AP Cash _ Cash Equivalents 5077

CEBU CPAR CENTER, INC.

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AUDI T OFCASH AND CASH EQUI VALENTS PROBLEM NO.1

I n connect i on wi t h youraudi tofCal oocan Corporat i on f ort heyearended Decemb mber31,2006,you g at he r e dt hef o l l o wi ng : 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Cur r e ntac c ountatMe t r obank P2, 000, 000 Cur r e ntac c ountatBPI ( 100, 000) Payr ol lac count 500, 000 For ei gnbankacc ount–r es t r i ct ed( i neq ui va l entpes os ) 1, 000, 000 Pos t ages t amps 1, 000 Empl oy e e ’ spos tdat e dc hec k 4, 000 I OU f r om c ont r ol l e r ’ ssi s t e r 10, 000 Cr edi tme mof r om av e ndorf orapur c ha ser e t ur n 20, 000 Tr av e l e r ’ sc hec k 50, 000 Not s uffici e nt f undsc he c k 15, 000 Mone yor de r 30, 000 Pet t ycas hf und( P4, 000i ncurr encyandex pense r e c e i pt sf orP6, 000) 10, 000 13. Tr e as urybi l l s ,due3/31/07( pur c has e d12/31/06) 200, 000 14. Tr e as ur ybi l l s ,due1/ 31/07( pur c has e d1/1/06) 300, 000 Que s t i o n:

Base d on t he abovei nf or mat i on and t he r es ul tofyo uraudi t ,comp mput ef ort he cas h and cas h equi val entt hatwoul dber eport edon t heDece mber31,2006bal ances heet . a. P2, 784, 000 c. P2, 790, 000 b. P3, 084, 000 d. P2, 704, 000 Sug g es t e dSo l ut i o n:

Cur r e ntacc ountatMe t r obank Payr ol lac count Tr av e l e r ’ sc he c k Mone yor de r Pe t t yc ashf und( P4, 000i nc ur r e nc y) Tr e as ur ybi l l s ,due3/31/07( pur c has e d12/31/06) Tot al

P2, 000, 000 500, 000 50, 000 30, 000 4, 000 200, 000 P2, 784, 000

Ans we r :A A

PROBLEM NO.2

I nt hec our s eo fy o ura udi to ft heLa sPi ña sCo r po r a t i o n,i t sc ont r o l l e ri sat t e mp mp t i ngt ode t e r mi mi net h e amo mountofcasht ober eport edoni t sDecemb mber31,2006bal ancesheet .Thef ol l owi ngi nf orma mat i oni s pr o v i de d: 1. Comm mmer ci alsa vi ngs acc ountofP1, 200, 000 and a co mmer ci alc hec ki ng acc ountbal ance of P1, 800, 000arehel datPSBank. 2. T r a v e la dv a nc e so fP360, 000f o re x e c ut i v et r a v e lf o rt hefir s tq ua r t e ro ft hene x ty e a r( e mp mpl o y e et o r ei mbur set hr oughsal arydeduct i on) . 3. Asepar at ecashf undi nt heamo mountofP3, 000, 000i sr est ri ct edf ort her et i r eme mentofal ongt erm debt. 4. Pet t yc ashf undofP10, 000. 5. AnI . O. U.f r om aco mpanyoffic ffice ri nt heamo mountofP40, 000. 6. Abankov er draf tofP250, 000hasoccurr edatoneoft hebankst hecomp mpanyuse st odeposi ti t s cashr ecei pts .Att hepresentt i me,t hecomp mpanyhasnodeposi t satt hi sbank. 7. Thecomp mpanyhast wocer t i ficat esofdeposi t ,each t ot al i ngP1, 000, 000. Thesece rt i ficat esof deposi thavema mat uri t yof120days. 8. LasPi ñashasr ec ei ve dachec kdat edJanuar y2,2007i nt heamo mountofP150, 000. 9. LasPi ñashasagr eedt oma mai nt ai nacashbal anceofP200, 000atal lt i mesatPS Bankt oensur e f ut ur ecr e di ta vai l abi l i t y . 1

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10.Cur r encyandco i nonhandamo mount edt oP15, 000. Que s t i o n:

Base d on t heaboveand t here sul to fyo uraudi t ,how muc h wi l lbe r epor t ed ascash and cas h equi val entatDec emb mber31,2006? a. P3, 025, 000 c. P2, 575, 000 b. P2, 825, 000 d. P5, 025, 000 Sug g es t e dSo l ut i o n:

Savi ngsac c ountatPSBank Che c ki ngacc ountatPSBank Pe t t ycas hf und Cur r e nc yandc oi n Tot al

P1, 200, 000 1, 800, 000 10, 000 15, 000 P3, 025, 000

Ans we r :A A

PROBLEM NO.3

Thecas hac c ountoft heMakat iCor por at i onasofDe ce mbe r31,2006c ons i s t soft hef ol l owi ng: On depos i ti nc ur r e ntac countwi t hRe alBank Cas hc ol l e c t i onnoty e tde pos i t e dt ot hebank Ac us t ome r ’ sc hec kr e t ur nedbyt hebankf ori ns uffic i e nt f und Ac he c kdr awnbyt heVi c e Pr e s i dentoft heCor por at i on dat e dJanuar y15,2007 Ac he c kdr awnbyas uppl i erdat e dDe c embe r28,2006f or goodsr e t ur ne dbyt heCor por at i on Ac he c kdat e dMay31, 2006dr awnbyt heCor por at i on agai nstt hePi ggyBanki npayme mentofcust oms msdut i es. Si nc et hei mpo r t a t i o ndi dno tma t e r i a l i z e ,t hec he c kwa wa s r et ur nedbyt hecust oms msbr oker .Thi scheckwasan o ut s t a ndi ngc he c ki nt her e c o nc i l i a t i o no ft hePi g g y Bankac c ount Pet t yCashf undofwhi chP5, 000i si ncurr ency;P3, 600i n f orm ofemp mpl oyees’ I . O. U.s;andP1, 400i ssupport edby appr ovedpet t ycashvoucher sf orexpensesal ldat ed pr i ort oc l os i ngoft hebooksonDe c e mbe r31,2006 T ot al Less:Over dr af twi t hPi ggyBanksecur edbyaChat t el mor t gageont hei nv e nt or i es Bal anc epe rl e dg e r

P 900, 000 350, 000 150, 000

70, 000 60, 000

410, 000

10, 000 1, 950, 000 300, 000 P1, 650, 000

Que s t i o n:

Atwhatamo untwi l lt heac c ount“ Cas h”appe aront heDe ce mbe r31,2006bal anc es he e t ? a. P1, 315, 000 c . P1, 495, 000 b. P1, 425, 000 d. P1, 725, 000 Sug g es t e dSo l ut i o n:

Cur r entac c ountwi t hRe alBank Unde pos i t e dc ol l e c t i on Suppl i e r ' sc he c kf orgoodsr e t ur ne dbyt heCor po r at i on Une xpe nde dpe t t yc as h Cur r entac c ountwi t hPi ggyBank( P410, 000-P300, 000) Tot al Ans we r :B

PROBLEM NO.4 2

P 900, 000 350, 000 60, 000 5, 000 110, 000 P1, 425, 000

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Younot e dt hef ol l owi ngc ompos i t i onofMal abonCompany’ s“ c as hac c ount ”asofDe c e mbe r31,2006 i nconnect i onwi t hyouraudi t : Demanddeposi tacc ount Ti mede posi t–30days NSFc he c kofcus t ome r Mone ymar ke tpl ac e me nt( dueJune30,2007) Sav i ngsde pos i ti nac l os e dbank I OU f r om e mpl oy e e Pe ns i onf und Pe t t yc as hf und Cus t ome r ’ sc he c kdat e dJanuar y1,2007 Cus t ome r ’ sc hec kout s t andi ngf or18mont hs Tot al

P2, 000, 000 1, 000, 000 40, 000 1, 500, 000 100, 000 20, 000 3, 000, 000 10, 000 50, 000 40, 000 P7, 760, 000

Addi t i onali nf or ma t i onf ol l ows : a) Chec k ofP200, 000 i n pay me ntofac c ount spay abl ewasr e co r dedon De c ember31,2006 but mai l edt osuppl i er sonJanuary5,2007. b) Chec kofP100, 000dat e dJanuar y15,2007i n payme ntofac c ount spayabl ewasr e c or de d and mai l edonDec ember31,2006. c) Thec ompanyusest hecal endarye ar . Thec ash r ec ei pt sj our nalwashel dopenunt i lJanuary 15,2007,dur i ngwhi cht i meP400, 000wascol l ec t edandre cor dedonDec ember31,2006. Que s t i o n:

Thecas handc as hequi v al e nt st obes hownont heDe c embe r31,2006bal anc es he e ti s a. P3, 310, 000 c. P2, 910, 000 b. P1, 910, 000 d. P4, 410, 000 Sug g es t e dSo l ut i o n:

Demanddeposi taccountasadj ust ed: De mandde po s i tacc ountpe rbo oks Unde l i v e r e dc he c k Pos t dat e dc hec ki s s ue d Wi ndow dr e s s i ngofc ol l e c t i on Ti medepos i t-30days Pe t t yc as hf und Cas handc ashe qui v al e nt s

P2, 000, 000 200, 000 100, 000 ( 400, 000) P1, 900, 000 1, 000, 000 10, 000 P2, 910, 000

Ans we r :C

PROBLEM NO.5

You we r eabl et og at hert hef ol l owi ngf r om t heDec e mbe r31,2006 t r i albal anc eofMandal uy ong Corporat i oni nconnect i onwi t hyouraudi toft hecompany: Cashonhand Pe t t yc as hf und BPIc ur r e ntac c ount Se c ur i t yBankc ur r e ntac c ountNo.01 Se c ur i t yBankc ur r e ntac c ountNo.02 PNB s av i ngsacc ount PNB t i mede pos i t

P 500, 000 10, 000 1, 000, 000 1, 080, 000 ( 80, 000) 1, 200, 000 500, 000

Cashonhandi ncl udest hef ol l owi ngi t ems: a. Cus t omer ’ schec kf orP40, 000 r e t ur nedbybank on Dec ember26,2006duet oi nsuffici ent f undbutsubsequent l yr edeposi t edandcl ear edbyt hebankonJanuary8,2007. b. Cus t ome r ’ sc he c kf orP20, 000dat e dJanuar y2,2007,r e c e i v e donDe c e mbe r29,2006. c. Post almoneyor der sr ec ei ve df r om cust omer s,P30, 000. Thepe t t yc ashf undcons i s t e doft hef ol l owi ngi t e msasofDe ce mbe r31,2006. 3


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Cur r e nc yandc oi ns Empl oy ee s ’v al e s Cur r e nc yi na ne nv e l o pema r k e d“ c o l l e c t i o nsf o rc ha r i t y ”wi t h name sat t ac he d Unr e pl e ni s he dpe t t yc ashv ouc he r s Chec kdrawnbyMandal uyongCor porat i on,payabl et ot he pe t t yc as hi e r

P 2, 000 1, 600 1, 200 1, 300 4, 000 P10, 100

I ncl uded amongt hechecksdr awn byMandal uyo ngCor por at i on agai nstt heBPIcurr entac count andrec or dedi nDecember2006ar et hef ol l owi ng: a. Chec k wr i t t en and dat edDec ember29,2006 and del i v er edt opay eeon Januar y2,2007, P80, 000. b. Che c k wr i t t e n on De c e mbe r 27,2006,dat e d Januar y 2,2007,del i v e r e dt o pay ee on Dec ember29,2006,P40, 000. Thec r edi tbal anc ei nt heSe cur i t yBankc ur r entac c ountNo.2r e pr e se nt sc hec ksdr awni ne xc e ssof t hedeposi tbal ance.Thesec heckswer est i l lout st andi ngatDecember31,2006. Thes avi ngsac c ountdepos i ti n PNB hasbee n se tas i debyt heboar dofdi r e c t or sf orac qui si t i on of new equi pment . Thi saccounti sexpec t edt obedi sbur se di nt henext3mont hsf r om t hebal ance s he e tda t e . Que s t i o ns :

Basedont heaboveandt here sul tofyouraudi t ,det ermi net headj ust edbal ancesoff ol l owi ng: 1. Cas honhand a. P410, 000 b. P530, 000

c . P470, 000 d. P440, 000

2. Pet t yc ashf und a. P6, 000 b. P7, 200

c . P2, 000 d. P4, 900

3. BPIc ur r e ntac co unt a. P1, 000, 000 b. P1, 120, 000

c . P1, 080, 000 d. P1, 040, 000

4. Cashandcas hequi v al ent s a. P2, 917, 200 b. P3, 074, 900

c . P3, 052, 000 d. P3, 066, 000

Sug g es t e dSo l ut i o n: Que s t i o n No .1

Unadj us t e dc as honhand NSFc he c k Pos tdat e dc he c kr e c e i v e d Adj us t e dc as honhand

P500, 000 ( 40, 000) ( 20, 000) P440, 000

Que s t i o nNo .2

Pe t t yc ashf undpe rt ot al Empl oy e e s'v al e s( I OU) Cur r encyi nenv el opemar ked" co l l ec t i onsf orc hari t y" Unr e pl e ni s hedpe t t yc as hv ouc he r s Pe t t yc ashf und,asadj us t e d

P10, 100 ( 1, 600) ( 1, 200) ( 1, 300) P 6, 000

Al t er nat i v ec omput at i o n:

Cur r e nc yandc oi ns Repl e ni s hme ntc he c k

P2, 000 4, 000 4


Pe t t yc ashf und,asadj us t e d

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P6, 000

Que s t i o nNo .3

Unadj us t e dBPIc ur r e ntac c ount Unr e l eas e dc he c k Pos tdat e dc he c kde l i v e r e d Adj us t e dBPIc ur r e ntac c ount

P1, 000, 000 80, 000 40, 000 P1, 120, 000

Que s t i o nNo .4

Cas honhand( s e eno.1) Pe t t yc ashf und( s e eno.2) BPIcur r e ntac count( s eeno.3) Securi t yBankcurr entaccount( netof ov er dr af tofP80, 000) PNB t i medeposi t Cas handc ashe qui v al e nt s ,asadj us t e d

P 440, 000 6, 000 1, 120, 000 1, 000, 000 500, 000 P3, 066, 000

) ;3)B;4)D Ans we r s :1)D;2 A

PROBLEM NO.6

ThebooksofMani l a' sSe r v i c e ,I nc .di s c l ose d acas h bal anc eofP687, 570 on De c e mbe r31,2006. Thebanks t at e me ntasofDe c embe r31s howe dabal anc eofP547, 800.Addi t i onali nf or ma t i ont hat mi g htbeus e f uli nr e c o nc i l i ngt het woba l a nc e sf o l l o ws :

( a)Chec knumber748f orP30, 000wasor i gi nal l yr ecor dedont hebooksasP45, 000. ( b)Acust omer ' snot edat edSept ember25wasdi sc ount edonOct ober12.Thenot ewasdi shonor ed on Dece mber29( mat ur i t ydat e) .Thebankcharg edMani l a' saccountf orP142, 650,i ncl udi nga pr o t e s tf e eofP2, 650. ( c)Thedeposi tofDecember24wasr ecor dedont hebooksasP28, 950,buti twasact ual l yadeposi t ofP27, 000. ( d)Out st andi ngcheckst ot al edP98, 850asofDec ember31. ( e)Ther ewer ebankservi cec harg esf orDece mberofP2, 100notye tr ecor dedont hebooks. ( f ) Mani l a' sacc ounthadbeenchar gedonDec ember26f oracust omer ' sNSFchec kf orP12, 960. ( g)Mani l apr oper l ydeposi t edP6, 000onDec ember3t hatwasnotr ec or dedbyt hebank. ( h)Rec ei pt sofDece mber31f orP134, 250wer er ecor dedbyt hebankonJanuary2. ( i ) A bank memo s t at ed t hata cust omer ' s not ef orP45, 000 and i nt er es tofP1, 650 had bee n col l ect edonDece mber27,andt hebankchar gedaP360col l ect i onf ee. Que s t i o ns :

Basedont heaboveandt her esul tofyouraudi t ,det ermi net hef ol l owi ng: 1. Adj us t edcas hi nbankbal ance a. P583, 200 b. P577, 200

c. P589, 200 d. P512, 400

2. Ne tadj us t mentt oc ashasofDec ember31,2006 a. P104, 370 c. P 98, 370 b. P110, 370 d. P175, 170 Sug g es t e dSo l ut i o n: Que s t i o n No .1

Ba l anc epe rbanks t at e me nt ,12/31/06 Add:De pos i t si nt r ans i t Banker r or deposi tnotr ecor ded Tot al Le s s :Out s t andi ngc he c ks

P547, 800 P134, 250 6, 000

5

140, 250 688, 050 98, 850


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Adj us t e dbankbal anc e ,12/31/06

