Audit_of_Receivables__Cash__and_Cash_Equivalents

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AUDIT OF CASH AND CASH EQUIVALENTS
PROBLEM 1 In the course of your audit of ABC Company's "Receivables" account as of December 31, 2021, you found out that the account comprised the following items: Trade account receivable PHP 3,100,000 Trade account receivable, assigned (proceeds from assignment 1,300,000) 1,500,000 Trade accounts receivable, factored (proceeds from factoring done on a without-recourse basis amounted 500,000) 600,000 12% Trade notes receivable 400,000 20% Trade notes receivable, discounted at 40% upon receipt of the 180-day note on a without recourse basis 600,000 Trade receivables rendered worthless 100,000 Installment receivable, normally due 1 year to 2 years 1,200,000 Customers' accounts reporting credit balances arising from sales returns 120,000 Advanced payments for purchase of merchandise 600,000 Customers' accounts reporting credit balances arising from advanced payments 80,000 Cash advances to subsidiary 1,600,000 Claims from insurance company 60,000 Subscription receivable due in 60 days 1,200,000 Accrued interest receivable 40,000 Deposit on contract bids 1,000,000 Advances to stockholders (collectible in 2024) 4,000,000 Requirements 1. How much is the total trade receivables? a. 7,300,000 b. 6,200,000 c. 6,000,000 d. 5,900,000 2. How much is the amount to be presented as "trade and other receivables" under current assets? a. 14,700,000 b. 10,700,000 c. 9,700,000 d. 8,100,000 3. How much loss from receivable financing should be recognized in the income statements? a. 72,000 b. 100,000 c. 172,000 d. 210,000 SOLUTION Trade receivables Other receivables Total trade and other receivables Trade account receivable 3,100,000 3,100,000 Trade account
receivable, assigned 1,500,000 1,500,000 12% Trade notes receivable 400,000 400,000 Installment receivable 1,200,000 1,200,000 Advanced payments 600,000 600,000 Claims from insurance company 60,000 60,000 Subscription receivable due in 60 days 1,200,000 1,200,000 Accrued interest receivable 40,000 40,000 6,200,000 1,900,000 8,100,000 (1), (2) Proceeds from factored AR 500,000 Less CA of factored AR 600,000 Loss from factoring (100,000) Principal 600,000 Add Interest (600,000 x 20%x 6/12) 60,000 Maturity value 660,000 Less Discount (660,000 x 40% x 6/12) 132,000 Proceeds from discounted NR 528,000 Less CA of discounted AR 600,000 Loss from discounting (72,000) Total loss from financing (172,000) (3)
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PROBLEM 2 In relation to your audit of Snowdrop Inc.’s accounts receivable, you ascertained the following information: a. The general ledger balances of the client’s receivable and related accounts were: Accounts Receivable P 4, 225,300 Allowance for Doubtful Accounts (269,000) Amortized Cost P 3,956,300 b. Snowdrop Inc. estimates its bad debt losses (expected credit losses) by aging its accounts receivable, the aging schedule of accounts receivable at December 31, 2022, is presented below: _____Age of Accounts ____ ______Amount______ Current P 1,866,400 1 to 30 days past due 920,200 31 to 60 days past due 438,900 61 to 90 days past due 135,500 Over 90 days past due 87,600 c. The company normally sells n/30. d. Furthermore, the company’s uncollectible accounts experience for the past five years was summarized in the schedule as follows: 1-30 days 31-60 days 61-90 days More than 90 Year Current past due past due past due days past due 2021 2% 5% 8% 22% 56% 2020 1% 7% 9% 17% 61% 2019 2% 3% 10% 15% 44% 2018 3% 4% 11% 21% 45% 2017 2% 1% 7% 20% 44% Requirements: 1) What are the corresponding percentages to be used per age category in computing for Snowdrop Inc.’s required allowance for doubtful accounts (expected credit losses)? Current 1-30 31-60 61-90 More than 90 a. 2% 4% 9% 18% 50% b. 2% 4% 8% 19% 48% c. 2% 4% 9% 19% 51% d. 2% 4% 9% 19% 50% 2) The required allowance for doubtful accounts expense is equal to
a. 183,128 b. 183,182 c. 138, 281 d. 183, 821 3) The net realizable value of the company’s accounts receivable on December 31, 2022, should be: a. 4,042,118 b. 4,042,181 c. 4,024,118 d. 4,024,811 Answers and Solutions: 1. D Year Curren t 1-30 days past due 31-60 days past due 61-90 days past due More than 90 days past due 2021 2% 5% 8% 22% 56% 2020 1% 7% 9% 17% 61% 2019 2% 3% 10% 15% 44% 2018 3% 4% 11% 21% 45% 2017 2% 1% 7% 20% 44% 2% 4% 9% 19% 50% 2) B Age of Accounts Amount Allowance in % Required Allowance in Amount Current 1,866,400 2% 37,328 1-30 days due 920,200 4% 36,808 31-60 days due 438,900 9% 39,501 61-90 days due 135,500 19% 25,745 Over 90 days due 87,600 50% 43,800 3,448,600 183,182 3) A Gross Accounts Receivable 4,225,30 0 Allowance for Doubtful Accounts 183,182 Net Realizable Value 4,042,11 8 PROBLEM 3
The ABC Corp. grants its customers 30 days credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 2% by the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly. At the end of 2021 before any audit adjustments, the general ledger accounts showed balances of account receivable at P1,550,000 and the allowance for bad debt at P145,000. Accounts receivable activity for 2020 included the following: Credit sales P12,750,000 Write offs, 92,000 The company’s controller prepared the following aging summary of year-end accounts receivable: Age Group Amount Percent Collectible 0 – 60 days P925,000 98% 61 – 90 days 320,000 90% 91 – 120 days 60,000 75% Over 120 days 228,000 65% Total P1,533,000 It was ascertained that P50,000 from the over 120 days accounts are absolutely worthless. Requirements: 1. How much is the unreconciled difference between the general ledger and the subsidiary ledger balance of accounts receivable and how should it be accounted for: a. P17,000; GL prevailing over SL, with the difference being charged against sales. b. P15,000; GL prevailing over SL, with the difference being charged to bad debt expense. c. P17,000; SL prevailing over GL, with the difference being charged against sales. d. P15,000; SL prevailing over GL, with the difference being charged to bad debt expense. 2. How much is the total bad debt expense for 2021? a. 297,700. c. 287,700. b. 287,800. d. 294,800. 3. How much is the net realizable value of accounts receivable at December 31, 2021? a. 1,355,000. c. 1,355,200. b. 1,535,300. d. 1,533,000.
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Answers and solutions Reconciliation of GL and SL with Agiing of AR PER GL PER SL 0-60 DAYS 61-90 DAYS 91- 120 DAYS OVER 120 DAYS 1,550,000. 00 1,533,000.0 0 925,00 0 320,00 0 60,000 . 228,000.00 AR - written off (50,000.00) (50,000.00) (50,000.00) Balance 1,500,000. 00 1,483,000.0 0 925,00 0 320,00 0 60,000 178,000.00 Unlocated difference (17,000.00) Adjusted Gross AR 1,483,000. 00 Required allowance for bad debts (%) 2% 10% 25% 35% Required allowance for bad debts (P) 127,800.0 0 18,500 32,000 15,000 62,300 1) C Sales 17,000. 00 Accounts Receivable 17,000. 00 **SL should prevail over GL 2) B Required balance for bad debts 127,800.00 Allowance for BD, unadjusted (145,000.00) Additional write off per audit 50,000.00 Additional bad debt expense per audit 32,800.00 Bad debt exp (12,750,000*2%) 255,000.00
Total Bad debt expense per audit 287,800.00 3) C Gross Accounts receivable 1,483,000.00 Allowance for Bad debts (127,800.00) Net Reliazable value 1,355,200.0 0 PROBLEM 4 You are auditing the Accounts Receivable of Noel Inc. as of December 31, 2021. You found the following information in the general journal: Accounts receivable P733,360 Less: Allowance for doubtful accounts (23.360) Accounts receivable net P710,000 The accounts receivable subsidiary ledger had the following details: Customer Invoice date Amount Balance Ganda 9/12/2021 P69,600 P69,600 Tisay 12/12/2021 76,800 12/02/2021 49,600 126,400 Rara 11/17/2021 92,560 10/08/2021 88,000 180,560 Ming 12/08/2021 80,000 10/25/2021 22,400 8/20/2021 20,000 122,400 Banong 9/27/2021 48,000 48,000 Bong 8/20/2021 35,680 35,680 Biboy 12/06/2021 56,000 11/29/2021 84,720 140,720 Total P723,360 Additional information: a. You discovered based on your review of subsequent events that Bong recently went bankrupt, thus your suggested that the amount receivable from the same shall be written off. b. You also discovered that the invoice dated 12/02/2021 has already been settled by Tisay per OR number 34675. This amount however has been erroneously posted against Rara’s subsidiary ledger as a settlement for an invoice dated 11/05/2021 for the same amount. c. The estimated bad debt rates (expected credit loss rates) below are based on the company’s receivable collection experience: Age of accounts Expected credit loss rates 0 – 30 days 2% 31 – 60 days 5%
61 – 90 days 10% 91 – 120 days 20% Over 120 days 50% Required: 1. Assuming that there were no other entries to the allowance for doubtful accounts, what is the correct bad debt expense for the year? a. 47,840 c. 70,992 b. 46,352 d. 72,480 2. What is the correct allowance for bad debt expense for the year ended December 31, 2021? a. 78,000 c. 60,160 b. 76,512 d. 58,672 3. What is the net adjustment to the Accounts receivable in the general ledger? a. 86,280 c. 45,680 b. 59,600 d. 35,680 4. What it the carrying value of the company’s accounts receivable as of December 31, 2021? a. 627,520 c. 637,520 b. 629,008 d. 647,520 5. What is the necessary adjusting entry to adjust any unlocated difference between the SL and GL? a. Bad debt expense 10,000 Accounts receivable 10,000 b. Sales 10,000 Accounts receivable 10,000 c. Accounts receivable 10,000 Other income 10,000 d. No necessary entry Answers and solutions:
