AUDIT OF CASH

Internal control procedures over cash receipts:

1. No one person should be assigned the function of cash handling and record keeping. 2. Official receipts must be pre-numbered and sequentially used. 3. Deposit each days cash receipts intact. 4. Deposits should be matched with official receipts. 5. Deposits should be reconciled with recorded cash receipts. The person making the reconciliation should not be the same person making the deposit. 6. Cash sales should be recorded at the point of sale. 7. The function of cash handling should be segregated from record keeping. 8. Cash register totals and credit card machines should be balanced daily. Any resulting cash shortage or cash overage should be monitored.

AUDIT OF CASH
Internal control procedures over cash disbursements:
1. All disbursements must be properly authorized and accompanied by adequate documentation. 2. Payments must be made by checks, electronic fund transfer, or from petty cash fund. 3. Issued checks must b e sequentially numbered. 4. Checks should be signed by at least two persons to prevent fictitious disbursements. 5. The check signing must be vested in persons at appropriately high levels in the organization. 6. Checks issued must be payable to specific entities (company or person) and must not be made payable to Cash. 7. Bank statement and canceled checks received must be reconciled by a person independent of the authorization and check signing function.

AUDIT OF CASH
Audit procedures for cash receipts:
1. Footing the cash receipt records; 2. Testing the posting of cash receipts to ledgers; 3. Comparing recorded receipts with bank statements;

4. Comparing deposit slips with recorded receipts; and comparing recorded receipts with details in the
official receipts.

Audit procedures for cash disbursements:

1. Proving the footings of cash disbursements journal or check register; 2. Tracing the totals to the general ledger; 3. Comparing checks returned with the entries in the cash disbursements journal or check register; and 4. Reconciling recorded disbursements with bank statements.

Audit documents relating to audit of cash:

1. Bank confirmation 2. Cash Count schedule 3. Proof of cash 4. Bank transfer schedule

CHAPTER 3 PROBLEMS BOOK

PROBLEM 1 :
A. ADJUSTING JOURNAL ENTRIES B. CASH and CASH EQUIVALENT TO BE REPORTED ON DECEMBER 31, SFP (A) Audit Adjustments: Cash equivalents Cash 3,000,000 3,000,000

Other Non-current Financial Assets

Cash

3,200,000
3,200,000

Cash Accrued Salaries Expense

35,000 35,000

Other Non-current Financial Assets

900,000

Cash

900,000

CHAPTER 3 PROBLEMS BOOK

Continuation PROBLEM 1 : Miscellaneous Expenses Advances to Employees Cash (Petty Cash Fund)
Cash Acrrued Utilities Expense Accounts Receivable Cash (B) Cash and Cash Equivalents: Savings account with Metrobank Checking account with Metrobank Certificates of deposit Payroll fund (1,200,000 + 35,000) Tax fund Petty cash fund Undeposited collections (85,000 25,000) Correct cash and cash equivalents 25,000 25,000 6,800 1,200 8,000 5,300 5,300

1,500,000 805,300 3,000,000 1,235,000 500,000 12,000 60,000 7,112,300

CHAPTER 3 PROBLEMS BOOK

PROBLEM 3: A. Correct amount of Petty Cash Fund B. Cash Shortage or Overaage C. Audit Adjusting Entries _______________________________
a. Correct Amount of Petty Cash Fund: Currencies and Coins b. Cash Shortage: Per Count: Currencies and coins Paid petty cash vouchers Employees NSF check Wedding gift contributions Cashiers Accountability: Petty cash fund, per ledger Wedding gift contribution Cash shortage 6,400

6,400 2,250 1,200 1,500 10,000 1,500

11,350

11,500 150

CHAPTER 3 PROBLEMS BOOK

Continuation PROBLEM 3:
c. Audit Adjusting Entries: Delivery Expense Office Supplies Expense Employee Medicine Transportation Expense Repairs and Maintenance Receivables from Employees Cash Shortage (or Misc. Exp or Recbl from Employee) Petty Cash Fund 250 160 240 400 400 2,000 150 3,600

CHAPTER 3 PROBLEMS BOOK

PROBLEM 6 (Da King Company) A) A Cash Count Sheet, B) Audit Adjusting Entries _______________________________ a. Cash Count Sheet: Bills and Coins - 500 x 1 100 x 8 50 x 3 10 x 4 5x2 1x3 Checks: 12/29/12 M. Roxas, employee 12.30/12 J. Madrigal Co. 01/02/13 J, Estrada, Junk Shop 01/15/13 F, Chavez, employee (received 12/27/12) Paid Petty Cash Vouchers: 12/16/12 - # 145 Freight 12/26/12 - # 164 Postage 12/29/12 - # 165 Transp messeger 01/02/13 - # 166 Repairs IOU Ed Gil, employee Postage Stamps 10 pcs x 12 Total per count

500 800 150 40 10 3_ 2,000 1,500 2,450 1,800 500 200 50 1,500

1,503

7,750

2,250 1,200 120 12,823

CHAPTER 3 PROBLEMS BOOK

Continuation PROBLEM 6 (Da King Company)
Total per count Cashiers Accountability: Petty Cash Fund Unremitted collections: 12/30/12 Refund for merchandise returned 01/02/13 Sale of junk and scrap materials Unused postage stamps Cash Shortage b. Audit Adjusting Entries: Receivable from employees (1,800 + 1,200 + 1,247) Freight-in / Cost of Goods Sold Transporation expense Postage expense (200 120) Prepaid expense Petty Cash Fund Repairs and Maintenance Accrued expenses Cash in Bank Purchase Returns & Allow / Cost of Goods Sold 10,000 1,500 2,450 120 12,823

14,070 1,247

4,247 500 50 80 120 4,997 1,500 1,500 1,500 1,500

CHAPTER 3 PROBLEMS BOOK

PROBLEM 7 (CSI Cisco Systems, Inc.) A. Bank Reconciliation B. Audit Adjusting Entries C. Cash and Equivalents in Current Asset of SFP _______________________________
a. BANK RECON: Unadjusted balances Outstanding checks Undeposited receipts Error in recording check issued for rental Bank charge for payment of loan & interest Bank service charges Deposit of another company Customers DAIF check Adjusted Balances Per Bank 1,463,212 (140,000) 59,500 Per Books 1,352,312

1,800 (45,000) ( 1,400) (87,500) (12,500) 1,295,212 1,295,212

CHAPTER 3 PROBLEMS BOOK

Continuation PROBLEM 7 (CSI Cisco Systems, Inc.)
b. ADJUSTING ENTRY: Note payable Bank Interest expense Bank service charge Accounts receivable Rent expense Cash in bank c. CASH and CASH EQUIVALENTS: Petty cash fund Cash in bank Treasury bills maturing in 2 mths Total cash and cash equivalents

40,000 5,000 1,400 12,500 1,800 57,100

20,000 1,295,212 500,000 1,815,212