P589, 200

Bal anc epe rbooks ,12/31/06 Add: Booke r r or-Che c kNo.748 Cust ome rnot ec ol l e c t e dbybank Tot al Le s s :Di s honor e dnot e Booker r or i mpr oper l yr ecor ded deposi t NSFc he c k Banks e r v i c ec har ge s Adj us t e dbookbal anc e ,12/31/06

P687, 570 P15, 000 46, 290

61, 290 748, 860

142, 650 1, 950 12, 960 2, 100

159, 660 P589, 200

Que s t i o n No .2

Unadj us t e dbal anc epe rbooks,12/31/06 Adj us t e dbookbal anc e ,12/31/06 Ne tadj us t me ntt oc as h–c r edi t

P687, 570 589, 200 P 98, 370

Ans we r s :1)C;2)C

PROBLEM NO.7

Shownbel ow i st hebankr ec onci l i at i onf orMari ki naCompanyf orNove mber2006: Bal anc epe rbank,Nov .30,2006 Add:De pos i t si nt r ansi t Tot al Le s s :Out s t andi ngc hec ks Bankc r e di tr e cor de di ne r r or Cas hbal anc epe rbooks ,Nov .30,2006

P150, 000 24, 000 174, 000 P28, 000 10, 000

38, 000 P136, 000

Thebanks t at e me ntf orDe c e mbe r2006c ont ai nst hef ol l owi ngdat a: Tot alde pos i t s Tot alc har ge s ,i nc l udi nganNSFc hec kofP8, 000anda s e r v i c ec har geofP400

P110, 000 96, 000

Al lout s t andi ngc he c ksonNov embe r30,2006,i nc l udi ngt hebankc r e di t ,we r ec l e ar e di nt hebank 1nDe c e mber2006. The r e we r e out s t andi ng c he c ks ofP30, 000 and de pos i t si nt r ans i tofP38, 000 on De ce mbe r31, 2006. Que s t i o ns :

Basedont heaboveandt her esul tofyouraudi t ,answert hef ol l owi ng: 1. Howmuc hi st hec as hbal anceperbankonDe c e mber31,2006? a. P154, 000 c. P164, 000 b. P150, 000 d. P172, 400 2. How muc hi st heDec emberr ec ei pt spe rbooks? a. P124, 000 c. P110, 000 b. P 96, 000 d. P148, 000 3. Howmuc hi st heDe c emberdi s bur se me nt spe rbooks ? a. P96, 000 c . P89, 600 b. P79, 600 d. P98, 000 6


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4. Howmuc hi st heca s hbal anceperbooksonDe c ember31,2006? a. P150, 000 c. P180, 400 b. P170, 400 d. P162, 000 5. Theadj us t edcas hi nbankbal anceasofDec ember31,2006i s a. P141, 600 c. P172, 000 b. P162, 000 d. P196, 000 Sug g es t e dSo l ut i o n: Que s t i o n No .1

Bal anc epe rbank,Nov .30,2006 Add:Tot alde pos i t sperbanks t at e me nt Tot al Le ss :Tot alc har ge spe rbanks t at e ment Bal anc epe rbank,De c .31,2006

P150, 000 110, 000 260, 000 96, 000 P164, 000

Que s t i o n No .2

Tot alde pos i t sperbanks t at e me nt Le ssde pos i t si nt r ans i t ,Nov .30 Dec.r ec e i pt sc l e ar e dt hr ought hebank Adddepos i t si nt r ans i t ,De c .31 De ce mberr e c ei pt spe rbooks

P110, 000 24, 000 86, 000 38, 000 P124, 000

Que s t i o n No .3

T ot alc har ge spe rbanks t at e me nt Le s s :Out s t andi ngc he c ks ,No v .30 Cor r ec t i onofe r r oneousbankc r e di t De c e mbe rNSFc he c k De c e mbe rbankse r v i c ec har ge De c .di s b.c l e ar e dt hr ought hebank Addout s t andi ngc he c ks,De c .31 De c e mbe rdi s bur s e me nt spe rbooks

P96, 000 P28, 000 10, 000 8, 000 400

46, 400 49, 600 30, 000 P79, 600

Que s t i o n No .4

Bal anc epe rbooks ,Nov .30,2006 AddDe c e mberr e c ei pt spe rbooks Tot al Le ssDec embe rdi s bur se me nt spe rbooks Bal anc epe rbooks ,De c.31,2006

P136, 000 124, 000 260, 000 79, 600 P180, 400

Que s t i o n No .5

Bal anc epe rbanks t at e me nt ,12/31/06 De pos i t si nt r ans i t Out s t andi ngc he c ks Adj us t e dbankbal anc e ,12/31/06

P164, 000 38, 000 (30, 000) P172, 000

Bal anc epe rbooks ,12/31/06 NSFc he c k Banks e r v i c ec har g e s Adj us t e dbookbal anc e ,12/31/06

P180, 400 ( 8, 000) ( 400) P172, 000

Ans we r s :1)C;2 ) ;3)B;4)C;5)C A

PROBLEM NO.8

Theac c ount antf ort heMunt i nl upaCompanyass e mbl e dt hef ol l owi ngdat a: 7


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June30 Jul y31 Cas hac c ountbal anc e P 15, 822 P 39, 745 Banks t at e me ntbal anc e 107, 082 137, 817 De posi t si nt r ans i t 8, 201 12, 880 Out s t andi ngc he c ks 27, 718 30, 112 Bankse r v i c ec har g e 72 60 Cust omer ' scheckdeposi t edJul y10,r et urnedby 8, 250 bankonJul y16mar ke dNSF,andr e de pos i t ed i mmedi at el y;noent rymadeonbooksf or r e t ur no rr e de po s i t Col l e c t i onb ybanko fcompany' snot e sr e c e i v abl e 71, 815 80, 900 Thebanks t at e me nt sandt hec ompany' sc ashr e c or dss how t he s et ot al s : Di s bur s eme nt si nJul ype rbanks t at e me nt Cas hr e c e i pt si nJul yperMunt i nl upa' sbooks

P218, 373 236, 452

QUESTI ONS:

Basedont heappl i cat i on oft henecessaryaudi tpr ocedur esandappr eci at i onoft heabovedat a,you a r et opr o v i det heans we r st ot hef o l l o wi ng : 1. How muc hi st headj us t edca shbal anceasofJune30? a. P87, 565 c. P107, 082 b. ( P3, 695) d. P15, 822 2. How muchi st headj ust edbankr ec ei pt sf orJul y? a. P253, 787 c. P245, 537 b. P214, 802 d. P232, 881 3. How muc hi st headj us t edbookdi sbur se ment sf orJul y? a. P220, 767 c . P181, 782 b. P212, 517 d. P206, 673 4. How muc hi st headj us t edcas hbal anceasofJul y31? a. P137, 817 c . P22, 513 b. P112, 335 d. P120, 585 5. How muc hi st hec ashshor t ageaso fJul y31? a. P8, 250 c . P196, 144 b. P71, 815 d. P0

Sug g es t e dSo l ut i o n: Munt i nl upaCompany Reconci l i at i onofRecei pt s,Di sbur sement s,andBankBal ance Fort hemont hendedJul y31 Begi nni ng June30 Bal anceperbank st at ement De po s i t si nt r a ns i t :

P107, 082

Di s b.

Endi ng Jul y31

P218, 373

P137, 817

Rec ei pt s a

P249, 108

8

CEBU CPAR CENTER, INC . June30 Jul y31 Out st andi ngchec ks: June30 Jul y31 NSFchec k r e d e po s i t e d Adj us t e dbank bal ance Bal ancepe rbooks Bankser vi cecharge: June Jul y Co l l e c t i o no fno t e s r e c e i v abl e : June Jul y Adj us t e dbook bal ance

8, 201

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( 8, 201) 12, 880

12, 880

( 27, 718)

( 27, 718) 30, 112 ( 8, 250)

( 30, 112)

( 8, 250)

P87, 565

P245, 537

P212, 517

P120, 585

P15, 822

P236, 452

P212, 529

b

P39, 745

( 72)

( 72) 60

71, 815

P87, 565

( 60)

( 71, 815) 80, 900 P245, 537

80, 900 P212, 517

P120, 585

a

( P137, 817+P218, 373–P107, 082)

b

( P15, 822+236, 452–P39, 745)

Ans we r s :1 ) ;2)C;3)B;4)D;5)D A

PROBLEM NO.9

I nt heaudi tofPasi gCompany’ scashaccount ,youobt ai nedt hef ol l owi ngi nf ormat i on: Thecompany’ sbookke e pe rpr e par e dt hef ol l owi ngbankr e c onc i l i at i onasofNov e mbe r30,2006: Bankbal anc e–Nov e mbe r30,2006 Unde pos i t edc ol l e c t i ons Banks er v i c ec har g e s Bankc ol l ec t i onofc us t ome r ’ snot e Out st andi ngchecks:

P90, 800 5, 000 100 ( 8, 000) Numbe r 7159 7767 7915

Amount P3, 000 5, 000 2, 000

Bookbal anc e–Nov e mbe r30,2006

( 10, 000) P77, 900

Addi t i onaldat aar egi v e nasf ol l ows : a. Companyr ec or di ngsf orDec ember : Tot alc ol l e ct i onsf r om c us t ome r s Tot alc he c ksdr awn b. Banks t at e me ntt ot al sf orDe c e mbe r: Char g es Cr e di t s

P165, 000 98, 000 P123, 800 169, 000

c. Chec kno.7159dat edNov ember25,2006,wasent er edasP3, 000 i n paymentofavoucherf or P30, 000.Uponexami nat i onoft hec hec ksr et urnedbyt hebank,t heact ualamountoft hec heck wasP30, 000. d. Chec k no.8113 dat edDec ember20,2006 wasi ss uedt or epl aceamut i l at edcheck( no. 7767) , whi c hwasr e t ur ne dbyt hepay e e.Bot hc he c kswe r er e c or de di nt heamountdr awn,P5, 000,but noent r ywasmadet ocancelchec kno.7767. e. TheDec emberbankst at ementi nc l udedachec kdr awnbySi pagCompanyf orP1, 500. f . Undeposi t edcol l ect i onsonDece mber31,2006-P8, 000. g. Thes er vi cecharg ef orDec emberwasP150whi chwascharg edbyt hebankt oanot hercl i ent . h. Thebankcol l ect edanot er ece i vabl eofP7, 000onDecember28,2006,butt hecol l ect i onwasnot r ecei vedont i met obere cor dedbyPasi g.

9


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i . Theout s t andi ngchec ksonDec ember31,2006,wer e: Che c kNo. 7767 8856

Amount P5, 000 1, 300

Chec kNo. 8910 8925

Amount P2, 300 4, 100

QUESTI ONS:

Basedont heaboveandt her esul tofyouraudi t ,det ermi net hef ol l owi ng: 1. Unadj us t edcas hbal anceperbooksasofDec ember31,2006 a. P152, 800 c. P144, 900 b. P152, 750 d. P165, 700 2. Adj us t edcas hbal anceasofNov ember30,2006 a. P85, 800 c. P63, 800 b. P58, 800 d. P90, 800 3. Adj us t edbookre ce i pt sf orDec ember2006 a. P170, 500 c. P172, 000 b. P182, 000 d. P173, 000 4. Adj us t edbankdi sbur se mentf orDec ember2006 a. P120, 150 c . P125, 150 b. P 76, 150 d. P 98, 150 5. Adj us t edcas hbal anceasofDec ember31,2006 a. P132, 650 c . P137, 800 b. P137, 650 d. P134, 650 Sug g es t e dSo l ut i o n: Que s t i o n No .1

Unadj us t e dbookbal anc e ,11/30/06 Addunadj us t e dbookr e c e i pt s : Col l e c t i onf r om c us t ome r s Not ecol l ect edbybanki nNov .pr esumed r e cor de di nDe c. T ot al Lessunadj ust edbookdi sbur sement s: Che c ksdr awn BSC f orNov .pr e s ume dr e c or de di nDec . Unadj us t e dbookbal anc e ,12/31/06

P77, 900 P165, 000 8, 000

98, 000 100

173, 000 250, 900

98, 100 P152, 800

Que s t i o n No s .2t o5 Pas i gCompany Pr oofofCash Fort hemont hendedDec ember31,2006

Bal anceperbank s t at e me nt De po s i t si nt r a ns i t : No v e mbe r30 Dec e mbe r31 Out st andi ngchec ks: Nov e mbe r30 Dec e mbe r31 Bankerr or s–Dec. Che c kofSi pagCo. BSC char ge dt o anot hercl i e nt Adj us t e dbank bal ance

Be gi nni ng Nov .30

Re ce i pt s

P90, 800

P169, 000

5, 000

Di s b.

P123, 800

( 5, 000) 8, 000

( 32, 000)

( 32, 000) 7, 700

150 P172, 000

a

P136, 000

8, 000

( 1, 500)

P63, 800

Endi ng De c.31

P 98, 150

10

( 7, 700) 1, 500 ( 150) P137, 650


Bal ancepe rbooks Cust omer ' snot e col l ect edbybank: Nov e mbe r Dec e mbe r Bankser vi cecharge: Nov e mbe r Dec e mbe r


Re ce i pt s

P77, 900

P173, 000

8, 000

www.Cebu-CPAR.com

Di s b. P98, 100

Endi ng De c.31 P152, 800

( 8, 000) 7, 000

7, 000

( 100)

( 100) 150

( 150)

Booker r or s: Checkno.7159 ( P30, 000-P3, 000)

( 27, 000)

( 27, 000)

Checkno.7767 ( mut i l at edcheck)

Adj us t e dbook bal ance

5, 000 P63, 800

5, 000 P172, 000

P 98, 150

P137, 650

a

( P90, 800+P169, 000–P123, 800)

Ans we r s :1 ) ;2)C;3)C;4)D;5)B A

PROBLEM NO.10

You obt ai ne dt hef ol l owi ngi nf or ma t i on ont hecur r e ntacc ountofPar añaqueCompanydur i ngy our exami nat i onofi t sfinanci alst at ement sf ort heyearendedDece mber31,2006. Thebanks t at e me ntonNov e mber30,2006s howe dabal anc eofP306, 000.Amongt hebankc r e di t s i n Novemberwascust omer ’ snot ef orP100, 000 col l ect edf ort heaccountoft hecompanywhi cht he companyre cogni ze di n Dec emberamongi t sr ec ei pt s. I ncl uded i nt hebank debi t swer ecostof c hec kbooks amount i ngt o P1, 200 and a P40, 000 c hec k whi c h waschar ge d byt hebank i n er r or agai nstParañaqueCo.account . Al soi n Nove mberyou asce r t ai ned t hatt her e wer e deposi t si n t r ansi tamount i ngt oP80, 000andout st andi ngchec kst ot al i ngP170, 000. Thebanks t at e me ntf ort hemo nt h ofDe c e mbershowe dt ot alc r e di t sofP416, 000andt ot alc har ge s ofP204, 000. Thecompany’ sbooksf orDece mbershowedt ot aldebi t sofP735, 600,t ot alcr edi t sof P407, 200 and abal anceofP485, 600. Bank debi tmemosf orDec emberwer e:No.121 f ors er vi ce char ges,P1, 600andNo.122onacust omer ’ sr et ur nedchec kmar ked“ Ref ert oDr awer ”f orP24, 000. OnDec ember31,2006t hec ompanypl acedwi t ht hebankacust omer ’ spr omi ss orynot ewi t haf ace v al ueofP120, 000f orc ol l e c t i on. Thecompanyt r e at e dt hi snot easpar tofi t sr e c e i pt sal t hought he bankwasabl et ocol l e c tont henot eonl yi nJanuar y ,2007. Ac hec kf orP3, 960wasr e c or de di nt hec ompanyc as hpayme nt sbooksi nDe c e mbe rasP39, 600. QUESTI ONS:

Basedont heappl i cat i on oft henecessaryaudi tpr ocedur esandappr eci at i onoft heabovedat a,you a r et opr o v i det heans we r st ot hef o l l o wi ng : 1. How muc hi st heundeposi t edcol l ec t i onsasofDec ember31,2006? a. P339, 600 c. P219, 600 b. P179, 600 d. P139, 600 2. How muc hi st heo ut s t andi ngc hec ksaso fDec ember31,2006? a. P191, 960 c. P361, 960 b. P397, 600 d. P363, 160 3. How muc hi st headj us t edca shbal anceasofNov ember30,2006? a. P216, 000 c . P176, 000 b. P256, 000 d. P157, 200 4. How muc hi st headj us t edbankr ec ei pt sf orDec ember ? 11

CEBU CPAR CENTER, INC . a. P635, 600 b. P515, 600

www.Cebu-CPAR.com

c . P475, 600 d. P435, 600

5. How muc hi st headj us t edbookdi sbur se ment sf orDec ember ? a. P395, 960 c. P225, 960 b. P431, 600 d. P397, 160 6. How muc hi st headj us t edca shbal anceasofDec ember31,2006? a. P625, 640 c . P220, 000 b. P195, 640 d. P375, 640