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PROBLEM 5 You were assigned to audit Miles Inc.’s accounts receivable which had an unadjusted balance per books of P755,142, net an allowance for bad debts amounting to 32, 858. Your inquiries and investigations revealed the following information: a. The only entries in the Bad debt expense account were: A credit for P1,296 on December 1, 20x1, because a customer remitted in full, an account charged off on October 31, 20x1. A debit on December 31, for the amount of the credit to Allowance for bad debt on the same date. b. The allowance for bad debt accounts had the following details: Jan. 1, balance P15,250 June. 30, write off of accounts (1,296) Aug. 31, write off of accounts (3,280) Oct. 31, write off of accounts (2,256) Dec. 31, Bad debt expense (3%*788,000) 23,640 Dec. 31, balance P32,858 Records revealed that the December 31, 20x1 bad debt expense was debited to the bad debt expense account and credited to allowance for bad debt for the amount shown above, while the write offs credited to accounts receivable amounted only to P6,032. Further investigation revealed that the correct amounts to be written off were shown in the analysis above. c. An aging schedule of the accounts receivable as of December 31, 20x1, and the decisions are as shown in the table below: Age Net Debit Balance Amount to which the allowance is to be adjusted after the adjustments and corrections have been made (Expected Credit Loss) 0 – 1 month P372,960 1% 1 – 3 months 307,280 2% 3 – 6 months 88,720 3% Over 6 months 24,000 Definitely uncollectible, P4,000; P8,000 is considered to be 50% uncollectible; the remainder is estimated to be 80% collectible. d. There is a credit balance in one accounts receivable (0 – 1 months) of P8,000; it represents an advance on a sales contract; also, there is a credit balance in one of the 1 – 3 months accounts receivable of P2,000 for which merchandise will be accepted by the customer. e. The accounts receivable control account is not in agreement with the subsidiary ledger. The differences cannot be located, and the company’s accountant decides to adjust the control to the sum of the subsidiaries after
corrections are made. Requirements: 1. What is the correct bad debt expense for the year? a. 10,296 c. 13,343 b. 10,640 d. 14,640 2. What is the adjusting journal entry to record the remaining unlocated difference between the general ledger and the subsidiary ledger after consideration of all adjustments? a. Accounts receivable P5,760 Bad debt expense P5,760 b. Accounts receivable P5,760 Sales P5,760 c. Accounts receivable P4,960 Sales P4,960 d. Accounts receivable P9,760 Bad debt expense P9,760 3. What is the accounts receivable balance on December 31, 20x1? a. 793,200 c. 798,960 b. 798,160 d. 808,960 4. What is the required allowance for bad debt expense on December 31, 20x1? a. 19,057 c. 29,357 b. 19,857 d. 32,857 5. What is the accounts receivable net of allowance for bad debts? a. 774,143 c. 779,503 b. 779,103 d. 779,903 SOLUTION: Reconciliation between GL and SL with Aging or A/R Analysis Per GL Per SL 0-1 mo 1-3 mos 3-6 mos > 6 mos Unadjusted Balances 788,00 0 792,96 0 372,96 0 307,28 0 88,720 24,000 (b) Add’l Write- Off (GL only) (800) (c) Add’l write- off per aging sched (4,000) (4,000) (4,000) (d) AR with cr bal 10,000 10,000 8,000 2,000 793,20 0 798,96 0 (3. C) 380,96 0 309,96 0 88,720 20,000 Unreconciled Difference 5,760 8,000 12,00 0 Adjusted Bal 798,9
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60 Allowance for BD in % 1% 2% 3% 50% 20% Allowance for BD in Amount 19,057 (4. A) 3,810 6,186 2,662 4,000 2,400 Adjusting Entries: (a) Bad Debt Expense 1,296 Allowance for Bad Debt 1,296 To adjust the entry made upon recovery of previously written-off account, credited by the client to BDE (b) Allowance for Bad Debt 800 Accounts Receivable 800 To record additional accounts written-off per SL (c) Allowance for Bad Debt 4,000 Accounts Receivable 4,000 To record additional accounts written-off per the aging schedule (d) Accounts Receivable 8,000 Advances from Customers 8,000 To reclassify the credit balances in customer accounts at (0-1 mo) P8,000 and (1-3 mos) P2,000. (e) Allowance for Bad Debts 10,297 Bad Debts Expense 10,297 Allowance for BD, ending 19,057 Less: Allowance for BD, beginning (15,250) Recovery of Previous Write-off (1,296) Add: Write-off of Accounts Receivable 6,832 Add’l Write-off Per Audit 4,000 Bad Debt Expense per Audit 13,343 (1. C) Bad Debt Expense per books 23,640 Overstatement in Bad Debt Expense (10,297) (f) Accounts Receivable 5,760 (2. B) Sales 5,760 To adjust the unlocated difference (SL should prevail over GL) 5. Answer: D Gross Accounts Receivable 798,960 Allowance for BD (19,057) Amortized Cost/Carrying Value 779,903 (5. D) PROBLEM 6
You are auditing the accounts receivable and the related allowance for bad debts account of Lamesa Inc. The control account of the aforementioned accounts had the following balances: Accounts Receivable P2,540,000 Less: Allowance for bad debt (156,000) Net Book Value P2,384,000 Upon your investigation, you found out the following information: a. The company’s normal sales term is n/30. b. The allowance for bad debt account had the following details in the general ledger: Allowance for Bad Debts July 31 Write off 48,00 0 Jan. 1 Balance 60,00 0 Dec. 31 Provision 144,0 00 c. The subsidiary ledger balances of the company’s accounts receivable as of December 31, 2020 contained the following information: Debit balances Credit balances Under one month P1,080, 000 Kutsara Co. P24,0 00 One to six months 1,104, 000 Tinidor Corp. 42,0 00 Over six months 456,000 Platito Inc. 54,0 00 P2,640,0 00 P120, 000 Additional information • The credit balance with Kutsara Co. was for an overpayment from the customer. The company delivered additional merchandise to Kutsara Co. on January 3, 2021 to cover such overstatement. • The credit balance of Tinidor Corp. was due to a posting error, the amount should have been credited to Kutchara Corp for a 60 day outstanding receivable. • The credit balance from Platito Inc. was a cash advance for a delivery to be made on January 15 the following year.
d. It was estimated that the expected credit loss is 1 percent of accounts aged under one month while the expected credit loss is 2 percent for accounts aged one to six. The accounts over six months are analyzed as follows: Definitely uncollectible (required write-off) P144, 000 Doubtful (expected credit loss at 50%) 72,00 0 Apparently good, but slow (expected credit loss at 10%) Total 240,0 00 456,0 00 Required: Based on your audit, answer the following: 1. What is the entry to adjust any unlocated difference between the control account and the subsidiary ledger? a. Sales 20,000 Accounts receivable 20,000 b. Accounts receivable 20,000 Sales 20,000 c. Sales 28,000 Accounts receivable 28,000 d. No unlocated difference 2. The adjusted accounts receivable balance on December 31, 2020, should be a. 2,424,000 c. 2,478,000 b. 2,454,000 d. 2,520,000 3. The required balance of the allowance for bad debts account on December 31, 2020, is a. 92,040 c. 128,040 b. 92,880 d. 284,040 4. The entry to adjust the allowance for bad debts account is a. Bad debts expense 92,040 Allowance for bad debts 92,040 b. Bad debts expense 104,040 Allowance for bad debts 104,040 c. Allowance for bad debts 12,000 Bad debts expense 12,000
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d. Bad debts expense 80,040 Allowance for bad debts 80,040 SOLUTION: Reconciliation between GL and SL with Aging of AR analysis Per GL Per SL Under 1 mo. 1-6 mo. Over 6 mo. Credit bal. Unadjusted balances 2,540,000.0 0 2,520,000.0 0 1,080,000.0 0 1,104,000.0 0 456,000.0 0 - 120,000. 00 Credit balance- Kutsara (Advances) 24,000.00 24,000.00 24,000.0 0 Credit balance- Tinidor (Posting error) - - - 42,000.00 42,000.0 0 Credit balance- Platito (Advances) 54,000.00 54,000.00 54,000.0 0 Write-off accounts - 144,000.00 - 144,000.00 - 144,000.0 0 2,474,000.0 0 2,454,000.0 0 1,080,000.0 0 1,062,000.0 0 312,000.0 0 - Unlocated difference - 20,000.00 72,000.00 240,000. 00 Adjusted balance (2. Ans: B) 2,454,000. 00 Allowance for BD % 1% 2% 50% 10% Allowance for BD in amount (3. Ans: A) 92,040.00 10,800.00 21,240.00 36,000.00 24,000.0 0 1. Ans: A Sales 20,000.00 Accounts Receivable 20,000.00 To record the unlocated difference (SL should prevail over GL) 4. Ans: D Allowance for BD, ending
92,040.0 0 Less: Allowance for BD, beg. - 60,000.0 0 Add: Write-off of AR 48,000.0 0 Additional write-off per audit 144,000. 00 Bad debt expense per audit 224,040. 00 Bad debt expense per books - 144,000. 00 Additional bad debt expense per audit 80,040.0 0 AJE: Bad debt expense 80,040.0 0 Allowance for bad debt 80,040. 00
PROBLEM 7 The substantiate the existence of the accounts receivable balances as at December 31, 2020, of Mirasol Company, you have decided to send confirmation requests to customers. Below is a summary of the confirmation requests to customers. Below is a summary of the confirmation replies together with the exceptions and audit findings. Gross profit on sales is 20%. The company is under the perpetual inventory method. Name of Customer Balance Per Books Comments from Customers Audit Findings Corpuz P100,000 P60,000 was returned on January 2, 2020. Correct balance is P40,000. Returned goods were received January 5, 2020 Ferrer P20,000 Your CM representing price adjustment dated December 29, 2020 cancels this. The CM was taken up by Mirasol in 2021 Luzano P96,000 You have overpriced us by P50. Correct price should be P100. The complaint is valid. Sarmiento P75,000 We received the gods only on January 5, 2021 Term is shipping point. Shipped in 2020 Yu P90,000 Balance was offset by our December shipment of your raw materials. Mirasol credited accounts payable for P90,000 to record purchases. Yu is a supplier Requirements: 1. If the necessary adjusting journal entry is made regarding the case of Mr. Corpuz, the net income will: a. increase by P12,000 b. decrease by P60,000 c. decrease by P12,000 d. increase by P60,000 2. The effect on 2020 net income of Mirasol Company of its failure to record CM involving transaction with Mr. Ferrer: a. P20,000 over b. P20,000 under c. P4,000 over d. P4,000 under 3. The actual number of units sold to Mr. Luzano is: a. 1,920
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b. 640 c. 960 d. 3,840 4. The overstatement of receivable from Mr. Luzano is: a. 64,000 b. 16,000 c. 48,000 d. 32,000 5. The accounts receivable from Mr. Sarmiento is: a. correctly stated b. 75,000 over c. 75,000 under d. 150,000 over 6. The adjusting journal entry to correct the receivable from Mr. Yu is; a. Purchases 90,000 Accounts receivable 90,000 b. Accounts payable 90,000 Purchases 90,000 c. Accounts receivable 90,000 Accounts payable 90,000 d. Accounts payable 90,000 Balance per book 60,000.00 GP ratio 0.20 1 C decrease in net income 12,000.00 2 A The credit memo should be recorded as of Dec. 31, 2020 20,000 over Balance per books 96,000.00 Overstated price 150.00 3 B Actual number of units 640.00 Number of units 640.00 Correct price 100.00 Total price 64,000.00 Balance per books 96,000.00 Correct balance 64,000.00 4 A Overstatement 32,000.00 5 A correctly stated 6 D Accounts Payable 90,000.00 Accounts Payable 90,000. 00 Accounts receivable 90,000
