of Cash 309 2017 Receipts during the month —April May Total credits to cash in bank 42,700.17 Total charges on bank statement pea REQUIRED: 45,317.57 Prepare a proof of cash. (Use adjusted balance method. ) 9-14. Proof of Cash Preparation You have been assigned to the audi . following information: audit of Tarlac Company. You acquired the a. Balances of cash account per th. ed December tT oot Bet the general ledger at Novernber 30, 2017 were P38,020 y b. Balance of demand di and P9,770 respectively. leposits at the Philippine National Bank at December 31, 2017 per the bank confirmation was P10,000. c, Outstanding checks at December 31 amounted to P4,000. d. An NSF check for P245 was charged to the bank account in December. This check was obtained from a customer on account. e Deposits in transit at the beginning and end of month of December were P2,500 and P3,500 respectively. f. Exchange and collection charges deducted by the bank in the amount of P25 for December have not been recorded. The charges for the month of November totaled P20 and these were recorded in December. g. The reconciliation data as of November 30 showed that the balance per bank statement was P45,240 and the outstanding checks totaled P10,000. h. In November, the bank charged in error a P260 check to the Tarlac Company account. It was corrected by the bank in December. i. Total deposits shown by the bank statement for December amounted to P100,000. j. Following is a summary of cash receipts and disbursements for the months indicated: . November December i 10 Receipts. P102,470 P100,74 Disbursements 129,880 128,990 REQUIRED: a Prepare a proof of cash for December, make the necessary eae entries and state the amount of cash you would show in the ee o financial position of December 31, 2017. (Use bank to book method.310 Chapter 9 9-15. ‘ion! id Other Related Statement of Financial Position Presentation: Cash ant fe ae i ents; the accountin; Genius Company is preparing its 2016 financial act to cash, are under period ends December 31. The following items, 7 eZ h item should be Consideration, You have been asked to indicate how a the basis f reported on the statement of financial position and to explain for your responses. a. A P900 check received from a customer, hand. b. A customer’s check was includ returned by the bank stamped NSF. No ent Genius to reflect the return. A P20,000 note receivable on which P1,000 of interest accrued to December 31 has just been recorded by debiting interest receivable and crediting interest revenue. The chief accountant proposes to report the P20,000 as cash in bank. d. Genius has a P200 petty cash fund. As of December 31, the fund cashier reported expense vouchers covering various expenses in the amount of P167 and cash of P32. . Postage stamps that cost P30 are in the cash drawer. f. A cashier’s check of P200 payable to Genius Company is in the cash drawer; it is dated December 29. g. Three checks, dated December 31, 2016, totaling P465, payable to vendors who have sold merchandise to Genius Company on account, were not mailed by December 31, 2016. They have not been entered as payments in the check register and ledger. dated February 1, 2017, is on led in the December 20 deposit. It was try has yet been made by h. Prior to December 30, Genius Company left a note that matures December 31, 2016, with its bank for collection. The note is for P20,000 and bears interest at 9 percent, having been outstanding for three months. As yet, Genius has not heard from the bank about collection but is confident of a favorable outcome because of the high credit rating of the maker of the note. The com i the P20,000 plus interest in its cash balance. ee9-16. 9-17, Substantive Tests of Cash 311 Classification of Cash a 5 For each of the items listed in indicating the correct classifi purposes. The first one is com, the table below, place an X in the column cation for statement of financial position pleted for you, Cash ‘ST Checking account Cash Equivalent Investments Other Savings account —- Rare coins kept for long-term —_—— speculation Postdated checks received — Money orders received —— Petty cash fund a Treasury bills purchased when two months remain in term Compensating balance for a short-term loan Sinking fund to retire a bond in five years Certificate of deposit (six-month term) Short-term investment in marketable equity securities LLL ITIL I You are conducting an audit of the Cordial Company for the year ended December 31, 2017. The internal control procedures surrounding cash transactions were not adequate. Ethel Diaz, the bookkeeper-cashier, handles cash receipts, maintains accounting records, and prepares the monthly reconciliations of the bank account. The bookkeeper-cashier prepared the following reconciliation at the end of the year: Balznce per bank statement P 350,000 Add: Deposit in transit P 175,250 Note collected by bank . 15,000 190,250 Balance P 540,250 Less: Outstanding checks iu 246,750 Balance per general ledger . P.293,500.aM 312_Chapter 9 In the process of your audit, you gathered the following: a. At December 31, 2017, the bank statement and the general ledger showed balances of P350,000 and 293,500, respectively. b. The cut-off bank statement showed a bank charge See a 2018 for P30,000 representing a correction of an erroneous ban! 7 Included in the list of the outstanding checks were the following: + A check payable to a supplier, dated December 29, 2017, in the amount of P14,750, released on January 5, 2018. to a supplier in the amount ** A check representing advance payment f of P37,210, the date of which is January 4, 2018, and released in December, 2017. d. On December 31, 2017, the company received and recorded customer’s postdated check amounting to P50,000. REQUIRED: Compute for the following: 1. The adjusted deposit in transit as at December 31, 2017: a. P175,250 d, P125,000 b. P125,250 e. None of these ce. P225,250 2. Thé adjusted outstanding checks as at December 31, 2017: a. P298,710 d. P194,790 b. P232,000 e. None of these c. P209,540 3. The adjusted cash to be presented in the statement of financial position as at December 31, 2017: a. P235,460 d. P310,460 b. P250,460 e. None of these c. P265,460 4, The cash shortage: a. P45,000 d. P 8,040 b. P58,040 ¢. None of these c. P60,0009-18. 