Depos i t si nt r ans i t ,11/30/06 P80, 000 Addc ol l e ct i onsi nDe c e mbe r : Dec e mbe rbookr e c e i pt s P735, 600 Le s sr e c e i pt sno tr e p r e s e nt i ng col l ect i onsi nDecember : Cust omer ’ snot ecol l ect edbybank i nNo v .r e c or de di nDec . P100, 000 Unc o l l e c t e dc us t o me r ' sno t e t r e at e dasr ec e i pt s 120, 000 220, 000 515, 600 Tot al 595, 600 Lessdeposi t scr edi t edbyt hebanki n Dec e mber : Dec e mbe rbankr e c ei pt s Le s sr e c e i pt sno tr e p r e s e nt i ng de po s i t s : Err oneousbankdebi t ,Nov . ; c or r e c t e dDe c. Depos i t si nt r ans i t ,12/31/06

P416, 000

40, 000

376, 000 P219, 600

Que s t i o n No .2

Out s t andi ngc he c ks,11/30/06 Addc he c ksi s suedi nDe c embe r : De c e mbe rbookdi s bur s e ment s Lessdi sbur se ment snot r e p r e s e nt i ngc he c ksi s s ue di n Dec e mber : Ba nks e r v i c ec ha r g e ,No v . ; r e c or dedDec . Err ori nr ecor di ngacheck ( shoul dbeP3, 960,r ecor dedas P39, 600) Tot al Lessc heckspai dbyt hebanki n Dec e mber : De c e mbe rbankdi s bur s e ment s Lessdi sbur se ment snot

P170, 000 P407, 200

P1, 200

35, 640

36, 840

P204, 000

12

370, 360 540, 360


r epr esent i ngchecks: Bankse r vi c ec har g e ,Dec . NSFc he c k,De c . Out s t andi ngc he c ks,12/31/06

P1, 600 24, 000

www.Cebu-CPAR.com

25, 600

178, 400 P361, 960

Que s t i o n No s .3t o6 Par añaqueCompany Pr oofofCash Fort hemont hendedDec ember31,2006

Bal anceperbank s t at e me nt De po s i t si nt r a ns i t : Nov e mbe r30 De ce mber31 Out st andi ngchec ks: Nov e mber30 De ce mber31 Er r oneousbank debi t No v ember Adj us t e dbank bal ance Bal anceperbooks Cust omer ' snot e col l ect edbybankNov e mbe r Bankser vi cecharge: Nov e mber De ce mber NSFc hec kDec e mbe r Bookerr orsDec e mbe r


Re ce i pt s

P306, 000

P416, 000

80, 000

Endi ng De c.31 a

P518, 000

219, 600 ( 170, 000) 361, 960

( 361, 960)

( 40, 000)

P256, 000

P515, 600

P395, 960

P375, 640

b P157, 200

P735, 600

P407, 200

P485, 600

100, 000

( 100, 000)

( 1, 200)

Unc o l l e c t e d cust omer ' snot e t r e a t e da s r e c ei pt s Er r o ri nr e c o r d i ng acheck( shoul d beP3, 960, r ecor dedas P39, 600) Adj us t e dbook bal ance

P204, 000

( 80, 000) 219, 600

( 170, 000)

40, 000

Di s b.

( 1, 200) 1, 600

( 1, 600)

24, 000

( 24, 000)

( 120, 000)

( 120, 000)

( 35, 640) P256, 000

P515, 600

P395, 960

35, 640 P375, 640

a

( P306, 000+P416, 000–P204, 000)

b

( P485, 600+407, 200–P735, 600)

) ;6)D Ans we r s :1)C;2)C;3)B;4)B;5 A PROBLEM NO.11

Youwe r eabl et oobt ai nt hef ol l owi ngi nf or mat i oni nc onne c t i onwi t hy ouraudi toft heCas hac c ount oft hePasa yCompanyasofDec ember31,2006: Bal anc e spe rbank Bal anc e spe rbooks Undepos i t e dc ol l e ct i ons Out s t andi ngc he c ks

Nov e mbe r30 P480, 000 504, 000 244, 000 150, 000

13

De ce mbe r31 P420, 000 539, 000 300, 000 120, 000


www.Cebu-CPAR.com

e. Thebank s t at ementf ort hemont h ofDec embers howed t ot alcr edi t sofP240, 000 whi l et he debi t sperbookst ot al edP735, 000. f . NSF c hec ks ar er ec or ded as a r educt i on ofcas hr ec ei pt s. NSF c hec ks whi c h ar el at er r e d e po s i t e dar et he nr e c o r de da sr e g ul a rr e c e i pt s .Da t ar e g a r di ngNSFc he c ksa r ea sf o l l o ws : 1. Re t ur nedbyt hebanki nNov .andre cor dedbyt hec ompanyi nDec . ,P10, 000. 2. Re t ur nedbyt hebanki nDec .andr ec or dedbyt hec ompanyi nDec . ,P25, 000. 3. Re t ur nedbyt hebanki nDec .andr ec or dedbyt hec ompanyi nJan. ,P29, 000. g. Chec kofPasa wayCompanyamount i ngt oP90, 000wasc har ge dt ot hecompany’ sac co untbyt he banki ne r r oronDe c e mbe r31. h. A bank memost at ed t hatt hecompany’ saccountwascr edi t edf ort hene tproc ee ds ofAni t o’ s not ef orP106, 000. i . Thecompany has hypot hec at ed i t sacc ount sr ec ei v abl ewi t ht hebank underan agr ee ment whe r e by t he bank l e nds t he c ompany 80% oft he hypot he c at e d ac c ount sr e c ei v abl e. The companyper f ormsaccount i ngandcol l ect i onoft heaccount s.Adj ust ment soft hel oanaremade f r o m da i l ys al e sr e p or t sandde po s i t s . j . Thebank c r e di t st hec ompanyac c ountand i nc r e as est heamo untoft hel oan f or80% oft he r eport edsal es.Thel oanagreementst at esspeci fical l yt hatt hesal esr eportmustbeaccept edby t hebank bef or et hecompanyi scr edi t ed. Sal esr eport saref orwarded byt hecompanyt ot he bank on t hefir s tdayf ol l owi ngt hedat eofs al e . Thebank al l oc at e se ac h de pos i t80% t ot he paymentoft hel oan,and20% t ot hecompanyaccount .Thus,onl y80% ofeac hday’ ssal esand 20% ofeac h col l ec t i on deposi t sar eent er edon t hebank st at ement . Thecompany account ant r ecor dst hehypot hecat i on ofnew account sre cei vabl e( 80% ofsal es)asadebi tt oCash and a cr edi tt ot hebank l oan as oft hedat eofs al es. Onehundred perc entoft hecol l ect i on on a c c ount sr e c e i v a bl ei sr e c o r de da sac a s hr e c e i pt ;80% o ft hec ol l e c t i o ni sr e c o r de di nt hec as h di sbur se ment sbooks asa paymenton t hel oan. I n connec t i on wi t ht hehypot hecat i on,t he f o l l o wi ngf a c t swe r ede t e r mi ne d: •

•

I ncl uded i n t he undeposi t ed col l ec t i ons i s cash f r om t he hypot hecat i on of account s r ec ei vabl e. Sal eswer e P180, 000 on Nov ember30,and P200, 000 atDec ember31. The bal anc e was ma de up f r om c ol l e ct i ons whi c h we r ee nt e r e d on t he books i nt he manne r i ndi c a t e dabo v e . Col l ect i onson account sr ecei vabl edeposi t ed i n December ,ot hert han deposi t si nt r ansi t , t ot al edP725, 000.

k. I nt er es tont hebankl oan f ort hemont h ofDec emberc har ge dbyt hebankbutnotr ec or dedi n t hebooks,amount edt oP38, 000. QUESTI ONS:

Basedont heaboveandt her esul tofyouraudi t ,answert hef ol l owi ng: 1. How muc hi st headj us t edca shbal anceasofNov ember30,2006? a. P574, 000 c. P430, 000 b. P394, 000 d. P350, 000 2. How muc hi st headj us t edbookr ec ei pt sf orDec ember ,2006? a. P860, 000 c. P876, 000 b. P280, 000 d. P296, 000 3. How muc hi st headj us t edbookdi sbur se ment sf orDec ember ,2006? a. P180, 000 c . P180, 000 b. P905, 000 d. P760, 000 4. How muc hi st headj us t edca shbal anceasofDec ember31,2006? a. P690, 000 c . P440, 000 b. P530, 000 d. P490, 000 5. How muc hi st hecas hshor t ageasofDec ember31,2006? a. P32, 000 c . P8, 000 b. P90, 000 d. P0

14


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Sug g es t e dSo l ut i o n: Pas ayCompany Pr oofofCash Fort hemont hendedDec ember31,2006