PROBLEM 8 You are revisiting the auditing working paper presented to you by your audit staff in line with his audit procedures done in auditing JGP Corporation’s accounts receivable. The following were lifted from the said working papers: Audit notes: A. JGP Corporation’s accounts receivable subsidiary ledger had the following details: Customer Invoice Date Invoice Amount Balance BBM Inc. 12/6/22 254,000 10/29/22 168,000 422,000 Leni Co. 12/30/22 84,000 9/27/22 60,000 8/20/22 107,040 251,040 Isko Inc. 12/30/22 80,000 12/8/22 160,000 11/25/22 127,200 367,200 Manny Co. 11/17/22 277,680 10/9/22 264,000 8/20/22 148,800 690,480 Lacson Corp. 12/10/22 500,000 500,000 Sara Inc. 9/12/2 208,800 208,800 Total 2,439,520 B. The accounts receivable balance were confirmed with the customers. You have noted the following exceptions: Customer Balance per reply Remarks BBM Inc. P394,000 The invoice dated 10/29/22 was erroneously priced at P168 per unit. The agreed upon price per the customer’s approved purchase order was at P140. Leni Co. 167,040 Invoice dated 12/30/22 was for a sale made on the same date. An additional clause in the sales agreement with Leni Co. is to install the merchandise sold which the company is yet to accomplish as of December 31. The installation service is considered as a separate performance obligation contract and based on pro-rata allocation, you determined that 20% of the invoice price is attributable to the unearned installation service revenue. Isko Inc. 287,200 The difference was due to the invoice dated 12/30/22. Goods have not been received by Xylon Inc. yet as of 12/31/22. Term of sale is FOB Shipping Point. Manny Co. 652,800 Credit memo for customer returns for damaged
goods worth P37,680 related to the invoice dated 11/17/22 was recorded in January of the following year. Lacson Corp. 400,000 Invoice dated 12/10 was the sales price of 5,000 units of merchandise delivered to Lacson Corp. on the same date on consignment basis. As of December 31, per Lacson Corp.’s reply, 1000 units still remained on hand. The consignment agreement provides Lacson Corp. a commission of 20% based on sales. Sara Inc. No reply Sara Inc. is under liquidation and the amount receivable from the company is deemed definitely uncollectible. C. The balance of the allowance for doubtful accounts at the beginning of the year was at P105,000. During the year, the company wrote-off P88,400 receivables and recovered P49,600 from the previously written-off accounts. The company’s policy with regard uncollectible accounts are summarized below: age % of collectivity 0-30 days 99% 31-61 days 9 61-90 days 95% 91-120 days 90% Over 120 days 50% Required: 1. What is the correct balance of the accounts receivable from BBM Inc.? a. 254,000 b. 394,000 c. 414,000 d. 422,000 2. What is the correct balance of the accounts receivable from Lacson Corp.? a. 400,000 b. 320,000 c. 240,000 d. 200,000 3. What is the correct balance of the accounts receivable gross of any allowances as of December 31? a. 2,009,040 b. 1,801,040 c. 1,901,040 d. 1,968,240 4. What is the correct allowance for bad debts as of December 31, 2022? a. 170,276 b. 172,620 c. 171,820 d. 169,604 5. What is the correct bad debt expense? a. 314,420 b. 312,204
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c. 315220 d. 312,876 Answers and solutions: 1. B 2. B Analysis: Customer Invoice Date Invoice Amount Adjustment s Adjusted Bal BBM inc. 12/06/2022 254,000 254,000 0-30 days 10/29/22 168,000 (28 ,000) 140,000 61-90 days 394,000 Leni Co. 12/30/22 84,000 (16 ,800) 67,200 0-30 days 9/27/22 60,000 60,000 91-120 days 107,040 107,040 Over 120 days 234,240 Isko Inc. 12/30/22 80,000 80,000 0-30 days 12/08/2022 160,000 160,000 0-30 days 11/25/22 127,200 127,200 31-60 days 367,200 Manny Co. 11/17/22 277,680 (37 ,680) 240,000 31-60 days 10/09/2022 264,000 264,000 61-90 days 8/20/22 148,800 148,800 Over 120 days 652,800 Lacson Corp. 12/10/2022 500,000 (18 0,000) 320,000 0-30 days
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Sara Corp. 09/12/2022 208,800 (20 8,800) 0 2,439,520 1,968,240 Adjustments: a. Sales 28,00 0 AR (BBM Inc.) 28,000 (168-140)*(168,000/168) b. Sales 16,80 0 AR (Leni Co.) 16,800 Installation service not yet completed c. Sales Returns 37,68 0 AR (Manny Co.) 37,680 d. Sales (500,000/5000u)*1000u 100,0 00 Commission Expense (4000u*P100)*20% 80,00 0 AR (Lacson Corp.) 180,000 e. Allowance for Bad Debts 208,8 00 AR (Sara Inc) 208,800 3. D 4. A ADJUSTED AGING SCHEDULE AR, Gross Required Allow. Allowance 0-30 days (December invoices) 881,200 1% 8,812 31-60 days (November Invoices) 367,200 2% 7,344 61-90 days (October Invoices) 404,000 5% 20,200 91-120 days (September invoices) 60,000 10% 6,000 More than 120 days (August and earlier 255,840 50% 127,920 1,968,240 170,276 5. D Allowance for bad debts, beg 105,000 Add: Recoveries 49,600 Total 154,600 Less: Allowance for bad debts, end (170,276)
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Write-off of AR (88,400) Additional write-off per audit (208,800) Bad Debts Expense (312,876)
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PROBLEM 9 On December 31, 2020, CDE Company, a financing institution, lent 8,000,000 to FGH Corp. due 3 years after. The loan is supported by an 8% note receivable. Transaction costs incurred to originate the loan amounted to 496,000. P748,000 was chargeable to FGH as origination fees. Interest on the loan are collectible at the end of each year. The yield rate on the loan is 9.25%. The company estimated at origination date that receivable is fully collectible thus did not initially provide loss arising from 12 months expected credit loss (ECL) CDE was able to collect interest as it become due at the end of 2021. There was no evidence of a significant increase in the credit risk by the end of 2021 and that receivable is determined to have "low credit risk". During 2022, however, due to GHJ Corporation's business deterioration and due to political instability and faltering global economy, the company was not able to collect amounts due at the end of 2022. After reviewing all available evidence at December 31, 2022, CDE company determined that it was probable that FGH would pay back only P6,800,000 collectible as follows: 31-Dec-24 2,800,000 31-Dec-25 2,000,000 31-Dec-26 1,200,000 31-Dec-27 800,000 As of December 31, 2022, the prevailing rate of interest for all debt instruments is 14%. Based on the above information and on you audit, answer the following requirements: 1. What is the carrying value of the loans receivables as of December 31, 2021? a.7,748,000 b. 7,824,690 c. 7,908,474 d. 8,000,000 2 What is the impairment loss to be recognized in the 2022 statement of comprehensive income? a. 2,672,376 b. 2,588,592 c. 2,188,036 d. 3,312,376 3. What is the interest income to be recognized in the 2024 statement of comprehensive income? a. 457,636 b. 529,140 c. 319,084 d. 484,340 4. What is the correct carrying value of the loans receivable as of December 31, 2024? a. 5,720,438 b. 2,027,664 c. 3,449,578 d. 3,768,664 SOLUTION Principal 8,000,000 Add Direct origination cost 496,000 Less Origination fee 748,000 Initial PV of loans 7,748,000 9.25% 8%
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Date II IR Amo PV Dec 31, 2020 7,748,0 00 Dec 31, 2021 716,690 640,000 76,690 7,824,6 90 (1) Dec 31, 2022 723,784 640,000 83,784 7,908,4 74 Dec 31, 2023 731,534 640,000 91,526 8,000,0 00 CA-Dec 31, 2022 7,908,47 4 Accrued interest 640,000 Total 8,548,47 4 Less (collectible x PV of 1 for n periods) Dec 31, 2024 (2.8M x 0.8378) 2,345,930 Dec 31, 2025 (2M x 0.7669) 1,533,789 Dec 31, 2026 (1.2M x 0.7020) 842,356 Dec 31, 2027 (800K x 0.6425) 514,023 5,236,09 8 Impairment loss - 2022 3,312,37 6 (2) 9.25% Date II Coll Amo PV Dec 31, 2022 5,236,0 98 Dec 31, 2023 484,339 0 484,339 5,720,4 37 Dec 31, 2024 529,140 2,800,000 - 2,270,86 0 3,449,5 77 (3), (4) Dec 31, 2025 319,086 2,000,000 - 1,680,91 1,768,6
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4 63 Dec 31, 2026 163,601 1,200,000 - 1,036,39 9 732,265 Dec 31, 2027 67,734 800,000 - 732,265 -
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PROBLEM 10 On December 31, 2018, Blackpink Company, a financing institution lent P15,000,000 to YG Corp. due 3 years after. The loan is supported by an 12% note receivable. Based on the company’s initial estimates the present value of the 12 months expected credit loss (ECL) discounted at 10% is at 2,000,000. The probability of default (PD) is at 7%. Blackpink Company was able to collect interest as it became due at the end of 2019. There was no evidence of significant increase in credit risk by the end 2019 and that the receivable is determined to have “low credit risk”. There were no changes in its initial estimate of the 12 months expected credit loss either. By the end of 2020, Blackpink Company was able to collect interest as it became due. Based on available forward-looking information (determinable without undue cost or effort), however, there is evidence that there was a significant increase in credit risk by the end of 2020. Blackpink Company therefore had to change its basis of calculation of the loss allowance from 12 months ECL to lifetime expected credit loss. The present value of the lifetime expected credit loss discounted at 10% is at 5,000,000. The probability of default (PD) is at 22%. During 2021, however, due to YG Corp.’s business deterioration and significant financial difficulties, the company was not able to collect amounts due at the end 2021. After reviewing all available evidence at December 31, 2021, Blackpink Company determined that the receivable is credit impaired and that impairment loss should be recognized. Blackpink Company also entered into the following concessions with YG Corp.: a. Interest due in 2021 is waived. b. Only 10M of the principal shall be collected in 2 equal installments, at the end of 2022 and 2023. c. Annual interest on the 10M revised principal shall be collected at 14% at the end of each year for the next two years (based on outstanding balance). As of December 31, 2021, the prevailing rate of interest for all debt instruments is 15%. Based on the above information and on your audit, provide the correct answer for the following requirements: 1) What is initial carrying value of the loans receivables as of December 31, 2018? a. 15,000,000 b. 14,680,000 c. 14,860,000 d. 13,000,000 2) What is the net amount to be recognized in the profit or loss for 2019 in relation to the loan?
