EXERCISES: INTERNAL CONTROLS OVER CASH

1. (BANK DEPOSITS) Serrano Company’s policy for store sales collections requires that the
cashier must deposit its available cash on hand at the end of the day. Cutoff time is 4pm,
meaning to say, all cash collections received for the day UNTIL 4pm will be deposited in
its depository bank. The store office hours run from 8am to 5pm. Any cash collected
after the cutoff until 5pm will be deposited the following day together with its cash
collection for that day.

The following details relate to November 5:

Cash sales, per tape receipts (in coins and currencies) – 13,455
Petty cash fund – 3,000
Change fund – 1,000
Cash stored in the store vault collected after 4pm on November 4 – 540
Cash collections after cutoff, November 5 – 730

What is the amount of cash deposited in the bank on November 5?

2. (CASH VAULT) A store office keeps all its cash funds, undeposited collections, including
checks collected and checks for issuance, bank deposit slips, tape receipts, check
booklets and O.R. booklets in a cash vault for safekeeping. During the weekend when
the store office was closed, the store was robbed and the cash vault was opened and
the money stored in the vault was stolen.

After a thorough investigation was made by the company’s internal auditor, it was found
out that:
 October 30 cash sales per POS terminal amounted to P24,000
 Checking of bank statement revealed that a deposit from the store office was
made on October 30 amounted to P22,100
 October 29 cash sales per POS terminal amounted to P17,800 and it was
identified that P3,100 (out of this P17,800) was cash sales after cutoff and was
not included in its October 29 bank deposit.
 Per ledger, there is a store petty cash fund of P5,000 assigned for petty items
purchases.
 2 check booklets were also missing.

What is the total amount of cash in the safe vault that was stolen?
3. (AUTHORIZATION MATRIX) The following are the authorized signatories for Serrano
Company:
 Mr. A. Serrano
 Mrs. B. Serrano
 Mr. C. Serrano
 Ms. D. Serrano
Authorization matrix revealed the following:

Amount of Disbursement Who Will Sign?

P10,000 and below
P20,000 and below
P50,000 and below
NOTE: Secondary is only used when one of the primary is not available.
ANY one (1) of the four (4) signatories
Mr. C. Serrano AND Ms. D. Serrano, jointly
Mr. A. Serrano, singly
Mrs. B. Serrano, singly
(PRIMARY)
Mr. A. Serrano AND Mrs. B. Serrano, jointly
(SECONDARY)
1st signatory: either Mr. A. OR Mrs. B. Serrano;
2nd signatory: either Mr. C OR Ms. D. Serrano

On November 6, the Finance Department prepared the following checks, vouchers and
supporting documents for approval:

Check Number Payee Amount Complete

Documents
00032 Juanito Dela Costa P 7,500.00 a
00033 Crisanta Ramirez 9,473.23 a
00034 Ramona Aquino 5,267.85 a
00035 Techie Supplies Inc. 23,460.00 a
00036 Cruz, De Vera & Associates 62,000.00 a
00037 Max Automotive 18,274.77 a
00038 Home & Office Supplies 6,758.03 a
Inc.
00039 AES Trading 83,500.00 a
00040 Gawad Kalinga 15,000.00 a
00041 007 Securities 25,400.00 a
Incorporated
00042 Anton Schaffer 40,000.00 a
00043 Bella Santos 11,034.35 a

Meanwhile, the following are the status and availability of the authorized signatories on
Nov. 6.
  Mr. A. Serrano – available to sign
 Mrs. B. Serrano – out of office (business trip)
 Mr. C. Serrano – out of office (field work)
 Ms. D. Serrano – available to sign
If Mr. A. Serrano assigned the checks that can be signed singly by Ms. D. Serrano, how
many checks will be left to be signed by Mr. A. Serrano, singly?
4. (POS Terminal / Cash Drawer) A medium-sized, merchandising store sells a variety of
goods to its customers like junk foods, biscuits, canned drinks, among others. Sales are
electronic and recorded via POS Terminals situated across the store. The store has a
total of three (3) terminals.

Data extracted from the system revealed the following:

POS Terminal #1:

Junk Foods Biscuits Canned Drinks Others

th
October 4 Week Sales Total
No. of Items 23 16 8 32
Sold
Gross Sales P 565 P 352 P 204 P 1,211
Sales Discounts P 8 - - P 70
Voided Sales P 24 P 5 - P 16

POS Terminal #2:

Junk Foods Biscuits Canned Drinks Others

th
October 4 Week Sales Total
No. of Items 17 21 12 28
Sold
Gross Sales P 428 P 404 P 262 P 1,035
Sales Discounts - P 5 - P 28
Voided Sales P 9 - P 14 P 106

POS Terminal #3:

Junk Foods Biscuits Canned Drinks Others

October 4th Week Sales Total
No. of Items 29 19 10 26
Sold
Gross Sales P 738 P 398 P 239 P 850
Sales Discounts P 11 P 4 P 3 P 15
Voided Sales P 35 P 12 - P 38
 Voided sales are cancelled sales transactions that happen when an item is already
punched in the system but eventually cancelled by the customer. Voided sales are not
included in the Gross Sales data.

Further data breakdown showed that the total net sales amounts from all terminals are
comprised of cash and credit card sales. Total credit card sales in terminal #1 amounted
to P738, P539 in terminal #2 and P350 in terminal #3.

What is the total amount of cash sales collected in the 4th Week of October?

RUBRICS:
Timeliness of Submission (4-3-2-1):
Early Bird, On-time, Late, Really?
Accuracy of Final Answer (20-15-10-5-0):
Perfect Score, 3 out of 4, 2 out of 4, 1 out of 4, No Correct Answers
Completeness of Solution (20-15-10-5-0):
Complete, 1 Solution Missing, 2 Solutions Missing, 3 Solutions Missing, No Solution
Understandability of Solution (6-4-2):
Easy to Understand, 50-50, Difficult to Understand