Figure 9.

2 Confirmation Form

STANDARD FORM TO CONFIRM ACCOUNT BALANCE INFORMATION

WITH FINANCIAL INSTITUTIONS

ORIGINAL The Seaview Corporation

To be mailed to accountant CUSTOMER NAME

Financial Eastern Bank and Trust Co. We have provided to our accountants the following information as of the close of business on December 31, 2019 regarding our deposit
Institution's Name Intramuros Manila and loan balances. Please confirm the accuracy of the information, noting any exceptions to the information provided. If the balances have
and Address been left blank, please complete this form by the balances have been left blank, please complete this form by furnishing the balance in the
appropriate 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 return the form directly to our
accountants.
1. At the close of business on the date listed above, our records indicated the following deposit balance (s):
ACCOUNT NAME ACCOUNT TO INTEREST RATE BALANCE
General Account 266-7850 None P 90,000
Payroll Account 266-7850 None 11,500
2. We are directly liable to the financial institution for loans at the close of business on the date listed above as follows:
ACCOUNT NO. DATE THROUGH WHICH INTEREST IS DESCRIPTIVE OF
BALANCE DATE DUE INTEREST RATE
/DESCRIPTION PAID COLLATERAL
55-8965T ₱4,000,000 6/15/2020 5% 12/15/2019 San Miguel Corp.
Credit Line 2,000,000.00 3/31/2020 6% 12/31/2019 Shares

Robert Dizon January 6, 2018

(Client 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 acounts have come to our attention except as noted below.

Arlene Cabrera January 31, 2018

(Financial Institution authorized Signature) (Date)

Controller
(Title)

EXCEPTIONS AND/OR COMMENTS

Please return this form directly to our accountants:

Ordinarily, balances are intentionally left blank if they are not available at the time the form is Cruz & Cortel, CPAs 2775 Ayala Avenue Makati City
prepared.
Figure 9.3 Cash Count Sheet

Company
Name of Fund
Cash Count Date

Bills Denomination Quantiry Amount Total

₱100.00
50.00
20.00
10.00
Fractional Denomnations ₱5.00
1.00
0.25
0.10
0.05
Total Bills and Fractional Denomination
CASH ITEMS
Checks and PMO's for deposit
Vouchers not yet replenished
Advances or IOU's
Others
Amount of Fund Pe Count
Amount of Fund Per Books or Receipts
Difference, if any

I hereby certify that the above fund of was counted in my presence

by (name of auditor) of on and was returned to me
intact. There are no other funds for which I am accountable for except as
noted below:
Other Funds: (simultaneously counted or physically controlled)

(Signature of Cashier)

Prepared by: Reviewed by:

Initial Date Initial Date

9.4 Adjusted Balance of Petty Cash Fund

X Company
Petty Cash Fund
12/31/2019

Balance per ledger P xxx

Add (Deduct) Adjusments
AJE (1) to take up enreplenished expenses (xxx)
(2) to take up advances to employees (xxx)
Balance as adjusted P xxx
Figure 9.5 Bank Reconciliation Statement
(Bank Balance to Book Balance Method)

X Company
Bank Reconciliation Statement
December 31, 2020

Balance per bank statement P xxx

Book debits not yet credited by the bank (e.g. undeposited
P xxx
Add: collections)
Bank debits not yet credited by the company (e.g. service
charges for the month of December, NSF checks returned in xxx xxx
December)
Total P xxx
Book credits not yet debiyed by the bank (e.g. outstanding
xxx
Less: checks)
Bank credits not yet debited by the company (e.g. proceeds of
xxx xxx
note collected by bank)
Balance per books P xxx

Figure 9.6 Bank ReconciliationStatement

(Book Balance to Bank Balance Method

X Company
Bank Reconciliation Statement
December 31, 2020
Balance per books P xxx
Book credits not yet debiyed by the bank (e.g. outstanding
P xxx
Add: checks)
Bank credits not yet debited by the company (e.g. proceeds of
xxx xxx
note collected by bank)
Total P xxx
Book debits not yet credited by the bank (e.g. undeposited
xxx
Less: collections)
Bank debits not yet credited by the company (e.g. service
charges for the month of December, NSF checks returned in xxx xxx
December)
Balance per bank P xxx
Figure 9.7 Bank Reconciliation Statement
(Adjusted Balance Method)