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a. 1,786,000 b. 1,768,000 c. 1,678,000 d. 1,876,000 3) What is the carrying value of the loans receivable as of December 31, 2020? a. 13,090,000 b. 13,900,000 c. 13,009,000 d. 13,000,900 4) What is the carrying value of the loans receivable as of December 31, 2021, after impairment recognition? a. 10,825,192 b. 10,528,912 c. 10,258,219 d. 10,258,291 Answers and Solutions: 1) C December 31, 2018 (Origination Date - STAGE 1: 12 MONTHS ECL) PV of 12 months expected credit loss 2,000,000 Multiply by: Probability of Default(PD) 7% Credit Loss/ Allowance 140,000 Journal Entries: Loans Receivable 15,000,000 Cash 15,000,000 Loss/Bad Debt 140,000 Allowance for Credit Loss/Bad Debt 140,000 Gross Carrying Value 15,000,000 Less: Allowance for Credit Loss 140,000 Initial Carrying Value 14,860,000 2) A
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December 31, 2019 (No significant increase in credit risk - STAGE 1: 12 MONTHS ECL) Journal Entries: Cash 1,800,000 Interest Income (15M x 12%) 1,800,000 Interest Expense 14,000 Allowance for Credit Loss/Bad Debt 14,000 (140,000 x 10%) Interest Income (15M x 12%) 1,800,000 Less: Interest Expense on Allowance (140K x 10%) 14,000 Net amount to be recognized in the profit or loss 1,786,000 December 31, 2020 (With significant increase in credit risk - STAGE 2: LIFETIME ECL) Journal Entries: Cash 1,800,000 Interest Income (15M x 12%) 1,800,000 Interest Expense 15,400 Allowance for Credit Loss/Bad Debt 15,400 [(140,000 x 110%)x10%] Loss/Bad Debt 930,600 Allowance for Credit Loss/Bad Debt 930,600 PV of lifetime expected credit loss 5,000,000 Multiply by: Probability of Default(PD) 22% Required allowance for credit loss 1,100,000 Less: Allowance, balance (140K+14K+15400) 169,400 Additional Credit Loss
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930,600 3) B Gross Carrying Value 15,000,00 0 Less: Required Allowance 1,100,000 Initial carrying Value, Net 13,900,00 0 4) D Total Receivable Gross Carrying Value of Loans 15,000,00 0 Accrued Interest Income (15M x 12%) 1,800,000 16,800,000 Total Recoverable Amount PV of future cash flows @ orig. EIR (12%) December 31, 2022 [(5M+1.4M) x 0.89286] 5,714,286 December 31, 2023 [(5M+700K) x 0.79719] 4,544,005 10,258,291 Required allowance for impairment loss 6,541,709 Less: Allowance, balance (1.1M + 110K) 1,210,000 Additional impairment loss 5,331,709 December 31, 2021 (With credit impairment - STAGE 3: IMPAIRMENT LOSS) Journal Entries: Interest Receivable 1,800,000 Interest Income (15M x 12%) 1,800,000 Interest Expense 110,000 Allowance for Credit Loss/Bad Debt 110,000 (1.1M x 10%) Impairment Loss 5,331,709 Allowance for Credit Loss/Bad Debt
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5,331,709
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PROBLEM 11 Belle Corp. had the following receivable financing transactions during the year: On April 1, 2021, Belle Corp. factored P700,000 of its accounts receivables to Robinson’s Bank. As of the date of factoring, it was ascertained that P85,000 of the accounts receivable is doubtful of collection. Robinson’s advanced P420,000 cash to Belle Corp. and withheld P75,000 as factors holdback (to cover future sales discount and sales returns and allowances). The company incurred P20,000 direct transaction costs (legal fees and other professional fees) related to the factoring. The factoring was done on a without-recourse basis, thus transferring all significant risks and rewards associated to the receivable to Robinsons. On June 1, 2021, Belle Corp. assigned P700,000 of its outstanding accounts receivable to BPI in consideration of a P600,000, 15% loan. Robinsons charged the company 1% of the accounts assigned as service charge. By the end of June, Belle Corp. collected P180,000 cash from the assigned accounts net of a P10,000 sales discount. By the end of July, Belle Corp. collected another P250,000 from the assigned accounts after P5,000 sales discount. The company accepted merchandise originally invoiced at P25,000 as sales returns and wrote-off P30,000 of the assigned accounts as worthless. It was agreed between parties that monthly collections shall be remitted to the bank as partial payment of the loan and interest. On August 30, 2021, Belle Corp. accepted from a customer a 4-month P600,000, 12% notes receivable for the sale of merchandise. On October 31, 2020, Belle Corp. discounted the note to Robinsons at a discount rate of 10%. The discounting was done on a without-recourse basis, thus transferring all significant risks and rewards associated to the receivable to Robinsons . Requirements: 1. How much should be reported as gain/loss in the income statement on the transfer of receivables on the factoring of receivable on April 1? a. (140,000) b. 140,000 c. 104,000 d. none 2. How much should be reported as gain/loss in the income statement on the transfer of receivables on the assignment of receivable on May 1? a. 16,000 b. 126,000 c. 316,000 d. none 3. What is the carrying value of the accounts receivable-assigned as of July 31? a. 200,000 b. 235,000 c. 205,000 d. none 4. What is the carrying value of the loans payable related to the accounts receivable assigned as of July 31?
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a. 258,456 b. 285,359 c. 275,309 d. none 5. How much should be reported as gain/loss in the income statement on the transfer of receivables on the discounting of the note receivable on August 30? a. 1,060 b. 1,600 c. 16,000 d. none Answers and solutions 1) A Net Cash Proceeds from factoring (420k- 20k) 400,000.00 Factor's holdback 75,000. 00 Selling price of the AR factored 475,000.00 CA of AR factored (700k-85k) - 615,000.00 Loss from factoring - 140,000.00 2) NONE 3) A Accounts receivable - assigned 700,000.00 June collection with SD (180k + 10K) (190,000.00) July collection with SD (250k + 5k) (255,000.00) Sales return (25,000.00) Worthless (30,000.00) Accounts receivable - July 31 200,000.00 4) B Payment Interest (Bal. *15%*1/12) Principal Balance Loans payable - June 1 700,000. 00 June remittance 180,000. 8,750.00 171,250. 528,750.