Bal anceperbank s t at e me nt De po s i t si nt r a ns i t : Nov e mber30 De ce mber31 Out st andi ngchec ks: Nov e mber30 De ce mber31 Er r oneousbank debi t De c embe r Deposi t swi t hl oan pay ment ( P725, 000x80%) Adj us t e dbank bal ance Bal ancepe rbooks NSFchec ks: Ret urnedi nNov . , r ec or dedi nDec. Re t ur nedand r ec or dedi nDe c. Ret urnedi nDec. , r ec or dedi nJan. Cust omer ' snot e col l ect edbybankDec e mbe r Ant i ci pat e dl oan pr oce edsf r om AR hypot hecat i on: No v .30sa l e s ( P180, 000x80%)


Re ce i pt s

P480, 000

P240, 000

c

100, 000

Di s b. a

P300, 000

Endi ng De c.31

P420, 000

( 100, 000) d

140, 000

140, 000 ( 150, 000)

( 150, 000) 120, 000 ( 90, 000)

( 120, 000) 90, 000

580, 000

580, 000

P430, 000

P860, 000

P760, 000

P530, 000

P504, 000

P735, 000

P700, 000

b

P539, 000

( 10, 000)

10, 000 25, 000

25, 000 29, 000

106, 000

( 144, 000)

( 29, 000)

106, 000

144, 000

Dec.31sal es

( 160, 000)

( P200, 000x80%)

( 160, 000)

Ant i ci pat e dl oan paymentf r om undeposi t ed c ol l e ct i ons : Nov .30 ( P100, 000x80%)

80, 000

80, 000

Dec .31 ( 112, 000)

( P140, 000x80%)

I nt e r e s tc har g ef o r bankl oani nDe c . Adj us t e dbook bal ance

38, 000 P430, 000

P860, 000

P760, 000

a

( P480, 000+P240, 000–P420, 000)

b

( P504, 000+735, 000–P539, 000)

c[

P244, 000–( P180, 000x80%) ]

d[

P300, 000–( P200, 000x80%) ]

) ;3)D;4)B;5)D Ans we r s :1)C;2 A PROBLEM NO.12 15

112, 000 ( 38, 000) P530, 000


www.Cebu-CPAR.com

I nconnect i onwi t hyouraudi t ,Quez onMet al sCompanypr ese nt edt oyou t hef ol l owi ngi nf ormat i on: Quez onMe t al sCompany Compar at i veBal anceShee t s De c e mber31,2006and2005 2006 2005 Ass e t s Cur r entAsset s: Cas h Av ai l abl ef ors al es e c ur i t i es Ac c ount sRe c e i v abl e I nv e nt or y Pr e pai de xpe nse s Tot alCur r e ntAs s e t s Pr ope r t y ,pl ant ,ande qui pme nt Ac c umul at e dde pr e ci at i on T ot alAs se t s Li a bi l i t i e sandSt o c kho l de r s 'Eq ui t y Cur r e ntLi abi l i t i e s: Ac c ount sPay abl e Ac c r ue de xpe ns es Di v i de ndsPay abl e Tot alCur r e ntLi abi l i t i e s Not esPay abl e-due2008 T ot alLi abi l i t i e s St o c kho l de r s ' Eq ui t y : CommonSt oc k Re t ai ne de ar ni ngs Tot alSt oc khol der s'Equi t y T ot alLi abi l i t i e sandSt oc khol de r s 'Equi t y

P 476, 000 236, 000 1, 248, 000 1, 112, 000 140, 000 3, 212, 000 2, 144, 000 ( 304, 000) 1, 840, 000 P5, 052, 000

P 392, 000 1, 016, 000 956, 000 84, 000 2, 448, 000 1, 636, 000 ( 212, 000) 1, 424, 000 P3, 872, 000

P 848, 000 392, 000 160, 000 1, 400, 000 500, 000 1, 900, 000

P 792, 000 304, 000 1, 096, 000 1, 096, 000

2, 400, 000 752, 000 3, 152, 000 P5, 052, 000

2, 200, 000 576, 000 2, 776, 000 P3, 872, 000

Quez onMe t al sCompany Condense dComparat i veI ncomeSt at ement s Fort heY ear sEndedDec ember31,2006and2005

Ne ts al e s Cos tofGoodsSol d Gr os sPr ofit Expe ns es Ne tI nc ome

2006 2005 P14, 244, 00 P13, 016, 00 0 0 11, 156, 000 10, 272, 000 3, 088, 000 2, 744, 000 2, 084, 000 1, 944, 000 P1, 004, 000 P 800, 000

Addi t i onali nf or ma t i onf orQue z on: ( a)Al laccount sre cei vabl eandaccount spayabl er el at et ot r ademer chandi se. ( b)Thepr oce edsf r om t henot espayabl ewer eusedt ofinancepl antexpansi on. ( c )Ca pi t a ls t o c kwa ss ol dt opr o v i dea ddi t i o na lwo r k i ngc api t a l . QUESTI ONS:

Basedont heaboveandt her esul tofyouraudi t ,comput et hef ol l owi ngf or2006: 1. Cashcol l ect edf r om account sr ecei vabl e,assumi ngal lsal esar eonaccount . a. P14, 012, 000 c. P14, 476, 000 b. P 796, 000 d. P16, 508, 000 2. Cas h pay me nt s made on ac c ount s pay abl et os uppl i e r s , as s umi ng t hat al l pur c hase s of i nvent oryar eonaccount . a. P11, 368, 000 c . P10, 944, 000 b. P11, 212, 000 d. P11, 256, 000 3. Cashpay ment sf ordi vi dends. a. P 828, 000

c. P 668, 000 16

CEBU CPAR CENTER, INC . b. P1, 020, 000

www.Cebu-CPAR.com

d. P1, 180, 000

4. Cashr ecei pt st hatwer enotprovi dedbyoper at i ons. a. P192, 000 c. P700, 000 b. P500, 000 d. P 0 5. Cashpayment sf orasset st hatwer enotr eflect edi noper at i ons. a. P1, 412, 000 c . P 508, 000 b. P 744, 000 d. P1, 176, 000 Sug g es t e dSo l ut i o n: Que s t i o n No .1

Acc ount sr e c e i v abl e ,1/1/06 Adds al e sf or2006 Tot alc ol l e ct i bl eacc ount s Le ssac c ount sr e c e i v abl e,12/31/06 Cas hcol l e c t e df r om ac c ount sr e c ei v abl e

P 1, 016, 000 14, 244, 000 15, 260, 000 1, 248, 000 P14, 012, 000

Que s t i o n No .2

Ac c ount spay abl e ,1/1/06 Addpur c has esf or2006: Costofgoodssol df or2006 AddI nv e nt or y ,12/31/06 T ot algoodsav ai l abl ef ors al e Le s sI nv e nt or y ,1/1/06 T ot alac c ount st obepai d Le s sac c ount spay abl e ,12/31/06 Cas hpayme nt smadeonAP

P P11, 156, 00 0 1, 112, 000 12, 268, 000 956, 000

792, 000

11, 312, 000 12, 104, 000 848, 000 P11, 256, 000

Que s t i o n No .3

Re t ai ne de ar ni ngs ,1/1/06 Addne ti nc omef or2006 Tot al Le ssr e t ai ne de ar ni ngs ,12/31/06 Tot aldi v i de ndsde c l ar e d Le ssi nc r e asei ndi v i dendspay abl e Cashpayme nt sf ordi v i de nds

P 576, 000 1, 004, 000 1, 580, 000 752, 000 828, 000 160, 000 P 668, 000

Que s t i o n No .4

Pr oc e e dsf r om not e spay abl e Proc ee dsf r om i ss uanceofcommonst ock ( P2, 400, 000-P2, 200, 000) Cashr ecei pt snotpr ovi dedbyoper at i ons ( cas hpr ov i de df r om financ i ng)

P500, 000 200, 000 P700, 000

Que s t i o n No .5

Pur c has eofav ai l abl ef ors al es e c ur i t i e s Pur c has eofPPE( P2, 144, 000-P1, 636, 000) Cashpayment sf orasse t st hatwer enotr eflect ed i nope r at i ons

P236, 000 508, 000 P744, 000

) ;2)D;3)C;4)C;5)B Ans we r s :1 A PROBLEM NO.13

The Val e nz ue l a Cor por at i on was or g ani z e d on Januar y 15,2006 and s t ar t e d ope r at i on s oon t her eaf t er .TheCompanycashi erwhoact edal soast hebookkeeperhadkeptt heaccount i ngr ecor ds v er yhaphaz ar dl y .Themanag e rs us pe c t shi m ofde f al c at i onandeng ag e dy out oaudi thi sac c ountt o findo utt hee xt e nto ft hef r a ud,i ft he r ei sa ny . OnNov ember15,whenyo u st ar t edt heexami nat i onoft heacc ount s,yo u findt hecas h onhandt o beP25, 700. Fr om i nqui r yatt hebank,i twasas c er t ai ne dt hatt hebal anc eoft heCompany’ sbank 17


