AUDIT OF CASH

Problem 1

Lina Reyes is the cashier of the Luzon Glass Company. As a representative of the Santos, Tan and
Associates, CPAs, you were assigned to verify her cash on hand in the morning of January 4, 2021. You
began to count at 9:00 AM in the presence of Miss Reyes. In your counting, you found currencies in paper
bills and coins together with checks, vouchers and other items, which are mentioned below:

Bills:

9 one hundreds, 25 fifties, 50 twenties, 120 tens

Coins:

P5.00 – 4 rolls and 5 loose (50 pieces to a roll)

1.00 – 8 rolls and 15 loose (100 pcs to a roll)

0.25 – 2 rolls and 2 loose (500 pcs to a roll)

0.10 – 3 rolls and 40 loose (500 pcs to a roll)

0.05 – 2 rolls (400 pcs to a roll)

Checks:

Maker Date Payee Amount

Rose Manalo, Asst. 12/23/2020 Luzon Glass Co. P600
Manager
Miss L. Reyes, Cashier 12/26/2020 Luzon Glass Co. 400

IOUs:

A. David, Janitor 12/20/2020 P350

R. Tirao, Clerk 12/22/2020 250
Pedro Munar, Bookkeeper 12/24/2020 150
Petty Cash Vouchers for Replenishment:

Payee Date Account Charged Amount

L. Cruz, Messenger 12/16/2020 Advances to Employees P100
Rosario & Co. 12/18/2020 Supplies 145
Victory Liner 12/18/2020 Freight-in 182.50
Bureau of Posts 12/18/2020 Supplies 300
(stamps)
A. Vallo, Carpenter 12/20/2020 Repairs 450
B. Tello 12/21/2020 Miscellaneous Expense 154

Your investigation disclosed the following:

1. The balance of the petty cash fund per books is P9,000.

2. Cash sales of January 2, 2021 amounted to P8,650 per sales records, while cash receipts per book
and deposit slip showed only P7,650 was deposited in the bank on January 3, 2021.
3. The following employees’ pay envelopes have been opened and the money removed. Each
envelope was marked “unclaimed”.
N. Roy P332.50
G. Gloria 247.50

Required:

1. Prepare the necessary adjusting journal entries as of December 31, 2020.

2. Determine the amount at which the Petty Cash Fund will be stated in the statement of financial
position as of December 31, 2020.

Problem 2:

The following information has been extracted from the accounting records of the Oracle Corporation:

1. Cash on hand (undeposited sales receipts) P1,020

2. Certificates of deposit 25,000
3. Customer’s note receivable 1,000
4. Reconciled balance in First Standard Bank checking account (350)
5. Reconciled balance in Prime National Bank checking account 9,350
6. Balance in Rural Bank savings account 8,560
7. Customer’s postdated check 1,350
8. Employee travel advances 1,600
9. Cash in bond sinking fund 1,200
10. Bond sinking fund investments 8,090
11. Postage stamps 430

Required:

Determine the balance in Oracle’s Cash account.