X Company
Bank Reconciliation Statement
December 31, 2020

Unadjusted balance per

P xxx
bank
Book debits not yet credited by the bank (e.g. undeposited
Add: xxx
collections)
Book credits not yet debited by the bank (e.g. ountstanding
Less: (xxx)
checks)
Adjusted bank balance P xxx
Unadjusted balance per
books
Bank credits not yet debited by the company (e.g. proceeds of
Add: xxx
note collected by bank)
Less: Bank debits not yet credited by the company (e.g. bank charges) (xxx)
Adjusted book balance P xxx

Figure 9.8 Kiting

Metrobank Equitable PCI Bank
Date Description Book Bank Book Bank
2019
Bank transfer not recordd on the
December 30 ₱100,000.00
books
2020
Record bank transfer on the
January 3 ₱100,000.00 -₱100,000.00
books
Bank transfer clears bank drawn
January 4 -₱100,000.00
on
Figure 9.9 Proof of Cash or Reconciliation of Receipts and Disbursements
(Bank Balance to Book Balance Method)

X Company
Proof of Cash
For the month ended December 31, 2020

Nov. 30 December Dec. 31

Balance Receipts Disbursements Balance
Balance per bank statement P xxx P xxx P xxx P xxx
Add (Deduct) Recnciling Items
1. Deposited in transit (received by
the bank in the succeeding month)
November 30 xxx (xxx)
December 31 xxx xxx
2. Outstanding check (paid by the
bank in the succeeding month)
November 30 (xxx) (xxx)
December 31 xxx (xxx)
3. Bank charges (recorded by the
company in the succeeding month)
November xxx xxx
December (xxx) xxx
4. Notes collected by bank (recorded
by the company in the succeeding
month)
November (xxx) xxx
December (xxx)
5. Check of another company
erroneously credited by the bank
(corrected in the following month)
November xxx (xxx)
December (xxx) xxx
6. Deposit of another company
erroneously credited by the bank
(corrected in the following moth)
November (xxx) (xxx)
December (xxx) (xxx)
Balance per books P xxx P xxx P xxx P xxx
Figure 9.10 Proof of Cash
(Book Balance to Bank Balance Method)

X Company
Proof of Cash
For the month ended December 31, 2020

Nov. 30 December Dec. 31

Balance Receipts Disbursements Balance
Balance per books P xxx P xxx P xxx P xxx
Add (Deduct) Recnciling Items
1. Deposited in transit (received by the
bank in the succeeding month)
November 30 (xxx) xxx
December 31 (xxx) (xxx)
2. Outstanding check (paid by the bank
in the succeeding month)
November 30 xxx xxx
December 31 (xxx) xxx
3. Bank charges (recorded by the
company in the succeeding month)
November (xxx) (xxx)
December xxx (xxx)

4. Notes collected by bank (recorded by

the company in the succeeding month)

November xxx (xxx)

December xxx
5. Check of another company
erroneously credited by the bank
(corrected in the following month)
November (xxx) xxx
December xxx (xxx)
6. Deposit of another company
erroneously credited by the bank
(corrected in the following moth)
November xxx xxx
December xxx xxx
Balance per bank statement P xxx P xxx P xxx P xxx
Figure 9.11 Proof of Cash
(Adjusted Balances Method)

X Company
Proof of Cash
For the month ended December 31, 2020

Nov. 30 December Dec. 31

Balance Receipts Disbursements Balance
Unadjusted book balance P xxx P xxx P xxx P xxx
Add (Deduct) Adjusments
Proceeds of note collected by bank
(recorded by he company in the
succeeding month)
November 30 xxx (xxx)
December 31 xxx xxx
Bank charges (recorded by the
company in the succeeding month)
November (xxx) (xxx)
December xxx (xxx)
Adjusted book balance P xxx P xxx P xxx P xxx
Unadjusted bank balance P xxx P xxx P xxx P xxx
Add (Deduct) Adjusments

Deposit in transit (paid by the bank in

the succeeding month)

November 30 xxx (xxx)