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00 00 00 July remittance 250,000. 00 6,609.00 243,391. 00 285,359. 00 5) B Principal 600,000.00 Interest (600k*12%*4/12) 24,000.00 Maturity value 624,000.00 Discount (624k*10%*2/12) (10,400.00) Proceeds from discounting 613,600.00 Carrying amount: Principal 600,000.00 Accrued interest (600k*12%*2/12) 12,000.00 612,000.00 Gain on discounting 1,600.00
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AUDIT OF CASH AND CASH EQUIVALENTS
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PROBLEM 1 The cash account in the ledger of Sampaguita Company had a balance of P211,200 at December 31, 2021. An examination of the account, however, disclosed the following: 1. The sales book was left open up to January 5, 2022, and cash sales totaling P30,000 were considered as sales in December. 2. Checks of P18,600 in payment of liabilities were prepared before December 31, 2021, recorded in the books, but not mailed or delivered to payees 3. Post-dated customer collection checks totaling P15,600 are being held by the cashier as part of cash. The company’s experience shows that post-dated checks are eventually realized. 4. Customer’s check for P3,000 deposited with but returned by bank, “NSF”, on December 27, 2021. Return was not recorded in the books. 5. The cash account includes P80,000 earmarked for the purchase of a computer which will soon be delivered. The cash balance to be shown on the balance sheet on December 31, 2021 should be: a. P211,200 c. P116,800 b. P101,200 d. P121,000 Answer and solution: Unadjusted cash balance 211,200 1. Jan. 5 collection recorded in December (30,000) 2. Undelivered check disbursement 18,600 3. Post-dated customer collection checks (15,600) 4. NSF customer collection check (3,000) 5. Cash fund for purchase of computer (80,000) Adjusted cash balance - current asset 101,200 B
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PROBLEM 2 In connection with your audit of LILY BLOSSOM BLOOM CORP. for the year ended December 31, 20x1, you gathered the following information: Current account at Bank of the Philippine Islands P6,000,000 Current account at Equitable PCI Bank (300,000) Payroll account 1,500,000 Foreign bank account – restricted (in USD) ** 60,000 Postage stamps 3,000 Employee’s post-dated check 12,000 IOU from a key officer 30,000 Credit memo from a vendor for a purchase return 60,000 Traveler’s check 150,000 Customer’s not-sufficient-funds check 45,000 Money orders 90,000 Petty cash fund (P12,000 in currency and expense vouchers for P18,000) 30,000 Treasury bills, due 3/31/21 (purchased 12/31/20) 600,000 Treasury bills, due 1/31/21 (purchased 1/1/20) 900,000 Change fund 10,000 Bond sinking fund 1,000,000 **current exchange rate as of December 31, 20x1 is at P50 for every USD1. Requirements: 1. What is the total cash and cash equivalent to be reported by the company in its December 31, 20x1 balance sheet? a. 9,262,000 c. 8,362,000 b. 8,380,000 d. 8,122,000 2. How much from the list above should be presented as part of Noncurrent assets? a. 1,000,000 c. 4,900,000 b. 4,000,000 d. 5,500,000 SOLUTION: Cash and Cash Equivalent Non- Current Current Account at BPI 6,000,000 6,000,000 Current Account at Equitable PCI Bank (300,000) No right of offset, classified as current liability Payroll Account 1,500,000 1,500,000 Foreign bank account – restricted (in USD) ** 60,000 3,000,000 Other asset at current exchange price Postage stamps 3,000 Prepaid expense Employee’s post-dated checks 12,000 Other receivables IOU from a key officer 30,000 Other receivables
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Credit memo from a vendor for a purchase return 60,000 Debited to accounts payable Traveler's check 150,000 150,000 Customer's not-sufficient-funds check 45,000 Accounts receivable Money orders 90,000 90,000 Petty cash fund, currencies only 12,000 12,000 Treasury bills, due 3/31/21 (purchased 12/31/20) 600,000 600,000 Treasury bills, due 1/31/21 (purchased 1/1/20) 900,000 Current investment Change fund 10,000 10,000 Bond Sinking Fund 1,000,000 1,000,000 LT fund investment TOTAL 8,362,000 (1. C) 4,000,000 (2. B)
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PROBLEM 3 PATAYGUTOM COMPANY General and Petty Cash Count Audit Year: 2020 Date of count – January 5, 2021, 9:10 am Bills and Coins Denom. Bundles of 100 pcs Rolls of 50 coins Loose P500 2 18 100 4 54 50 6 10 20 10 8 10 20 5 12 8 1 20 40 .25 80 32 Checks Maker Payee Date Amount T. Otis – customer Pataygutom 12/30/20 P23,840 R. Eyes – customer Pataygutom 12/26/20 25,010 O. Liever – customer Pataygutom 1/2/21 11,414 F. Rancisco – customer Pataygutom 12/21/20 26,700 Pataygutom ABC Co. 12/27/20 29,000 M. Doza – officer Cash 1/5/21 620 O. Campo * Cash 12/29/21 520 *Amount is for a return of travel advance made to the employee in an earlier period. Vouchers and IOUS Paid to Date Amou nt
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PNR – transportation expense 1/2/21 P70 Post office – postage stamps 12/20/20 300 Italian Village – Christmas party 12/23/20 12,58 0 I. Dio – IOU 12/27/20 600 Others 1. Cash sales invoices (all currencies No. 17903 to 18112), P201,000 2. Official receipts Number Amount Form of Collection 31250 P1,120 Cash 31251 25,010 Check 31252 2,404 Cash 31253 23,840 Check 31254 26,700 Check 3. Stamps of various denomination amounted to P160. 4. A notation on a sheet of paper as follows: “ Proceeds from employee contribution for Christmas Party, P19,000” 5. Petty cash per ledger, P30,000. Required: 1. How much is the petty cash shortage as of January 5, 2021? a. 27,826 c. 30,606 b. 29,006 d. none 2. The adjustment to correct petty cash fund involves a credit to petty cash fund at: a. 30,000 c. 29,976 b. 29,906 d. 29,336 3. What is the adjusted petty cash fund as of December 31, 2020? a. 0 c. 24 b. 94 d. 624 SOLUTION: Accountability: Petty cash fund, imprest balance 30,000.00 Undeposited Collections Cash sales invoices (17903-18112) 201,000.0 0 Official receipts 79,074.00 Customer collection check, not yet included 11,414.00 291,488.0
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0 Other collections: Return of expense advance 520.00 Other collections: Contribution for Christmas Party 19,000.00 Total Accountability 341,008. 00 Valid supporting items: Bills and coins 210,348.0 0 Customer collection checks 12/30 T. Otis 23,840.00 12/26 R. Eyes 25,010.00 1/2 O. Liever 11,414.00 12/21 F. Rancisco 26,700.00 Accomodated check 620.00 12/29 O. Camp (return of expense advance) 520.00 Expense vouchers and IOUs 13,550.00 312,002.0 0 Petty cash shortage 29,006.0 0 1. Ans: B Cash on hand as of January 5, 2021 Bills and coins 210,348.0 0 Customer collection checks 86,964.00 Accomodated check 620.00 Return of expense advance 520.00 298,452.0 0 Cash that does not belong to the petty cash fund Undeposited collections: Collection checks 86,964.00
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Cash collections (201,000+1,120+2,404) 204,524.0 0 - 291,488.0 0 Return of expense advance - 520.00 Excess collection from Christmas Party (19,000-12,580) - 6,420.00 Cash on hand as of January 5 belonging to the petty cash 24.00 Vouchers paid after December 31: 1/2/21, PNR 70.00 Petty cash fund as of December 31, 2021 94.00 3. Ans: B AJEs: (a) Office Supplies expense (300-160) 140.00 Unused office supplies 160.00 Receivable from employee 600.00 Petty cash fund 900.00 To record unreplenished vouchers as of December 31. (b) Receivable from employee 29,006.00 Petty cash fund 29,006.00 To record petty cash shortage. Reconciliation: Petty cash fund, imprest balance 30,000.00 AJE (a) - 900.00 AJE (b) - 29,006.00 - 29,906.0 0 2. Ans: B Petty cash fund, adjusted balance 94.00
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PROBLEM 4 The Fiber Company’s internal control over its cash transaction is very weak. The company’s cash position at December 31, 2020 were as follows: The cash book showed a balance of P30,000, which included cash on hand. A credit of P300 on the bank’s records did not appear on the company’s books. The bank statement showed a balance of P24,600; and the outstanding checks were: 0200 – P240; 0402 – P200; 0600 – P460; 1502 – P220; 1520 – P280; and 1530 – P300. The cashier removed all of the cash on hand in excess of P6,000 and then prepared the following reconciliation: Balance per books, Dec. 31, 2020 P30,000 Add: Outstanding checks: No. 1502 P220 1520 280 1530 300 600 30,600 Deduct: Cash on hand 6,000 Balance per bank, Dec. 31, 2020 24,600 Deduct: Unrecorded credit 300 Deduct: Unrecorded credit 24,300 1. What is the cash shortage? a. 600 c. 1,000 b. 800 d. 1,400 2. A correct reconciliation will show that the cashier’s accountability for cash on hand is: a. 6,600 c. 7,000 b. 6,800 d. 7,400 3. The adjusted cash in bank excluding cash on hand as of December 31, 2020 is: a. 22,600 c. 23,200 b. 22,900 d. 23,700 4. The adjusted cash balance to be reported in the Statement of Financial Position as of December 31, 2020: a. 28,600 c. 29,200 b. 28,900 d. 29,700
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Bank Book Unadjusted balance 24,600.00 30,000. 00 Unadjusted balance Undeposited collection 6,000.00 300.00 Banck credit Outstanding checks - 1,700.00 4 B Adjusted balance 28,900.00 30,300. 00 1 D - 1,400.0 0 Shortage 28,900. 00 Undeposited collection 6,000.00 Shortage 1,400.00 2 D Accountability for cash on hand 7,400.00 Correct cash balance 28,900.00 Cash on hand/undeposited collection - 6,000.00 3 B Adjusted cash in bank 22,900.00
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PROBLEM 5 You were assigned to audit the cash account of PBB Corp. in line with your firm’s audit of its financial statements for the year ended December 31, 2021. The following resulted from your substantive test procedures: BANK RECONCILIATION The cashier prepared the bank reconciliation statement as of December 31, 2021, which included the following information: Bank loan proceeds credited by the bank in December, recorded in the books in January 3 P300,000 Bank service charge for December, recorded in books in January 3 18,720 Outstanding checks, P41,460 of which has been certified by the bank 223,800 Check of PBB Inc., charged by the bank in error on December 28, 2021; corrected by the bank on January 2, 2022 as per the cut-off bank statement 55,080 Deposit in transit 65,400 Cash per general ledger, December 31, 2021 351,840 Cash per bank statement, December 31, 2021 754,284 Audit notes: a. A cash collections from customers in December amounting to P42,000 was recorded in the books at P4,200. b. A P3,000 check issued to a supplier in December was recorded in the books at P30,000. CASH COUNT From January 2, 2022, to January 10, 2022, the date of your cash count, total cash receipts appearing in the cash records (debited to cash) for the said period amounted to P381,060. During the same period, total bank credits amounted to P188,148 as per the cut-off bank statement. The following cash and cash items were on hand at the close of business on January 10, 2022: Currencies and coins P5,130 Customer’s checks Dated January 4 18,240 Dated January 6, NSF 4,800 Dated January 10 12,930 Expense Vouchers 26,700 Audit Notes: a. Check deposit on January 5, 2022, amounting to P14,400 was not recorded in the books. b. Undeposited collections on January 10, 2022 amounting to P32,400 was also not yet recorded in the books. Requirements:
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1. What is the correct cash in bank balance as of December 31, 2021? a. 655,440 b. 544,344 c. 692,424 d. 697,920 2. What is the cash shortage as of December 31, 2021? a. 9,696 b. 5,496 c. 6,096 d. 3,024 3. What is the actual total customer collections from January 2 to January 10? a. 81,060 b. 67,668 c. 60,192 d. 127,860 4. What is the cash shortage from undeposited collections from January 2 to January 10? a. 2,808 b. 1,992 c. 49,608 d. 23,892 Answers and solutions: 1. C 2. B Bank Reconciliation 12/31/2021 BANK BOOK Unadjusted Balance 754,284 351,840 Unadjusted Balance Deposit in transit 65,400 300,000 Unrecorded credit Outstanding check (182,340 ) (18,720) Unrecorded debit Bank error 55,080 37,800 Book error (note a, understated receipts) 27,000 Book error (note b., overstated disb) Correct Cash balance 692,424 697,920 (5,496) Shortage 692,424 Adjusted Balance 3. D 4. A Total receipts per books from Jan. 2-10 381,060 Unrecorded credits as of 12/31 recorded in books in January (300,000) Books errors in January (audit note a and b) 46,800 Cash Collections, per books from Jan. 2-10 127,860 January deposits from January collections January bank credits 188,148
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Correction of Dec. bank charge error (55,080) Deposit in transit (65,400) 67,668 Cash and Checks on hand (Depositable) 36,300 Expense Vouchers 26,700 Cash OVERAGE from Jan 2-10 (2,808)
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PROBLEM 6 You are auditing the cash account of Camera Inc. for the fiscal year ended July 31, 2021. The client has not prepared the July 31 bank reconciliation. The following information were made available General ledger Bank Statement Beginning balances 280,660 345,180 Deposits 1,503,360 Cash receipts journal 1,527,360 Checks clearing the bank -1,416,900 Cash disbursement -1,308,660 Journal July bank service charge -5,220 Note paid by the bank -366,000 NSF check -18,660 Ending balances 499,360 41,760 Audit notes: a. Bank reconciliation in June included the following information. Bank statement balance, June P 345,180l Deposit in transit P 36,000; Outstanding checks P104,520; and Balance per general ledger, June P 280,660. b. Checks clearing the bank in July, outstanding by the end of June was at P101,520. c. Checks clearing the bank in July and were recorded in the July cash disbursement journal was at P1,228,020. d. A check for P63,600 cleared the bank, but had not been recorded in the cash disbursement journal. It was for a payment of an accounts payable. e. A check for P23,760 was erroneously charge by the bank to Camera Inc. f. Deposits included P36,000 from June and P773,680 from July. g. The bank charged Camera Inc.'s account for a non sufficient fund check totaling to P18,660. The credit manager concluded that the customer intentionally closed its account and the owner left the city. The check was turned over to a collection agency. h. A note for P348,000 plus interest was paid directly by the banks under an agreement signed four months ago. The note payable was recorded at P348,000 on Camera Inc.'s books. Based on your audit procedures and appreciation of the above data, answer the following: 1. How much is the total outstanding check as of July31? a. 41,880 b. 64,980 c. 83,640 d. 20,040 2. How much is the deposit in transit as of July 31? a. 41,880 b. 60,000 c. 36,000 d. 54,660
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3. What is the correct cash in bank balance as of July 31? a. 41,880 b. 22, 320 c. 65,640 d. 18,120 4. How much is the cash in bank shortage as of June 30? a. none b. 2,400 c. 4,000 d. 4,400 SOLUTION Book balance Jun-30 Receipt Disbursement Jul-31 Unadjusted 280,660 1,527,360 1,308,660 499,360 DM July 31 BSC 5220 -5220 DM July 31 NSF 18,660 - 18,660 unrecorded bank debit, NP 366,000 - 366,000 d. unrecorded payment of AP 63,600 - 63,600 Adjusted 280,660 1,527,360 1,762,140 45,880 Bank balance Jun-30 Receipt Disbursement Jul-31 Unadjusted 345,180 1,503,360 1,806,780 41,760 DIT, June 30 36,000 - 36,000 DIT, July 31 (squeeze) 60,000 60,000 (2) OC, June 30 - 104,520 - 104,520 OC, July 31 (squeeze) 83,640 - 83,640 (1) e. Erroneous Bank charge - 23,760 23,760 Adjusted 276,660 1,527,360 1,762,140 41,880 (3) Cash shortage 4,000 (4)
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PROBLEM 7 In the course of our audit of Return To Hogwarts Inc.’s cash in bank for the year ended December 31, 2021, you ascertained the following information: November 30 December 31 Cash per books P 21,565 P 374,750 Cash per bank statements 553,420 896,850 Undeposited collections 41,500 84,600 Outstanding checks 183,950 170,650 Bank service charges 6,300 4,000 Insufficient fund check 52,300 Company’s notes receivable collected by bank 395,705 440,050 The bank statement and the company’s cash records show the following totals: Checks and debit memos per bank statement 1,108,615 Cash receipts per cash records ? Cash disbursements per cash records ? Deposits and credit memos per bank statement 1,452,045 The insufficient fund check was redeposited in the same month. No entries are made to take up the return and redeposit. Requirements: 1) What is the unadjusted book receipts in December? a. 1,398,500 c. 1,389,500 b. 1,398,050 d. 1,938,005 2) What is the unadjusted book disbursements in December? a. 1,045,305 c. 1,054,315 b. 1,045,315 d. 1,045,351 3) What is the adjusted book balance on November 30? a. 410,970 c. 410,790 b. 401,970 d. 410,079 4) The adjusted bank receipts in December should be: a. 1,547,445 c. 1,442,854 b. 1,442,845 d. 1,495,145 5) The adjusted bank disbursements in December should be: a. 1,147,615 c. 1,0430,015 b. 1,095,315 d. 1,174,615 6) What is the adjusted book balance on December 31? a. 810,800 c. 810,080 b. 810,808 d. 810,008 Answers and Solutions
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Proof of Cash, December 31, 2021 November 30, 2021 Receipts Disbursements December 31, 2021 Unadjusted balances per bank statement 553,420 1,452,045 1,108,615 896,850 Undeposited collections, November 41,500 (41,500) Undeposited collections, December 84,600 84,600 Outstanding checks, November (183,950) (183,950) Outstanding checks, December 170,650 (170,650) Adjusted Balances 410,970 1 ,495,145 1,09 5,315 810,800 Req. 4) D Req. 5) B Req. 1) A Req. 2) B November 30, 2021 Receipts Disbursements December 31, 2021 Unadjusted balances per book 21,565 1, 398,500 1,04 5,315 374,750 Unrecorded bank credit: Note Collection, November 395,705 (395,705) Unrecorded bank credit: Note Collection, December 440,050 440,050 Unrecorded bank debits: BSC, November (6,300) (6,300) Unrecorded bank debits: BSC, December 4,000 (4,000) NSF Check, return and redeposit, same month 52,300 52,300 Adjusted Balances 410,970 1, 495,145 1,09 5,315 810,800 Req. 3) A Req. 6) A PROBLEM 8 Shown below is the April 30, 2021, bank reconciliation prepared by DB CORP.’s staff:
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DB Corp. Bank Reconciliation: BPI Acct No. 0021261 April 30, 2021 Bank balance P752,000 Add: Deposit in transit 20,000 Total P772,000 Less: Outstanding checks No. 640 P12,000 652 8,000 653 2,000 22,000 Adjusted balance P750,000 Book balance P589,000 Add: Proceeds of note receivable collected in May P150,000 Deposit on April 30 not recorded on books until May 12,000 162,000 Total P751,000 Less: Bank service charge 1,000 Adjusted balance P750,000 The May 2021 bank statement is shown below: Bank of the Philippine Island From April 30, 2021 to May 31, 2021 Account No.: 0021261 Date Checks Deposit May 1 P8,000 P10,000 May 8 2,000 May 11 14,000 20,000 May 13 1,000 DM 1,000 May 16 4,000 May 21 12,000 56,000 May 27 18,000 May 29 1,000 EC 1,000 EC May 30 200 SV May 31 3,000 DM SV – Service Charge DM – Debit Memo EC – Error Corrected CM – Credit Memo
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The paid checks accompanying this bank statement (all clearing in May) are the following: No. 652 P8,000 No. 653 2,000 No. 654 14,000 No. 655 4,000 No. 657 12,000 No. 658 18,000 The check register reveals that the last check issued in May is No. 659 for P5,000 and that check no. 656 is for P2,600. Cash received for the period May 22 through May 31 of P70,000 was deposited in the bank on June 1. The bank erroneously charged the company P1,000 on May 29 but immediately corrected the error on the same date. The debit memos on May 13 and May 31 represent customers’ NSF checks returned by the bank. The May 13 NSF check was immediately redeposited without entry. The May 31 NSF check was redeposited on June 1 without entry. 1. What is the total bank receipts in May per bank statement? a. 87,000 b. 88,000 c. 77,000 d. 78,000 2. What is the total bank disbursements in May per bank statement? a. 59,200 b. 58,000 c. 58,200 d. 63,200 3. What is the balance per bank statement on May 31, 2021? a. 776,800 b. 767,200 c. 777,400 d. 776,200 4. What is the total receipts in May per books? a. 288,000 b. 220,000 c. 246,000 d. 298,000 5. What is the total disbursement in May per books? a. 53,000 b. 57,600 c. 54,600 d. 53,200 6. What is the cash balance per books on May 31, 2021? a. 832,200 b. 829,200 c. 832,400 d. 876,800
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Answers and solutions BANK 30-Apr Receipt Disburseme nt 31-May Unadjusted bank balance 752,000 88,000 63,200 776,800 Deposit in transit: April 20,000 (20,000) May 70,000 70,000 Outstanding checks April (22,000) (22,000) May 17,600 (17,600) Erroneous bank charge- May (1,000) (1,000) Adjusted balances 750,00 0 137,000 57,800 829,200 BOOK 30-Apr Receipt Disburseme nt 31-May Unadjusted book balance 589,000 298,000 54,600 832,400 Credit memos - April 162,000 (162,000) Debit memo-BSC April (1,000) (1,000) Debit memo-BSC May 200 (200) Unrecorded DM-NSF May 1,000 1,000 Unrecorded Dm-NSF May 3,000 (3,000)
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Adjusted balances 750,000 137,000 57,800 829,200 1 B 2 D 3 A 4 D 5 C 6 C
