AUDITING PROBLEMS
Quiz 01: Chapters 1-4 Instructor: J. Cayetano
1. On December 31, 2023, the Cash and Equivalent items of BYE FEU! Company shows the following
composition:
Petty cash fund (of which P750 is unreplenished vouchers for expenses; P150 is IOU notes
and remaining currencies and coins amounting to P3,500) 5,000
Cash in bank, General account A, net of P25,000 bank overdraft in the general payroll
account in a different bank 625,000
Cash in bank, General account B, including unrestricted compensating balances of P200,000 270,000
Cash in bank, General account C, per book (outstanding checks as of year-end totaled 90,000
P10,000)
Cash on hand including customers’ postdated checks of P6,000 25,000
Cash in bank, Administrator’s payroll account, after check amounting to P125,000 dated
December 31, 2023 but unreleased as of December 31, 2023 750,000
Savings deposit, earmarked for the acquisition of building which are expected to be
disbursed within 6 moths from reporting date 600,000
Cash surrender value 50,000
Cash set aside for payment of interests and dividends 20,000
Treasury bill, due 3/30/24 (purchased 12/31/23) 70,000
Treasury bill, due 1/31/24 (purchased 5/1/23) 40,000
Traveler’s and Manager’s check 10,000
Postage stamps 1,000
Bond sinking fund 100,000
How much is the correct amount of Cash and Cash Equivalents to be shown in the Statement of Financial
Position at December 31, 2023?
A. 1,997,500 B. 2,607,500 C. 2,587,500 D. 2,007,500
2. The following data pertains to Michael Trading on April 30:
Correct cash balance in a general checking account with BDO 320,000
Overdraft in a special checking account in General Bank (Michael Trading does not have
another account with General Bank) 20,000
Cash accumulated in a special fund that will be used for plant expansion in five years 150,000
Cash surrender value of life insurance policy 32,000
Currency and coins in petty cash fund (the company has not replenished the fund to the
imprest amount of P2,000) 580
How much cash should Michael report on April 30?
A. 332,580 B. 320,580 C. 322,000 D. 302,000
3. The statement of financial position of Vuitton Company shows cash of P237,390. The following items were
found to comprise this amount:
Cash in Metrobank, per bank statement (outstanding checks as of year-end totaled 99,320
P5,200)
Savings account at Far East Bank 30,800
Petty cash fund (including expense receipts of P250) 1,500
Cash on hand (undeposited sales receipts) 4,200
Sinking fund cash 20,000
Cash in foreign bank (in equivalent pesos) 62,000
Customer’s checks on hand:
Traveler’s check 4,450
Certified check 3,120
90-day, BSP treasury bills 12,000
What is the correct amount of cash and cash equivalents in Vuitton Company’s statement of financial
position?
A. 231,940 B. 211,940 C. 199,820 D. 196,820
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4. Louis Company had the following account balances at December 31, 2021:
Cash in Metrobank 1,875,000
Cash in BPI 200,000
Cash on hand (includes a customer’s check for P15,000 dated January 5, 2022 125,000
Cash restricted for acquisition of machinery (expected to be disbursed in 2022) 1,600,000
Cash in Metrobank include P300,000 of compensating balance against short-term borrowing arrangements.
The compensating balance is not legally restricted as to withdrawal by Louis. In the current asset section of
Louis’ December 31, 2021 statement of financial position, total cash should be reported at
A. 2,185,000 B. 1,885,000 C. 3,785,000 D. 3,485,000
5. San Company reported the following items on December 31, 2022:
Treasury bills – 7 months maturity P 150,000
Treasury bills – 2 months maturity 75,000
Bank A – demand deposit 67,500
Undeposited customer check 26,000
Currency and coins on hand 2,900
Savings deposit – for plant expansion 2,000,000
Bank B – demand deposit 100,000
The demand deposit in Bank B represents a 20% compensating balance for a P1,000,000 loan with the bank.
Victoria may not withdraw the balance until the loan is repaid in 2025. What amount of cash and cash
equivalents should Victoria report on December 31, 2022?
A. 171,400 C. 421,400
B. 321,400 D. 271,400
6. The following data pertain to Vinci Tear Corporation on December 31, 2021:
Traveler’s check P 50,000
Money order 20,000
Bank draft 10,000
Petty cash fund 4,000
Savings deposit in a closed bank 150,000
Current account at Bank of the Philippine Island 1,800,000
Current account at UCPB (100,000)
Payroll account 500,000
Foreign bank account (in equivalent pesos) 800,000
Postage stamps 1,000
Employee’s post-dated check 4,000
IOU from employees 10,000
Credit memo from a vendor for a purchase return 20,000
Pension fund 2,000,000
DAIF check of customer 15,000
Customer’s check dated 1/10/22 80,000
Certificate of deposit – 30 days 200,000
Commercial paper (due in 9 months) 500,000
Treasury bills, due 3/31/22 (purchased 12/31/21) 200,000
Treasury bills, due 1/31/22 (purchased 2/1/21) 300,000
The cash and cash equivalents as of December 31, 2021 is:
A. 2,784,000 C. 3,584,000
B. 3,734,000 D. 3,734,000
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7. AJC Corporation had the following items listed in its trial balance at December 31, 2020:
Currencies and coins 650
Balance in checking account 2,600
Customer checks waiting to be deposited 1,200
Treasury bills, purchased on 11/2/20, mature 4/30/21 3,000
Marketable equity securities 10,200
Commercial paper, purchased on 11/2/20, mature on 1/30/21 5,000
What amount will AJC include in its year-end statement of financial position as cash and cash equivalents?