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deposi ti n cur r entaccounton t hesamedat ewasP131, 640. Ver i ficat i on r eve al ed t hatt hechec k i ssuedf orP9, 260i snotyetpai dbyt hebank.Thecorporat i onsel l sat40% abovecost . Youre xami nat i onoft heav ai l abl er e c or dsdi s cl os e dt hef ol l owi ngi nf or ma t i on: Ca pi t als t oc ki s s ue datparf orc as h Re als t at epur c has e dandpai di nf ul l Mor t g agel i abi l i t ys e c ur edbyr e als t at e Furni t ur eandfixt ur es( gr oss)boughtonwhi cht her e i ss t i l lbal anc eunpai dofP30, 000 Out s t andi ngnot esduet obank Tot alamo untowe dt oc r e di t or sonope nac c ount Tot als al e s Tot alamo unts t i l lduef r om c us t ome r s I nv e nt or yofme r c handi seonNov embe r15atc os t Expe ns espai de xc l udi ngpur c hase s

P1, 600, 000 1, 000, 000 400, 000 145, 000 160, 000 231, 420 1, 615, 040 426, 900 469, 600 303, 780

QUESTI ONS:

Basedont heaboveandt her esul tofyouraudi t ,comput ef ort hef ol l owi ngasofNovember15,2006: 1. Col l ect i onsf r om sal es a. P1, 188, 140 b. P1, 153, 600

c. P1, 615, 040 d. P2, 041, 940

2. Payment sf orpur c hases a. P1, 854, 620 b. P1, 391, 780

c . P1, 207, 204 d. P 922, 180

3. Tot alcas hdi sbur se ment s a. P2, 340, 960 b. P3, 273, 400

c. P2, 810, 560 d. P2, 625, 984

4. Unadj us t edcas hbal ance a. P 74, 740 b. P722, 156

c . P1, 007, 180 d. P 537, 580

5. Cas hs hor t ag e a. P574, 076 b. P389, 500

c . P859, 100 d. P 0


Sal es Le ssac c ount sr e c e i v abl e,11/15 Col l ec t i onsf r om s al e s

P1, 615, 040 426, 900 P1, 188, 140

Que s t i o n No .2

Cos tofsal es( P1, 615, 040/1. 4) AddMe r c handi s ei nv e nt or y ,11/15 Pur c has es Le ssAc count spay abl e ,11/15 Payment sf orpur c has es

P1, 153, 600 469, 600 1, 623, 200 231, 420 P1, 391, 780

Que s t i o n No .3

Pur c has eofr e ale s t at e Paymentf orf urni t ur eandfixt ur es ( P145, 000-P30, 000) Expe ns espai d Payment sf orpur c has es( se eno.2) Tot alc as hdi s bur s eme nt s

P1, 000, 000 115, 000 303, 780 1, 391, 780 P2, 810, 560

Que s t i o n No .4

Pr oc e e dsf r om i s s uanc eofc ommons t oc k Pr oc e e dsf r om mor t g ag enot epay abl e Pr oc e e dsf r om not e spay abl e-bank

P1, 600, 000 400, 000 160, 000 18


Co l l ec t i onsf r om s al e s( se eno.1) Tot alc as hr e ce i pt s Le ssc as hdi s bur se me nt s( s e eno.3) Unadj us t e dc ashbal anc e

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1, 188, 140 3, 348, 140 2, 810, 560 P 537, 580

Que s t i o n No .5

Cashac count abi l i t y Lesscashaccount ed( Adj ust edcash bal anc e ) : Unadj us t e dbankbal anc e De pos i ti nt r ans i t Out s t andi ngc he c ks Cashs hor t ag e

P537, 580

P131, 640 25, 700 ( 9, 260)

148, 080 P389, 500

) ;2)B;3)C;4)D;5)B Ans we r s :1 A PROBLEM NO.14

You we r ee ng age dt oaudi tt heac c ount sofTagui gCor por at i on f ort hey e are nde d De ce mbe r31, 2006. I n yourexami nat i on,youdet er mi nedt hatt heCashaccountr epr es ent sbot h cashon hand andcashi nbank.You f urt hernot edthatt hecompany’ si nt ernalcont r olovercashi sver ypoor . You s t ar t e dt heaudi tonJanuar y15,2007. Bas e dony ourc as hc ountont hi sdat e ,c as honhand amount edt oP19, 200. Exami nat i on oft hecashbookandot herevi denceoft r ansact i onsdi scl osed t hef o l l o wi ng : a. Januarycol l ect i onsperdupl i cat er ecei pts ,P75, 200. b. Tot aldupl i c at e de pos i ts l i ps,al ldat e d Januar y ,P44, 000. Thi s amo unti nc l ude s a de pos i t r epresent i ngcol l ect i onsonDecember31. c. Cashbook bal anceatDec ember31,2006 amount edt oP186, 000,r epr es ent i ng bot h ca sh on handandcas hi nbank. d. Banks t at ementf orDec embershowedabal anceofP170, 400. e . Out s t andi ngchec ksatDe c e mber31: Nov e mberc hec ks No.280 P1, 800 290 6, 600

De c e mbe rc hec ks No.331 P2, 400 339 1, 600 345 20, 000 353 3, 600 364 10, 000

f . Undeposi t edcol l ec t i onsatDec ember31,2006amount edt oP20, 000. g. An amountofP4, 400 r epr es ent i ng pr oce edsofa cl ean draf to n a cust omerwascr edi t ed by bank,buti snoty e tt ake nupi nt hec ompany’ sbooks . h. Bankser vi cechar ge sf orDec ember ,P400. Thec ompanyc as hi e rpr es e nt e dt oy ou t hef ol l owi ngr e c onci l i at i on s t at e me ntf orDe c e mbe r ,2006, whi c hhehaspr e par e d: Ba l anc epe rbooks ,De ce mbe r31,2006 Addout s t andi ngc he c ks : No.331 339 345 353 364 Tot al Banks e r v i c ec har g e Unde pos i t e dcol l e ct i ons Bal anc epe rbank,De c e mbe r31,2006

P180, 600 P2, 400 1, 600 2, 000 3, 600 1, 000

QUESTI ONS:

19

10, 600 191, 200 ( 400) ( 20, 400) P170, 400


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Basedont heaboveandt her esul tofyouraudi t ,answert hef ol l owi ng: 1.

How muc hi st headj us t edcas hbal anceasofDec ember31,2006? a. P152, 800 c . P180, 200 b. P144, 400 d. P 0

2.

How muc hi st hec ashshor t ageasofDec ember31,2006? a. P45, 600 c. P37, 200 b. P 4, 400 d. P41, 200

3.

How muchi st hecas hshort agef ort heper i odJanuary1t o15,2007? a. P30, 800 c . P31, 200 b. P32, 400 d. P32, 000

4. Whi c hoft hef ol l owi ngi snotame t hodus e dbyt hec as hi e rt oc ov e r upt hes hor t ageasof

Dec e mber31,2006? a. Under st at i ngout st andi ngchecksbyP27, 000. b. Notr e c or di ngt hebankc ol l e c t i onofP4, 400. c. Under st at i ngt hebookbal ancebyP5, 400. d. Over st at ementofundeposi t edcol l ect i onsbyP400. Sug g es t e dSo l ut i o n: Quest i ons No.1and2

Unadj us t e dbal anc e s Add( de duct )adj us t me nt s : Out s t andi ngc he c ks : Unde pos i t e dc ol l e c t i ons Unr e c or de dbankc ol l e c t i on Banks e r v i c ec har ge Bal anc e s Shor t age Adj us t e dbal anc e s

Bank P170, 400

Books P186, 000

( 46, 000) 20, 000

144, 400 P144, 400

4, 400 ( 400) 190, 000 ( 45, 600) P144, 400

Que s t i o n No .3

Col l ec t i onspe rr e c or ds Addunde pos i t e dc ol l e c t i ons ,De c.31 Tot alc as ht hatshoul dbede pos i t edi nJanuar y Le ssJanuar yde pos i t s Unde pos i t e dcol l e ct i ons ,Jan.15 Le ssunde pos i t e dc ol l e c t i onspe rc as hc ount Shor t age ,Jan.1t o15,2007

P75, 200 20, 000 95, 200 44, 000 51, 200 19, 200 P32, 000

Que s t i o n No .4

Cove r upf ort heDece mber31,2006short age: No nr e c or di ngofbankc ol l e c t i on Unders t at ementofbookbal ance ( P186, 000-P180, 600) Unders t at ementofout st andi ngchecks ( P46, 000-P10, 600) Ov e r s t a t e me nto funde po s i t e dc o l l e c t i o ns ( P20, 400-P20, 000) Tot als hor t ag e,De c embe r31,2006

P 4, 400 5, 400 35, 400 400 P45, 600

Ans we r s :1)B;2 A A ) ;3)D;4 )

PROBLEM NO.15

Se l e c tt hebe s ta ns we rf o re ac ho ft hef o l l o wi ng : 1. Anaudi t orwoul dconsi deracashi er ’ sj obdescr i pt i on t ocont ai ncompat i bl edut i esi ft hecashi er r ecei vesr emi t t ancef r om t hemai l r oom andal sopr eparest he a. Dai l yde po si ts l i p. c. Remi t t anceadvi ces. 20

CEBU CPAR CENTER, INC . b. Pr e l i s tofi ndi v i dualc he c ks .