5. 6. The net adjustment to the a. P43,040 cash account: b. P60,000 4. P45.000 c. P58,040 ©. None of these The net adjustment to the ac a. P14,750 debit Counts payable account: b. P14,750 credit é Rees c. P51,960 debit - None of these Proof of Cash Substantive Tests of Cash 313 The following information is available co i Paste Copa ea available concerning the cash balance of the 1. 2. 3 4, 5. a 10. I 12, . Total receipts recorded by the bank during July 14, Cash balance from bank statement, June 30 Cash balance from bank statement, July 31 Cash balance from company records, June 30 (adjusted) Cash balance from company records, July 31 Deposit made by Pablo on July 31 received by the bank August 2 NSF check returned by bank with the July bank statement July 31 outstanding checks: #1345 P27.00 # 1353 P13.23 #1354 P14.24 ‘A check written by Pablo during July for P162.50 was erroneously recorded on the books as P126.50 Note collected by the bank on July 31 (not previously recorded by Pablo) Interest on the preceding note (not previously recorded) July bank service charge June deposit in transit received by the bank July 1 Total payments recorded by the bank during July P13,031.78 17,756.43 12,057.16 18,414.92 1,098.51 113.15 P1,000.00 15,00 7.80 146.73 10.05 L.A7 5,326.52B14 Choper@ ecks) 472.50 Fi *s cht 15, July 31 cash on hand (undeposited customer ® 16. June outstanding checks: # 1082 8 0372 15 received by bank wy 2 # 1086 352,40 received by ban sy ; #1087 196.80 received by bank July 17, Total July receipts per books 18. Total July payments per books 10,460.45 4,102.69 REQUIRED: Prepare a four-column proof of cash for the Pablo Cot month ended July 31, 2017. poration for the 9-19. Proof of Cash The following information is available concerning the ca Jayce Corporation on August 31, 2017: sh balance of the 1. Cash balance from bank statement, July 31 P 9,852.46 from bank statement, August 31 11,679.25 from company records, July 31 (adjusted) 10,206.76 from company records, August 31 11,306.74 2. Total receipts recorded by the bank during August 16,755.64 Total August receipts from books 15,913.93 3. Total payments recorded by the bank during August 14,928.85 Total August payments from books 14,813.95 4. Deposit made by Jayce on August 31; received by the bank September I 1,235.32 July 31 deposit in transit received by the bank August 2 953.71 5. July 31, outstanding checks: #2150 P345.26 received by bank August 3 #2151 P156.72 received by bank August 4 #2152 P._97.43 received by bank August 5 August 31 outstanding checks: # 2265 P 56.89 #2269 P341.72 #2270 P185.759-20. Substantive Te 6. NSF check returned by bank with the Ai aes us 7. Accheck written by Jayce was erroneously recorded 8. Note collected by the ban! recorded by Jayce) gust bank statement 96.75 luring August for P112.51 n the books as P121.51 kK on August 31 (not Previously Interest on the preceding note (not previously recorded) Reason 9. August bank service charge ; 12.10 10. August 31 cash on hand (undeposited customer's checks) 421.68 REQUIRED: Prepare a four-column proof of cas . month ended August 31, 2017, th for the Jayce Corporation for the Petty Cash, Bank Reconciliation Bob Hernandez is reviewing the cash accounting for Kartero, Inc., a local mailing service. Hermandez’s review will focus on the petty cash account and the bank reconciliation for the month ended May 31, 2017. He has collected the following information from Kartero’s bookkeeper for this task. Petty Cash 1. The petty cash fund was established on May 10, 2017, in the amount of P250. 2. Expenditures from the fund by the custodian as of May 31, 2017, were evidenced by approved receipts for the following: Postage expense P33.00 Mailing labels and other supplies 75.00 1.0.U. from employees 30.00 Shipping charges 7 57.45 Newspaper advertising 22.80 Miscellaneous expense 15.35 On May 31, 2017, the petty cash fund was replenished and increased to P300; currency and coin in the fund at that time totaled P16.40.316 Chapter 9 Bank Recon STANDARD BANK Bank Statement Disbursements _ Receipts spalanee Balance, May 1, 2017 28,000 Deposits Note payment direct from customer 930 . (interest of P30) ; Checks cleared during May P31,150 Bank service charge 27 GA Balance, May 31, 2017 i Kartero’s Cash Account Balance, May 1, 2017 Peed Deposits during May 2017 : erin : (31,835) Checks written during May 2017 Deposits in transit are determined to be P3,000, and checks outstanding at May 31 total P550. Cash on hand (besides petty cash) at May 31, 2017, is P246. What amount of cash should be reported in the May 31, 2017 statement of financial position? a. P9,518 c. P9,218 b. P8,672 d. P8,972 Bank Reconciliation and Adjusting Entries Presented below is information related to Powder Inc. Balance per books at October 31 P 41,847.85 Receipts 173,523.91 Disbursements 166,193.54 Balance per bank statement, November 30 56,274.20 The following checks were outstanding at November 30, pe P1,635.29 eH 2,468.30 3,625.15 eats 482.17ive Tests of Cash 317 Included with the November bank State the company were a bank debi aa ‘ment and not recorded by i for P27, ir k fc the month, a debit memo fer PSTD 1 7.40 covering bank charges for collected by the bank in the na Cash on hand at November 30 recorded and Awaiting deposit amounted to PI 1915.40, The adjusted cash balance as at November 30, 2017 is a. P49,178.22. c. P49,978.69, b. P50,189.60 d. PS8,578.22.