December 31 xxx xxx
Outstanding checks (paid by the bank
in the succeeding month)
November 30 (xxx) (xxx)
December 31 xxx (xxx)
Check of another company
erroneously credited by the bank
(corrected in the following month)
November xxx (xxx)
December (xxx) xxx
6. Deposit of another company
erroneously credited by the bank
(corrected in the following moth)
November (xxx) (xxx)
December (xxx) (xxx)
Adjusted bank balance P xxx P xxx P xxx P xxx
Illustrative Audit Case 9.1: Petty Cash Fund and Undeposited Collection

Lina Reyes is the cashier of the Luzon Glass Company. As representative of the Santos, Tan and
Associates, CPA’s, you were assigned to verify her cash on hand in the morning of January 4, 2018. You
began to count 9:11 am in the presence of Miss Reyes. In the course of your counting, you find
currencies in paper bills and coins together with checks, vouchers and other items, which are mentioned
below:
Bills
9 one hundred, 25 fifties, 50 twenties, 120 tens
Coins
₱5.00 4 rolls and 5 loose (50 pieces to a roll)
1.00 8 rolls and 15 loose (100 pieces to a roll)
0.25 2 rolls and 2 loose (500 pieces to a roll)
0.10 3 rolls and 40 loose (500 pieces to a roll)
0.05 2 rolls 400 pieces to a roll)

Checks
Maker Date Payee Amount
Rose Manalo, Asst. Manager 12/23/2020 Luzon Glass Co. ₱600.00
Miss L. Reyes, Cashier 12/26/2020 Luzon Glass Co. 400.00

I.O.U.s
A. David, Janitor 12/20/2020 ₱350.00
R. Tirao, Clerk 12/22/2020 $250.00
Pedro Munar, Bookkepeer 12/24/2020 $150.00

Petty Cash Vouchers for Replenishment

Payee Date Account Charged Amount
L. Cruz, Messender 12/19/2020 Advances to Employees ₱100.00
Rosario & Co. 12/18/2020 Supplies 145.00
Vicory Liner 12/18/2020 Freight - in 182.50
Bureau of Posts (stamps) 12/18/2020 supplies 300.00
A. Vallo, Carpenter 12/20/2020 Repairs 450.00
B. Tello 12/21/2020 Miscellaneous Expense 154.00

Your Investigation also disclosed the following:

1. The balance of petty cash fund per books is P9000.

2. Cash sales of January 2, 2019 mounted to P8, 650 per sales records, while cash receipts book
and deposit slip showed that only P7, 650 was deposited in the bank on January 3, 2019.
3. The following employees’ pay envelopes have been opened and the money removed. Each
envelope was marked “unclaimed”.
N. Roy P332.50
G. Gloria P247.50

Required:

1. Prepare working papers showing your cash count.

2. Prepare necessary adjusting journal entries without explanation as of December 31, 2019.
3. Determine the amount at which the Petty Cash Fund will be stated in the statement of financial
position as of December 31, 2019.
Solution: Illustrative Audit Case 9.1

Exhibit 1.1
Requirement (1)

Luzon Glass Company

Cash Count Sheet
January 4, 2020

Denomination Quantity Amount Total

BILLS ₱100.00 9 ₱900.00
50.00 25 1,250.00
20.00 50 1,000.00
10.00 120 1,200.00 ₱4,350.00
COINS ₱5.00 205 ₱1,025.00
1.00 815 815.00
0.25 1002 250.50
0.10 1540 154.00
0.05 800 40.00 2,284.50
TOTAL BILLS AND COINS ₱6,634.50
CASH ITEMS
Checks for deposit
Date Maker Payee
12/23/19 R. Manalo Luzon Glass Co. ₱600.00
12/26/19 L. Reyes Luzon Glass Co. 400.00 1,000.00
Unreplenished vouchers
Date Payee Particulars
12/18/19 Rosario & Co. Supplies ₱145.00
12/18/19 Victory Liner Freight - in 182.50
12/18/19 Bureau of Posts Supplies 300.00
12/20/19 A. Vallo Repairs 450.00
12/21/19 B.Tello Miscellaneous 154.00 1,231.50
Advances or IOUs
Date Payee
12/16/19 L. Cruz ₱100.00
12/23/19 A. David 350.00
12/22/19 R. Tirao 250.00
12/24/19 P. Munar 150.00 850.00
Total Amount of Fund Per Count ₱9,716.00
Total Amount of Fund Per Books or Receipts
Petty Cash Fund per ledger ₱9,000.00
Unclaimed Wages per opened envelopes 580.00
Undeposited collections
Cash sales, 1/2/19 ₱8,650.00
Less: Amounted
7,650.00 1,000.00 10,580.00
deposited, 1/3/19
Shortage -₱864.00