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PROBLEM 9 You are auditing the cash of JSS Corp. for the fiscal year ended September 30, 2021. The bank reconciliation prepared by the accountant of JSS Corp. for the months of August is presented below: Bank balance, per bank statement P78,000 Add: Deposit in transit, August 31 1,350 Total 79,350 Less: Outstanding checks: No. 547 P300 561 2,700 562 2,100 565 900 6,000 Adjusted balance P73,350 Book balance, per general ledger P60,000 Add: Proceeds of note receivable collected by bank in August 12,000 Deposit made in bank on August 31 not recorded on books until September 1,500 Total 73,500 Less: Bank Service charge 150 Adjusted balance P73,350 There was no available bank reconciliation for the month of September, instead, the accountant provided you a copy of the September bank statement to aid you in your audit. The September bank statement included the following bank debits and credits: Date Particulars Debits Credits August 31 September 1 Chk #561 2,700 1,350 September 6 Chk #562 2,100 September 9 Chk #565 900 15,000 September 12 210 DM 210 September 15 Chk #566 1,500 September 17 300 September 20 Chk #567 1,050 21,000 September 27 Chk #569 2,160 September 29 150 EC 150 EC September 30 660 SV September 30 450 DM September 30 Chk #570 2,730 SV—Service charges DM—Debit Memo EC—Error Corrected CM—Credit Memo Further investigation revealed the following information: a. All book reconciling items during August has been recorded in September
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b. The check register revealed that the last check issued in September was No. 571 for P1,500 and that check No.568 was P3,900. c. Cash received for the period September 25 through 31 of P14,100 was deposited in the bank on October 1. d. The debit memo on September 12 and September 30 were customer NSF checks returned by the bank. The check on September 12 was immediately redeposited without entry . The check returned on September 31 was redeposited by the client in the bank on October 1 also without entry. e. Among the bank credits for the month was P300 deposit of SJS Corp. credited by the bank to the company’s account. Required: Based on your audit procedures and appreciation of the above data, answer the following: 1. How much is the unadjusted bank balance as of September 30, 2021? a. 50,550 b. 54,600 c. 96,450 d. 101,400 2. How much is the total book receipts for September? a. 37,710 b. 53,310 c. 63,600 d. 64,950 3. How much is the total book disbursements for September? a. 12,540 b. 12,960 c. 13,140 d. 14,610 4. How much is the unadjusted book balance as of September 30, 2021? a. 110,910 b. 111,060 c. 112,310 d. 112,460 5. How much is the adjusted cash balance as of September 31, 2021? a. 109,500 b. 109,800 c. 110,100 d. 110,910 Answers and solutions:
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PROBLEM 10 The following information was obtained in connection with the audit of Ryle Company’s cash account as of December 31, 20x1: Outstanding checks, 11/30/20x1 P16,250 Outstanding checks, 12/31/20x1 12,500 Deposit in transit, 11/30/20x1 12,500 Cash balance per general ledger 12/31/20x1 37,500 Actual company collections from its customers during December 152,500 Company checks paid by bank in December 130,000 Bank service charges recorded on the company books in December 2,500 Bank service charges per December bank statement 3,250 Deposits credited by bank during December 145,000 November bank service charges recorded on company books in December 1,500 The cash receipts book of December is underfooted by P2,500. The bank erroneously charged the company’s account for a P3,750 check of another depositor. This bank error was corrected in January 20x2. 1. How much is the deposit in transit on December 31, 20x1? a. 5,000 b. 20,000 c. 22,500 d. 17,500 2. The total unrecorded bank service charges as of December 31, 20x1? a. 750 b. 2,250 c. 1,750 d. 4,250 3. What is the total book receipts in December? a. 150,000 b. 152,500 c. 155,000 d. 147,500 4. What is the total amount of company checks issued in December? a. 130,000 b. 123,000 c. 133,750 d. 126,250 5. What is the total book disbursements in December? a. 123,750 b. 128,500 c. 126,250 d. 128,750 6. What is the book balance on November 30, 20x1? a. 16,250 b. 21,250 c. 37,500 d. 35,000 7. What is the bank balance on November 30, 20x1? a. 23,000 b. 18,500 c. 43,500 d. 16,250 8. What is the total bank receipts in December? a. 120,000 b. 140,000 c. 145,000 d. 150,000 9. What is the total bank disbursements in December? a. 154,500 b. 132,500 c. 129,500 d. 137,000 10. What is the bank balance on December 31, 20x1? a. 21,500 b. 26,500 c. 31,000 d. 33,250
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SOLUTION: 1. Answer: B December actual collections from customers 152,500 Deposit credited by bank in December 145,000 Less: DIT, November (12,500) December collections credited in December (132,500) DIT, December 20,000 (1. B) 2. Answer: B November Banks Service Charge 1,500 December Bank Service Charge 3,250 Bank Service Charge recorded per books in Dec. (2,500) Unrestricted Bank Service Charge, Dec. 2,250 (2. B) 3. Answer: A Actual company collections in December 152,500 Book error, underfooting cash receipts (2,500) Book receipts, December 150,000 (3. A) 4. Answer: D Outstanding checks, Dec. 31 12,500 Add: Checks paid by bank in Dec. 130,000 TOTAL 142,500 Less: Outstanding checks, Nov. 30 (16,250) Checks issued in December 126,250 (4. D) 5. Answer: D Checks issued in December (4) 126,250 Add: Bank service charges recorded in Dec 2,500 Book Disbursements in December 128,750 (5. D) 6. Answer: A Book balance, December 31 37,500 Add: Book Disbursements in Dec. (5) 128,750 TOTAL 166,250 Less: Book receipts in Dec (3) (150,000) Book Balance, November 30 16,250 (6. A) Proof of Cash, December 31, 20x1 November 30 Receipts Disbursemen ts December 31 Unadjusted balances per bank statement 18,500 (7. B) 145,000 (8. C) 137,000 (9. D) 26,500 (10. B) (squeezed)
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DIT, November 12,500 (12,500) DIT, December 20,000 20,000 Outstanding Checks, November (16,250) (16,250) Outstanding Checks, December 12,500 (12,500) Bank error, Dec. Overstated Disbursement (3,750) 3,750 Adjusted Balances 14,750 152,500 129,500 37,750 November 30 Receipts Disbursements December 31 Unadjusted balances per book 16,250 150,000 128,750 37,500 Unrecorded bank debits: BSC, November (1,500) (1,500) Unrecorded bank credits: BSC, December 2,250 (2,250) Book error, Dec. Understated Receipt 2,500 2,500 Adjusted Balances 14,750 152,500 129,500 37,750
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PROBLEM 11 In your audit of Condring Inc.’s cash account as of December 31, 2020, you ascertained the following information: The bookkeeper’s bank reconciliation on November 30, 2020, is as follows: Bank balance per bank statement, November 30 Add: Deposit in transit 7,296 Total P55,892 Less: Outstanding checks No. 3408 P880 3413 600 3414 13,640 3416 7,848 3417 1,600 Balance Add: Bank service charge for November Balance per books * Entered in Check Register in December The Cash Receipts Journal shows a total receipts for December of P743,532. The Check Register reflects total checks issued in December of P755,264. A collection of P11,824 was recorded on company books on December 31 but was not deposited until January 2, 2021. The balance per bank statement at December 31, 2020, is P35,032. This statement shows total receipts of P747,004 and checks and other charges paid of P760,568. Your examination revealed the following additional information: a. Check no. 3413 dated November 24, 2020, was entered in the Check Register as P600. Your examination of the paid returned with the December bank statement reveals that the amount of the check is P60. b. Check no. 3417 was mutilated and returned by the payee. A replacement check (no. 3453) was issued. Both checks were entered in the Check Register but no entry was made to cancel check no. 3417. 25,56 8 P31,32 4 7 2 * P31,39 6
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c. The December bank statement includes an erroneous bank charge of P960. d. On January 3, 2021, the bank informed your client that a December bank charge of P84 was omitted from the statement. e. Your examination of the bank credit memo accompanying the December bank statement discloses that it represents proceeds from the note collection in December for P8,000. f. The outstanding checks at December 31, 2020, are as follows: No. 3408 P880 No. 3417 1,600 No. 3418 5,628 No. 3419 11,576 1. What is the total book disbursements for the month of December? a. 755,336 b. 755,420 c. 755,264 d. 755,192 2. What is the book balance at December 31? a. 19,664 b. 19,736 c. 19,508 d. 19,592 3. What is the total outstanding checks at December 31? a. 17,204 b. 18,144 c. 18,084 d. 19,684 4. What is the adjusted bank balance on November 30? a. 33,380 b. 33,464 c. 33,608 d. 33,548 5. What is the adjusted book receipts for the month of December? a. 751,448 b. 743,532 c. 724,476 d. 751,532 6. What is the adjusted book disbursements for the month of December? a. 755,180 b. 755,324 c. 755,348 d. 755,264 7. What is the adjusted book balance on December 31? a. 29,648 b. 29,732 c. 29,816 d. 29,564 SOLUTION: 1. Ans: A Total checks issued and recorded in December 755,264.0 0 November BSC recorded in December 72.00
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Total book disbursements, December 755,336. 00 2. Ans: D Balance per books, Nov. 30 31,396.00 Total book receipts, Dec. 743,532.0 0 Total book disbursements, Dec. - 755,336.0 0 Balance per books, Dec. 31 19,592.0 0 3. Ans: C Check number 3408 880.00 Check number 3418 5,628.00 Check number 3419 11,576.00 Outstanding checks, Dec. 31 18,084.0 0 Proof of Cash, December 31, 2021 Nov-30 Receipt Disburseme nt Dec-31 Unadjusted balances per bank statement 48,596.00 747,004.0 0 760,568.00 35,032.00 DIT- Nov. 7,296.00 - 7,296.00 DIT-Dec. 11,824.00 11,824.00 OC- Nov. - 22,428.00 - 22,428.00 OC- Dec. 18,084.00 - 18,084.00 Bank error- Dec. overstated disbursement - 960.00 960.00 Bank error- Dec. understated disbursement 84.00 - 84.00 Adjusted balances 755,348.00 29,648.00
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33,464.0 0 751,532.0 0 4. Ans: B Nov-30 Receipt Disburseme nt Dec-31 Unadjusted balances per book 31,396.00 743,532.0 0 755,336.00 19,592.00 CM- Dec. 8,000.00 8,000.00 BSC- Nov. - 72.00 - 72.00 BSC- Dec. 84.00 - 84.00 Book error- Nov. over. Check 3413 (not yet corr.) 540.00 540.00 Book error- Nov. over. Check 3417 (not yet corr.) 1,600.00 1,600.00 Adjusted balances 33,464.00 751,532. 00 755,348.00 29,648.00 5. Ans: D 6. Ans: C 7: Ans: A. PROBLEM 12 Marie Corp. has a current account in PNB. Your audit of the company’s cash account reveals the following: a. Balances taken from the company’s general ledger: Cash balance, November 30, 2020 P1,275,720 Cash balance, December 31, 2020 1,152,840 Receipts, December 1 – 31, 2020 612,440 b. Balances taken from the December bank statement: Bank balance, November 30, 2020 P1,370,360 Bank balance, December 31, 2020 1,274,440 Disbursements (debit) 712,160 c. Outstanding checks, November 30, 2020 (P52,280 was paid by the bank in December), P128,280.