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d. Mont hl ybankr e c onci l i at i on.

2. Whi choft hef ol l owi ngi nt er nalcont r olpr ocedur eswi l lmostl i kel ypr eventt heconceal mentofa c a s hs ho r t a g er e s ul t i ngf r o mi mpr o p e rwr i t e o ffo fat r a dea c c ountr e c e i v a bl e ? a. Wr i t eoffsmustbesupport edbyanagi ngsc hedul eshowi ngt hatonl yr ecei vabl esov er duef or sev er almont hshavebeenwri t t enoff. b. Wr i t e offsmus tbeappr ov e d byt hec as hi e rwhoi si n aposi t i on t oknow i ft her e c e i v abl e s ha v e,i nf ac t ,be e nc ol l e c t e d. c. Wr i t eoffs mus tbe appr ov ed by a r es ponsi bl e office raf t err ev i ew ofcr edi tdepar t ment r ecommendat i onsandsuppor t i ngev i dence . d. Wr i t eoffsmustbe aut hor i z ed by companyfiel d sal esempl oy ee swho ar ei n a posi t i on t o det ermi net hefinanci alst andi ngoft hecust omer s. 3. An ent i t y’ si nt er nalcont r olst ruct ur erequi r eseverycheck r equestt hatt her ebean appr oved v ouc he r ,s uppor t e dbyapr e numbe r edpur c has eor derandapr e numbe r e dr e c e i v i ngr e por t . To det er mi ne whet herchecks ar e bei ng i ss ued f orunaut hor i ze d expendi t ur es,an audi t ormost l i ke l ywo ul ds e l e c ti t e msf o rt e s t i ngf r o mt hepo pul at i o no fal l a. Cancel l edchecks. c. Pur chaseorder s. b. Appr ov e dv ouc her s. d. Rec e i v i ngr epor t s . 4. Whi ch oft he f ol l owi ng audi t i ng pr oce dur es woul dt he audi t or not appl yt o a cut off bank st at ement ? a. Traceyearendout st andi ngchecksanddeposi t si nt r ansi tt ot hecut offbankst at ement . b. Reconci l et hebankaccountasoft heendoft hecut off peri od. c. Comparedat es ,paye esandendor se ment sonre t ur nedchec kswi t ht hec ashdi sbur se ment s r e c o r d . d. Det er mi net hatt heye arenddeposi ti nt r ansi twascr edi t edbyt hebankont hefirs twor ki ng da yoft hef o l l o wi ngac c o unt i ngpe r i o d. 5. A cl i entmai nt ai ns t wo bank acc ount s. One oft he acco unt s,Bank A,has an ov er dr af tof P100, 000. The ot heraccount ,Bank B,has a posi t i ve bal ance ofP50, 000. To concealt he o v e r dr a f tf r o mt heaudi t o r ,t hec l i e ntma yde c i det o a. Dr aw acheckf oratl eas tP100, 000on BankA f ordeposi ti nBankB.Rec or dt her ec ei ptbut nott hedi sbur sementandl i stt here cei ptasadeposi ti nt r ansi t . Recor dt hedi sbur sement att hebe g i nni ngoft hef o l l o wi ngy e ar . b. Dr aw acheckf oratl eastP100, 000onBankB f ordeposi ti nBankA.Recor dt her ecei ptbut nott hedi sbur sementandl i stt here cei ptasadeposi ti nt r ansi t . Recor dt hedi sbur sement att hebe g i nni ngoft hef o l l o wi ngy e ar . c. Dr aw ac hec kf orP100, 000onBankB f ordeposi ti nBankA. Rec or dt hedi sbur se mentbut nott herece i pt. Li stt hedi sbur sementasan out st andi ngcheck,butdonotl i stt herece i pt asade po s i ti nt r a ns i t .Re c or dt her e c e i pta tt hebe g i nni ngo ft hef o l l o wi ngpe r i o d. d. Dr aw a c hec kf or a tl e as t P100, 000 on Bank A f or de pos i ti n Bank B. Re c or dt he di sbur sement but not t he r ece i pt and l i stt he di sbur se ment as an out st andi ng check. Re c or dt her e c e i ptatt hebe g i nni ngo ft hef o l l o wi ngy e ar . 6. Whi l eper f or mi ngan audi tofcash,an audi t orbegi nst osuspectcheck ki t i ng. Whi ch oft he f o l l o wi ngi st hebe s te v i de nc et ha tt heaudi t o rc o ul do bt a i nc o nc e r ni ngwhe t he rki t i ngi st a ki ng pl a c e ? a. Doc ument ar ye vi dence obt ai ned by v ouchi ng cr edi t s on t he l at es t bank s t at ement t o support i ngdocument s. b. Doc ume nt ar ye v i de nce obt ai ne d by v ouc hi ng e nt r i e si nt he c ash ac c ountt os uppor t i ng doc ume nt s . c. Or alevi denceobt ai nedbydi scussi onwi t hcont r ol l erper sonnel . d. Evi denceobt ai nedbypr epari ngaschedul eofi nt er bankt r ansf er s. 7. Two mont hsbef or eyear end,t hebookkeeperer r oneousl yrec or ded t here cei ptofa l ongt er m bankl oan byade bi tt oc as h andac r e di tt os al e s . Whi c h oft hef ol l owi ngi st hemo s te ffe c t i v e pr o c e dur ef o rde t e c t i ngt hi st y peofe r r o r ? a. Anal yz ebankconfirmat i oni nf or mat i on. b. Anal yz et henot e spay abl ej our nal . c. Pr epar eyear endbankr econci l i at i on. d. Pre par eayear endbankt r ansf ersc hedul e.

21


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8. Post dat edchecksr ece i ve dbymai li nse t t l ementofcust omer ’ saccount sshoul dbe a. Re t ur nedt oc us t omer . b. St ampe dwi t hr e s t r i c t i v eendor s eme nt . c. Deposi t edi mmedi at el ybyt hecashi er . d. Deposi t edt hedayaf t ert oget herwi t hcashr ecei pts . 9. Thecashi erofMi l adyJewel ri escov er edashort agei nt hecashwor ki ngf undwi t hcashobt ai nedat De c ember31 f r om abank bycas hi ng butnotr ec or di ng ac hec k dr awn on t heco mpanyouto f t ownbank.How woul dyouasanaudi t ordi sco ve rt hemani pul at i on? a. Byc onfir mi ngal lDe c ember31bankbal ance s. b. Byc ount i ngt hec as hwor ki ngf undatt hec l os eofbus i ne s sonDe c e mbe r31. c. Byi nve st i gat i ngi t emsr et ur nedwi t ht hebankcut offst at ement soft hesucc eedi ngmont h. d. Bypre par i ngi ndependentbankre conci l i at i onsasofDece mber31 10.Ane s s e nt i a lpha s eo ft heaudi to ft hec a s h ba l a nc eatt hee ndo ft hey e a ri st heaudi t o r ' sr e v i e wo f c ut o ffba nks t a t e me nt .Thi ss p e c i ficp r o c e d ur ei sno tus e f uli nde t e r mi ni ngi f a. Ki t i nghasoc curr ed. b. Lappi nghasoc c ur r e d. c. Thecas hr ec ei pt sj our nalwashel dopen. d. Di sbur se ment spert hebankst at ementc anber ec onci l edwi t ht ot alcheckswr i t t en. Ans we r s :1 ) ;2)C;3 ) ;4)B,5)B;6)D;7 ) ;8)B;9)C;10)B A A A

end-

22

AP Cash _ Cash Equivalents 5077

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