Pamantasan ng Cabuyao

Katapatan Subd., Banay Banay, City of Cabuyao

Task No. 1
Name: _________________________________ Score: ___________
Auditing and Assurance: Concepts and Principles, Part Mr.W. E. Peralta
INSTRUCTION: Solve the following problems. Show your solutions in good form.
1. On December 31, 2021 the cash account of Gummy Company shows the following composition:
Petty cash fund, P30,000; Cash in bank (payroll fund), P2,000,000; Travel fund, P150,000; interest and dividend fund,
P250,000; tax fund, P120,000; cash in bank (current account), P3,000,000; certificate of deposit (terms 90 days), P1,000,000;
Certificate of deposit (terms 180 days), P1,500,000; cash in foreign bank-restricted, P500,000; money market funds (6
months), P900,000; Customer’s check dated January 15, 2022, P60,000. Customer’s check dated December 31, 2021
returned for lack of funds, P40,000; A 30-day BSP treasury bill, P1,000,000; A 3 year BSP treasury bill acquired three months
prior to maturity, P1,200,000; Sinking fund cash, P800,000; Preferred Redemption fund, P400,000; Contingent fund,
P300,000; Insurance fund, P200,000: Fund for the acquisition of a long-lived asset, P500,000; traveler’s checks, P60,000; and
cashier’s checks, P100,000.
What is the correct cash and cash equivalents balance to be reported by Gummy Company on December 31, 2021?
A. P7,810,000 C. P9,410,000
B 8,210,000 D. 9,610,000
2. On December 31, 2021, Everlasting Company’s “cash” account balance per ledger of P3,600,000 includes:
Demand deposit, P1,500,000; Certificate of deposit-30 days, P500,000; NSF check of customer, P20,000; Money market
placement (due date: June 30, 2022), P1,000,000; Savings deposit in closed bank, P50,000; IOU from an employee, P30,000;
Pension fund, P400,000; Petty cash fund, P10,000; Customer’s check dated January 31, 2022, P60,000; Customer’s check
outstanding for 18 months, P30,000.
Additional information:
• Check of P100,000 in payment of accounts payable was recorded on December 31, 2021 but mailed to creditors on
January 15, 2022.
• Check of P50,000 dated January 31, 2022 in payment of accounts payable was recorded and mailed December 31,
2021.
• The company uses the calendar year. The cash receipts journal was held open until January 15, 2022, during which
time, P200,000 was collected and recorded on December 31, 2021.
How much “cash and cash equivalents” should be shown on the December 31, 2021 balance sheet?
A. P1,960,000 C. P2,160,000
B 2,050,000 D. 2,360,000

3. Pakwan, Inc. had the following account balances at December 31, 2021:
Cash in bank - Bank A P 50,000
Cash in bank - Bank B (closed by BSP) 60,000
Saving deposit – Bank C 150,000
Petty cash fund, including unreplenished December 2021 petty
cash expenses vouchers for P5,000 and an accommodated
employee’s check for P3,500 dated January 28, 2022 10,000
Treasury bills purchased December 10, 2021 and due March 10, 2022 1,000,000
Time deposits, one year, due March 31, 2022 2,000,000
The amount to be shown as “Cash and Cash Equivalents” on Pakwan’s balance sheet at December 31, 2021 is
A. P1,201,500 C. P1,210,000
B. 3,201,000 D. 1,206,500
4. On December 31, 2021, cash account of Tonette Company showed the following details:
Undeposited collections P 60,000
Cash in Bank – RCBC checking account 500,000
Cash in Bank – PNB (overdraft) (50,000)
Undeposited NSF check received from customer, dated December 1, 2021 15,000
Undeposited check from a customer, dated January 15, 2022 25,000
Cash in Bank- RCBC (fund for payroll) 150,000
Cash in Bank – RCBC (saving deposit) 100,000
Cash in Bank – RCBC (money market instrument, 90 days) 2,000,000
Cash in foreign bank, restricted 100,000
IOUs from officers 30,000
Sinking fund cash 450,000
Listed shares held as trading investment 120,000
The statement of financial position on December 31, 2021 should show “cash and cash equivalents” at
A. P2,660,000 C. P2,770,000
B. 2,810,000 D. 810,000
5. Santol Corporation’s checkbook balance on December 31, 2021 was P180,000. In addition, Santol held the following items in
its safe on December 31
Check payable to Santol, dated January 2, 2022, not included
in December 31, 2021 checkbook balance P 45,000
Check payable to Santol, deposited December 20 and included
in December 31 checkbook balance but returned by bank
on December 30 stamped “NSF”. The check was redeposited
January 2, 2022 and was cleared January 7. 46,000
 Postage stamps received from mail order customers 2,000
Check drawn on Santol’s account, payable to vendor, dated and
recorded December 31, but not mailed until January 15, 2022 63,000