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d. Checks written and recorded in December; not included in the checks returned with the December bank statement, P72,160. e. Deposit in transit, November 30, 2020, P30,520. f. Deposit in transit, December 31, 2020, P32,280. g. A bank credit memo was issued in December to correct an erroneous charge made in November, P3,000. h. Note collected by bank in December (company was not informed of the collection), P4,120. i. A check for P4,040 (payable to a supplier) was recorded in the Check Register in December as P6,000. j. A check for P4,480 was charged by the bank as P4,840 in December. k. Halal Co. issued a stop payment order to bank in December. This pertains to a check written in December which was not received by the payee. A new check was written and recorded in the Check Register in December. The old check was written off by a journal entry also in December, P1,560. l. Bank service charge, November 30, 2020, P120. Requirements: 1. What is the total book disbursements in December? a. 735,320 b. 489,560 c. 739,440 d. 737,080 2. What is the total bank receipts in December? a. 520,320 b. 616,240 c. 612,120 d. 618,040 3. What is the total outstanding check on December 31? a. 200,440 b. 76,000 c. 124,440 d. 148,160 4. What is the adjusted bank balance on November 30? a. 1,272,600 b. 1,370,360 c. 1,275,600 d. 1,269,600 5. What is the adjusted book receipts in December? a. 615,000 b. 612,440 c606,760 d. 610,880 6. What is the adjusted bank disbursements in December? a. 707,960 b. 731,680 c. 691,920 d. 732,040 7. What is the adjusted book balance on December 31? a. 1,155,000 b. 1,154,800 c. 1,152,840 d. 1,158,920
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Bank Nov-30 Receipts Disbursemen ts Dec-31 Unadjusted balance 1,370,360. 00 616,240. 00 712,160.00 1,274,440. 00 146 B DIT - Nov 30,520.00 - 30,520.0 0 - Dec 32,280.0 0 32,280.00 OC - Nov - 128,280.00 - 128,280.00 - Dec 148,160.00 - 148,160.00 147 D Errors - 3,000.00 - 3,000.00 - - 360.00 360.00 Adjusted balance 1,275,600 .00 615,000. 00 731,680.00 1,158,920. 00 148 C Book Nov-30 Receipts Disbursemen ts Dec-31 Unadjusted balance 1,275,720. 00 612,440. 00 735,320.00 1,152,840. 00 145 A CM 4,120.00 4,120.00 DM - BSC - 120.00 - 120.00 Errors - - 1,960.00 1,960.00 - 1,560.00 - 1,560.00 Adjusted balance 1,275,600. 00 615,000. 00 731,680.00 1,158,920 .00 149 A 149 150 151 150 B 151 D
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Reconciliation of Bank and Company Cash Amounts (Appendix 6.1) MillerCorporation’s December 31, 2019, bank statement showed a $2,049.25 balance. On thisdate, Miller’s Cash account reflected a $325.60 overdraft. In reconciling theseamounts, the following information is discovered:1. Cash on hand for undeposited sales receipts, December 31, $130.25.2. Customer NSF check returned with bank statement, $420.40.3. Cash sales of $640.25 for the week ended December 18 were recorded on thebooks. The cashier reports this amount missing, and it was not deposited in thebank.4. Note receivable of $2,500 and interest of $25 collected by the bank and notrecorded on the books.5. Deposit in transit December 31, $350.00.6. A customer check for $290.40 in payment of its account was recorded on thebooks at $940.20.7. Outstanding checks, $2,040.55. Includes a duplicate check of $70.85 to C.Brown, who notified Miller that the original was lost. Miller stopped payment onthe original check and has already…
Problem 10 You are assigned to assess the collectibility of the receivables carried in the books Goliath Company, your company's audit client. The working trial balance are prepared at December 31, 2021 showed the following balances: Notes Receivable 6,000,000 Accounts Receivable 4,000,000 In the course of your examination, you discovered the following: Notes Receivable from Company A Notes Receivable from Company B 2,000,000 3,000,000 Notes Receivable from Company C 1,000,000 No interest has yet been recorded by Goliath during 2021 on any of the notes above. Company A is undergoing bankruptcy proceedings and has negotiated for a restructuring of its notes receivable. The note was for a four-year period and interest of 10% is collectible annually. All interest accrued before 2021 has been collected. The note matured on December 31, 2021. Collection of Interest was last made on December 31, 2020. The restructuring agreement with Company A calls for annual payment of P550,000 starting…
Bank Reconciliation and Adjusting Entries (Appendix 6.1)   Instructions Chart of Accounts Labels and Amount Descriptions Bank Reconciliation General Journal         X Instructions     Odum Corporation’s cash account showed a balance of $17,200 on March 31, 2019. The bank statement balance for the same date indicated a balance of $17,916.55. The following additional information is available concerning Odum’s cash balance on March 31: • Undeposited cash on hand on March 31 amounted to $724.50. • A customer’s NSF check for $180.80 was returned with the bank statement. • A note for $2,000 plus interest of $25 was collected for Odum by the bank during March. The bank notified Odum of this collection on the bank statement. • The bank service charge for March was $15. • A deposit of $950.75 mailed to the bank on March 31 did not appear on the bank statement.   The following checks mailed to creditors had not been processed by the bank on March…
Reporting Cash on the Balance SheetYour audit of Watt Corporation discovers the following information:   Reconciled balance in First National Bank checking account $3,625.80 Reconciled balance in City National Bank checking account (40.20) Balance in First Federal savings account 35,291.00 Certificate of deposit 30,000.00 Employee's IOU 125.00 Employees' travel advances 1,640.00 Cash on hand (undeposited sales receipts) 1,432.10 Prepaid debit card 600.00 Customer's postdated check 290.40 What amount should be reported as cash on Watt's balance sheet? (Place the necessary items in the same order as they are provided in the information.) Round your answers to nearest cent, if required.
QUESTION 1 The summary of the bank column in the cash book of APINO Ltd. for the month ended October 31, 2020 is presented to you below; CASH BOOK Bal. b/d 11,000 Total Payments 54,000 Receipts 79,000 Bal. c/d 36,000   90,000   90,000           When the bank statement of the company was received on 31st October 2020, it showed a balance which differed from that of the cash book. Your investigation of the accounting records for the period reveals the following information. Bank charges of GH¢320 appear in the bank statement on 30th October 2020 but have not been recorded in the cash book.   Cheques from a customer Papa Kay totaling GH¢2,890 entered in the cash book on 29th October, 2020 were credited by the bank on 2nd November, 2020.   A cheque for GH¢ 1,000 entered in the cash book was yet to be submitted for payment by the payee.   A cheque for GH¢12, 900 drawn by APINO Ltd. To pay for a new item of plant had been mistakenly entered…
Reporting Cash on the Balance SheetYour audit of Watt Corporation discovers the following information:
Problem 1 - Prepare a bank reconciliationThe following information relates to M Park Corporation for the month of March 2022:1. Cash balance per books, March 31 was $20,647.002. Deposits in transit, March 31 were $8,140.003. The March bank service charge was $34.00 and has not been recorded by the company.4. Outstanding checks, March 31 were $3,905.005. An electronic funds transfer (EFT) collected by the bank was $590. The collection has not been recorded by M Park Corporation.6. The bank made an error and recorded a $3,000 deposit twice.7. Cash balance per bank, March 31 was $19,968.00PurposeThe purpose of this problem is to demonstrate an understanding of preparing a bank reconciliation.InstructionsAfter analyzing the data, prepare a bank reconciliation for M Park Corporation at March 31st. Reconcile the cash balance per the bank firstand list items that increase the cash balance first. Also, round amounts to two decimal places. Please provide explainations, thanks! (
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Question Content Area Thompson Corporation gathered the following reconciling information in preparing its October bank reconciliation: Cash balance per bank, 10/31 $15,965 Note receivable collected by bank 4,859 Outstanding checks 9,437 Deposits in transit 4,203 Bank service charge 201 NSF check 1,307 Using the above information, determine the cash balance per books (before adjustments) for Thompson Corporation. a.$19,316 b.$7,380 c.$14,082 d.$10,731
An entity reported the following data on December 31, 2020: Cash in bank, net of bank overdraft of P100,000 1,200,000 Petty cash, including unreplenished petty cash expenses P10,000 50,000 Accounts receivable, net customers’ accounts with credit balances of P200,000 2,000,000 Inventory, excluding unrecorded purchase of P300,000 on account in transit shipped FOB shipping point on December 31, 2020 2,500,000 Deferred charges 150,000 Accounts payable, net of suppliers’ accounts with debit balances of P400,000 3,000,000 Note payable, with annual installment of P500,000 payable every December 31 2,000,000 Accrued expenses 300,000 What amount should be reported as total current liabilities on December 31, 2020?
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