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CORDILLERA CAREER DEVELOPMENT COLLEGE

College of Accountancy
Buyagan, Poblacion, La Trinidad, Benguet

Auditing Problems Integration


Audit of Cash/Receivables
Instructions: Show your calculations in good form. No calculations, NO points. See the corresponding points per
item.
Problem 1:
The accountant of SAINT Company is in the process of preparing the company’s financial statements for the year
ended December 31, 2020. He is trying to determine the correct balance of cash and cash equivalents to be
reported as a current asset on the statement of financial position. The following items are being considered:
 Balances in the company’s accounts at the Metropolitan Bank:
 Current account P81,000
 Savings account P132,600
 Un-deposited customer checks of P22,200 (including a customer check dated January 2, 2021 for ₱3,000)
 Currency and coins on hand P3,480
 Savings account at the Northern Philippines Bank with a balance of P2,400,000. This account is being used
to accumulate cash for future plant expansion (in 2021)
 Petty cash of P4,000 (currency of P1,200 and un-replenished vouchers P2,800)
 P120,000 in a current account at the Northern Philippines Bank. This represents a 20% compensating
balance for P600,000 loan with the bank. SAINT Company is legally restricted to withdraw the funds until
the loan is due in 2023.
 Treasury bills:
 Two−month maturity bills P90,000
 Seven−month bills 120,000
 Time deposit- matures on Feb. 14, 2021 P100,000
What is the correct balance of cash and cash equivalents to be reported in the current assets section of the
statement of financial position? ( 10 points)
A) P547,480 C)P430,280
B) P427,480 D) P327,480

PROBLEM 2:
Your audit of the December 31, 2020 financial statements of GANDA CORP. reveals the following:
 Current account at Prime Bank P(30,000)
 Current account at Prudent Bank 135,000
 Treasury Bills (acquired 3 months before maturity) 300,000
 Treasury Bills (maturing date is Dec.31, 2021) 1,500,000
 Payroll account 390,000
 Foreign bank account – restricted (translated using the
Dec. 31, 2020 exchange rate) 2,000,000
 Postage stamps 1,250
 Employee’s postdated check 4,500
 IOU from the vice-president 8,000
 Credit memos from a supplier for a purchase return 8,100
 Travelers check 21,000
 Money order 12,000
 Petty cash fund (P3,000 in currency and expense
Receipts for P12,000) 15,000
What amount would be reported as “cash and cash equivalents” in the statement of financial position on Dec. 31,
2020? ( 10 points)
A. P840,050 C. P849,400
B. P873,900 D. P861,900
PROBLEM 3 :
The cash account of the SHANE CORPORATION as of December 31, 2020 was composed of the following:
On deposit in current account with the Bank of PI P900,000
Cash collection not yet deposited in the bank 350,000
A customer’s check returned by the bank for insufficient fund 150,000
A check drawn by the Vice-President of the company dated
January 15, 2021 70,000
A check drawn by a supplier dated December 28, 2020 for
Goods returned by the company 60,000
A check dated May 31, 2020 drawn by the company against
the Bank of Manila in payment of customs duties.
since the importation did not materialize, the check was
returned by the custom broker. This check an outstanding
check in the reconciliation of the Bank of Manila 410,000
Petty cash fund of which P10,000 is in currency, P7,200 in form
of employee’s IOU’s; and P2,800 is supported by approved
petty cash vouchers for expenses all dated prior to closing
of the books on December 31, 2020 20,000
TOTAL P1,960,000
Less: Overdraft with the Bank of Manila secured by a chattel
mortgage on the inventories 300,000
CASH BALANCE PER LEDGER P1,660,000

What is the amount of cash to be reported in the December 31, 2020 statement of financial position of SHANE
Corporation? ( 10 points)

PROBLEM 4:
EDGAR CO. was organized on January 2, 2020. The following items are from the company’s trial balance on
December 31, 2020.
Ordinary share capital P1,500,000
Share premium 150,000
Merchandise inventory 69,000
Land 1,000,000
Building 1,400,000
Furniture and fixture 367,000
Accounts receivable 165,400
Accounts payable 389,650
Notes payable-bank 500,000
Sales 6,235,200
Operating expenses (including depreciation of P400,000) 1,005,150

Additional information as follows:


1. Deposits in transit, December 31 P384,660
2. Service charges for December 2,000
3. Outstanding checks, December 31 475,000
4. Bank balance, December 31 892,000
5. Edgar Co.’s mark up on sales is 30%

1. What is the total collections from sales? ( 5 points)


A. P6,114,967 C. P6,235,200
B. P4,119,240 D. P6,069,800
2. What is the total payments for merchandise purchases? ( 5 points)
A. P3,905,990 C. P4,043,990
B. P4,649,140 D. P5,914,550
3. What is the total cash receipts per books? ( 5 points)
A. P7,819,800 C. P8,219,800
B. P.8,169,800 D. P8,069,800
4. What is the total cash disbursements per books? ( 5 points)
A. P7,816,140 C. P8,021,290
B. P7,416,140 D. P7,278,140
5. What is the cash balance per books on December 31? ( 5 points)
A. P653,660 C. P1,203,660
B. P803,660 D. P707,060
6. What is the adjusted cash balance on December 31? ( 5 points)
A. P801,660 C. P1,201,660
B. P651,660 D. P803,660

/dbay-an, cpa; mba; rea; reb; lpt