Prob 7 The Chill Sea Corporation engaged the services of Herr Burt & Co., where you serve as the audit manager, to audit its accounts. In your examination of cash you find that the cash account represents both cash on hand and cash in bank. You further noted that there is very poor internal control of cash. Your audit covers the period ended June 30, 2021. You start the audit July 15. Upon cash count on this date, cash on hand amounted to P4,800. Examination of the cash book and other evidence of transactions disclos ed the following: 1. July collections per duplicate receipts, P18,800. 2. Total of duplicate deposit slips all dated July, P11,000 includes a deposit representing collections of June 30. 3. Cash book balance at June 30, 2021 is P46,500 representing both cash on hand and cash in bank. 4. Bank statement for June shows a balance of P42,400. 5. Outstanding checks at June 30: May checks, No. 183 for P450, and No. 198 for P1,650, June checks, No. 205 for P600, No. 254 for P400, No. 280 for P5,000, No. 302 for P900, and No. 317 for P2,500. 6. Undeposited collections at June 30, P5,000. 7. An amount of P900 representing proceeds of a clean draft on a customer was credited by bank, but is not yet taken up in the company books. 8. Bank service charges for June - P100. The company cashier presented to you the following reconciliation statement for June, 2021 which he has prepared: Balance, per books, June 30, 2017 Add: Outstanding checks: P45,600 No. 205 P600 254 400 500 280 302 700 317 1.500 Total Bank charges Undeposited collections Balance per bank, June 30, 2021 3,600 P49,200 ( 100) 1 5,100) P44,000 1. Ascertain the amount of cash shortage, if any. Submit a statement to support your answer. 2. Submit a schedule showing how the cashier attempted to cover up his shortage.
Prob 7 The Chill Sea Corporation engaged the services of Herr Burt & Co., where you serve as the audit manager, to audit its accounts. In your examination of cash you find that the cash account represents both cash on hand and cash in bank. You further noted that there is very poor internal control of cash. Your audit covers the period ended June 30, 2021. You start the audit July 15. Upon cash count on this date, cash on hand amounted to P4,800. Examination of the cash book and other evidence of transactions disclos ed the following: 1. July collections per duplicate receipts, P18,800. 2. Total of duplicate deposit slips all dated July, P11,000 includes a deposit representing collections of June 30. 3. Cash book balance at June 30, 2021 is P46,500 representing both cash on hand and cash in bank. 4. Bank statement for June shows a balance of P42,400. 5. Outstanding checks at June 30: May checks, No. 183 for P450, and No. 198 for P1,650, June checks, No. 205 for P600, No. 254 for P400, No. 280 for P5,000, No. 302 for P900, and No. 317 for P2,500. 6. Undeposited collections at June 30, P5,000. 7. An amount of P900 representing proceeds of a clean draft on a customer was credited by bank, but is not yet taken up in the company books. 8. Bank service charges for June - P100. The company cashier presented to you the following reconciliation statement for June, 2021 which he has prepared: Balance, per books, June 30, 2017 Add: Outstanding checks: P45,600 No. 205 P600 254 400 500 280 302 700 317 1.500 Total Bank charges Undeposited collections Balance per bank, June 30, 2021 3,600 P49,200 ( 100) 1 5,100) P44,000 1. Ascertain the amount of cash shortage, if any. Submit a statement to support your answer. 2. Submit a schedule showing how the cashier attempted to cover up his shortage.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Prob 7 The Chill Sea Corporation engaged the services of Herr Burt & Co., where you serve as the audit
manager, to audit its accounts. In your examination of cash you find that the cash account represents
both cash on hand and cash in bank. You further noted that there is very poor internal control of cash.
Your audit covers the period ended June 30, 2021. You start the audit July 15. Upon cash count on this
date, cash on hand amounted to P4,800. Examination of the cash book and other evidence of
transactions disclos ed the following:
1. July collections per duplicate receipts, P18,800.
2. Total of duplicate deposit slips all dated July, P11,000 includes a deposit representing collections
of June 30.
3. Cash book balance at June 30, 2021 is P46,500 representing both cash on hand and cash in bank.
4. Bank statement for June shows a balance of P42,400.
5. Outstanding checks at June 30: May checks, No. 183 for P450, and No. 198 for P1,650, June
checks, No. 205 for P600, No. 254 for P400, No. 280 for P5,000, No. 302 for P900, and No. 317
for P2,500.
6. Undeposited collections at June 30, P5,000.
7. An amount of P900 representing proceeds of a clean draft on a customer was credited by bank,
but is not yet taken up in the company books.
8. Bank service charges for June - P100.
The company cashier presented to you the following reconciliation statement for June, 2021 which he
has prepared:
Balance, per books, June 30, 2017
Add: Outstanding checks:
P45,600
No.
205
P600
254
400
280
500
302
700
317
1.500
3,600
Total
Bank charges
Undeposited collections
Balance per bank, June 30, 2021
P49,200
( 100)
1 5,100)
P44,000
1. Ascertain the amount of cash shortage, if any. Submit a statement to support your answer.
2. Submit a schedule showing how the cashier attempted to cover up his shortage.
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