The proper amount to be shown on as Cash on Santol’s balance sheet at December 31, 2021 is
A. P244,000 C. P242,000
B. 208,000 D. 197,000
Question 6 and 7 are based on the following information:
The petty cash fund of the Mangga, Co., immediately after the close of business on September 30, 2021, the end of the
company’s fiscal year is composed of the following:
Currency and coins P15,000
Unused postage stamps 500
Petty cash vouchers:
Delivery Expenses P1,500
Postage stamps 800
Office supplies 500
Repairs of office equipments 750
Advances to employees 1,750 5,300
A check drawn by the company payable to the order of
Ms. Policarpia Malagunaw, petty cash custodian
representing her salary 14,000
An employee’s check returned by the bank for insufficiency
of funds 4,000
A sheet of paper with names of several employees together with their
contribution for a departing employee. Attached to the sheet of
paper is currency of 5,000
P43,800
The petty cash fund has an imprest balance of P40,000.
6. The petty cash overage (shortage) is
A. P1,700 C. P3,800
B. (1,700) D. (3,800)
7. What is the amount of petty cash fund that should be shown on the balance sheet as of September 30, 2021?
A. P15,000 C. P29,000
B. 34,000 D. 27,000
Question 8 and 9 are based on the following information:
Avocado Corp. keeps all of its cash in a checking account. An examination of the company’s accounting records and bank
statement for the month ended December 31, 2021 revealed bank statement balance of P80,344 and book balance of
P88,404.
A deposit of P 47,500 on December 29, 2021 does not appear on the bank statement. Checks outstanding on December 31,
2021 amounted to P113,500.
The bank statement shows that on December 26, 2021, the bank collected a note for Avocado Corp. and credited the
proceeds of P46,750 to the company’s account. The proceeds included P1,750 interest, all of which Avocado Corp. earned
during the current period. Avocado Corp. has not yet recorded the said collection.
Avocado Corp. discovered that check number 021261 written in December 2021 for P9,150 in payment of an account had
been recorded in the company’s records as P1,590.
Included with the December 31, 2021 bank statement was an NSF check for P112,500 that Avocado Corp. had received from
Buko Company on December 22, Avocado Corp. has not yet recorded the returned check. The bank statement shows a P750
service charge for December 2021.
8. What is the adjusted cash balance for December 31, 2021?
A. P12,594 C. P14,344
B. 21,904 D. 15,904
9. The journal entry to adjust the cash balance as of December 31, 2021 is
A. Net debit to cash of P74,060 C. Debit to cash of P66,000
B. Net credit to cash of P74,060 D. Credit to cash of P46,750
10. The bank statement received by Guyabano, Inc. from Pasig Bank showed a balance of P547,800 at June 30, 2021. Upon
Comparing the statement with cash records, the following facts were determined:
• Customer’s check for P30,000 was originally recorded on the books for P45,000.
• A customer’s note dated March 25 was discounted on April 12. The note was dishonored on June 29 (maturity date).
The bank charged Guyabano’s account for P142,650.
• The deposit on June 24 was recorded on books as P28,950 but was actually a deposit of P27,000.
• Outstanding checks totaled P98,950 as of June 30.
• There were bank charges for June of P2,100 not yet recorded on the books.
• Guyabano’s account had been charged on June 26 for a customer NSF check of P12,960.
• Guyabano properly deposited on June 30 P6,000 but was not yet recorded by the banks.
• Receipts of June 30 for P134,250 were recorded by bank on July 2.
• A bank memo stated that a customer’s note for P45,000 and interest of P1,650 had been collected on June 27, and
the bank charges a P360 collection fee.
 What is the cash balance on the books at June 30, 2021?
A. P689,520 C. P687,570
B. 587,160 D. 583,640

Questions 11 through 13 are based on the following information:

The reconciliation of Durian Company’s bank account at May 31, 2021 is shown below:
Balance per bank statement P1,050,000
Deposit in transit 150,000
Outstanding checks (15,000)
Correct cash balance P1,185,000

Balance per book P1,186,000

Bank service charge (1,000)
Correct cash balance P1,185,000

June data are as follows:

Bank Book
Checks recorded P1,150,000 P1,180,000
Deposits recorded 810,000 900,000
Collection by bank (P200,000 note plus interest) 210,000
NSF check returned with June 30 bank statement 5,000
Balances 915,000 905,000
11. What is the total outstanding checks at June 30, 2021?
A. P15,000 C. P30,000
B. 45,000 D. 0
12. How much is the deposit in transit at June 30, 2021?
A. P 90,000 C. P 60,000
B 630,000 D. 240,000
13. What is the adjusted cash balance at June 30, 2021?
A. P1,110,000 C. P1,120,000
B. 630,000 D. 730,000
Questions 14 and 15 are based on the following information:
The cash account in the ledger of Pinya, Inc. shows a balance of P936,000 at September 30, 2021. The bank statement,
however, shows a balance of P840,000 at the same date. The only reconciling items consists of a bank service charge of
P1,000, a large number of outstanding checks, and a deposit in transit of P245,000.
14. What is the adjusted cash balance at September 30, 2021?
A. P785,000 C. P937,000
B. 690,000 D. 935,000
15. The total outstanding checks at September 30, 2021 should be?
A. P150,000 C. P246,000
B. 350,000 D. 151,000
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wep/ACP103/task1