I certify that the above fund of P9,716.00 was counted in my presence by (name of auditor)
ofSantos, Tan and Associates, CPAs on January4,2018 at 9:00am and was returned to me
intact.

Lina Reyes
LINA REYES
Cashier

Prepared by: Reviewed by:

Initial Date Initial Date
Requirement (2)
Adjusting Journal Entries - 12/31/2019
1. Supplies expense (P145 + P300) ₱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

4. Accounts receivable - Cashier 864.00

Petty cash fund 864.00

Requirement (3)
Luzon Glass Company
Petty Cash Fund
December 31, 2019

Balance per ledger ₱9,000.00

Add (Deduct) Adjustments
AJE (1) To take up unreplenished expenses -1,231.50
(2) To take up advances to employees -850.00
(3) To take up shortage per cash count -864.00
Net adjustment -2,945.50
Balance s adjusted ₱6,054.50
Proof:
Bills and coins ₱6,634.50
Checks for deposit 1,000.00
Total cash counted ₱7,634.50
Less: Non-fund items
Unclaimed wages ₱580.00
Undeposited collections 1,000.00 1,580.00
Balance for Petty Cash Fund ₱6,054.50
Illustrative Case 9.2: Audit of Cash and Related Accounts using the Bank Reconciliation Statement

The following example illustrates the preparation of a bank reconciliation and the required adjusting
entries for the Bulacan Corporation for the month ended June 30, 2019. The unadjusted cash balances
are as follows:

Cash balances per bank statement, June 30, 2019 P 249, 223.00

Cash balance per company records, June 30, 2019 248, 758.80

The bank statement disclosed the following information:

1. A customer note for P24, 000 plus P240 interest was collected on June 30, 2019
2. A customer check for P2, 762.80 was returned because of inefficient funds (NSF check).
3. The month service charge was P300.

A review of the company records disclosed the following:

1. A deposit for P22, 857.40 mailed to the bank on June 29, 2019 did not appear on the bank
statement.
2. Customer checks totaling P6, 548 were on hand at the end of June awaiting deposit.
3. The following company checks were outstanding at the end of June:
#862 P1,923.80
#864 2,943.60
#865 5,265.00
4. Check #843 written for P1,824.00 in payment of a creditor account and included with the
canceled checks in the bank statement has been erroneously recorded as P384.00 in the
company records.
EXHIBIT 2.1 Illustrates a bank reconciliation based on the foregoing data.
EXHIBIT 2.1 Bank Reconciliation

BULACAN CORPORATION
Bank Reconciliation
June 30, 2019

Balance per bank statement ₱249,223.00

Add: Deposit in transit ₱22,857.40
Checks on hand 6,548.00 29,405.40
Deduct: Outstanding checks
#862 1,923.80
#864 2,943.60
#865 5,265.00 10,132.40
Ajusted cash balance ₱268,496.00

Balance per company records ₱248,758.80

Add: Note collected by bank ₱24,000.00
Interest on note 240.00 24,240.00
Deduct: Bank service charge ₱300.00 ₱272,998.80
NSF check returned 2,762.80
Error in recording check #843 1,440.00 4,502.80
Adjusted cash balance ₱268,496.00

Upon completion of the reconciliation, adjusting entries must be prepared to record those items not
previously included in the company records. The following adjusting entries should be prepared:

1. Cash 24,240.00
Notes Receivables (note cllected) 24,000.00
Interest Revenue (interest collected) 240.00
2. Miscellaneous Expense (bank service charge) 300.00
Accounts Receivables (NSF check) 2,762.80
Accounts Payable (error) 1,440.00
Cash 4,502.80

There entries adjust the cash account to P268,496 the amount that would appear as the Cash balance
(along with any petty cash) on the June 30, 2019 statement of financial position.