A. 9,450 B. 7,450 C. 12,450 D. 19,650
Use the following information for the next two (2) questions:
On December 31, 2022, Giyomier Company reported cash account balance per ledger of P3,600,000:
Cash in bank – demand deposit P 1,500,000
Time deposit – 30 days 500,000
NSF check of customer 20,000
Money market placement due on June 30, 2023 1,000,000
Saving deposit 50,000
IOU from an employee 30,000
Pension fund 400,000
Petty cash fund 10,000
Customer check dated January 31, 2023 60,000
Customer check outstanding for 18 months 30,000
a. Check of P100,000 in payment of accounts payable was dated and recorded on December 31, 2022 but
mailed to creditors on January 15, 2023.
b. Check of P50,000 dated January 31, 2023 in payment of accounts payable was recorded and mailed Dec. 31,
2017.
c. The cash receipts journal was held open until January 15, 2022, during which time P200,000 was collected
and recorded on December 31, 2022.
8. What total amount should be reported as cash on December 31, 2022?
A. 1,510,000 C. 1,150,000
B. 1,650,000 D. 1,300,000
9. What total amount should be reported as cash and cash equivalents on December 31, 2022?
A. 1,510,000 C. 1,960,000
B. 1,860,000 D. 2,010,000
10. The cash account in the current asset section of the statement of financial position of Restoration Company
showed a balance of P55,500. It was found to include the following items:
Petty cash fund (P100 is in the form of paid vouchers) P 500
Checking account balance in the BPI Company, per bank statement (a P2,500
check is still outstanding) 25,500
Undeposited receipts, including a post-dated check for P500 12,000
Currencies and coins awaiting deposit 5,500
Bond sinking fund – cash 10,000
Check drawn by management, returned by bank marked NSF 2,000
The correct cash balance for Restoration Company’s statement of financial position is
A. 43,000 C. 42,400
B. 42,900 D. 40,000
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11. On January 1, 2022, Bernadette Corporation established a petty cash fund of P400. On December 31, 2022,
the petty cash fund was examined and found to have receipts and documents for miscellaneous expenses
amounting to P364. In addition, there was cash amounting to P44. What entry would be required to record
the replenishment for the petty cash fund on December 31, 2022?
A. Petty Cash 364
Cash Short or Over 8
Cash in Bank 356
B. Miscellaneous expense 364
Cash Short or Over 8
Petty Cash 356
C. Miscellaneous expense 364
Cash Short or Over 8
Cash in Bank 356
D. Miscellaneous expense 356
Cash Short or Over 8
Cash in Bank 356
Use the following information for the next two (2) questions:
A surprise count of the petty cash fund of Jing Trading on July 4, 2021 showed the following:
Currencies 5,600
Coins 450
Paid vouchers for:
Office supplies (dated July 2, 2021) 1,750
Newspaper subscription for two weeks (dated June 29, 2021) 300
Loans to employees 3,000
Company check representing replenishment of petty cash fund 3,850
The company’s fiscal year ends of June 30. The petty cash fund was established for an amount of P15,000.
12. What is the correct amount of petty cash fund at June 30, 2021?
A. 6,050 B. 9,900 C. 11,650 D. 15,000
13. How much is the shortage or overage in the petty cash fund at June 30, 2021?
A. 50 shortage B. 50 overage C. 1,800 shortage D. 1,800 overage
14. Nicole Ocampo Company established a petty cash fund of P10,000 on July 1, 2021. At the end of the month,
the count of cash on hand indicated that P3,557.40 remained in the fund. A review of petty cash vouchers
disclosed the following expenses had been incurred during the month:
Office supplies – P841.60;
Postage – P780.00;
Representation – P1,000,00;
Transportation – P1,321.40; and
Miscellaneous – P837.60
Other items found in the petty cash drawer were as follows:
• A sympathy envelope containing P3,500, representing employees’ contributions for the death of the
mother of the company’s messenger.
• An employee’s check for P1,100 dated August 15, 2021.
The given information indicates that there is a
A. 562 shortage B. 562 overage C. 538 shortage D. 538 overage
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PROBLEM 3
Hyun-Ah is the cashier of Girls’ Generation Company. You were assigned to verify the cash on hand. You started
the count at 9:00 am on January 4, 2023 in the presence of Ms. Hyun-Ah. Your count revealed the following:
Bills
Denomination Quantity Denomination Quantity
1,000 2 50 10
500 4 20 25
100 9
Coins
Denomination No. of rolls (50 pieces to a roll) Loose
10 2 7
5 4 6
1 4 0
Checks
Marker Date Payee Amount
K. Taeyeon, Manager December 22, 2022 Girls’ Generation Company 1,200
H. Tiffany, Cashier December 29, 2022 Girls’ Generation Company 800
IOUs
Maker Date Amount
K. Yuri, Janitor December 19, 2022 700
S. Seohyun, Clerk December 21, 2022 500
C. Sooyoung, Clerk December 23, 2022 300
Petty Cash Vouchers
Marker Date Account Charged Amount
L. Sunny, Messenger December 15, 2022 Advances to employees 200
2NE1 Supplies, Inc. December 18, 2022 Supplies 290
SISTAR Express December 19, 2022 Freight-in 365
4-Minute Supplies, Inc. December 20, 2022 Supplies 600
K. Hyoyeon, Plumber December 21, 2022 Repairs 900
FX Supermarket December 28, 2022 Miscellaneous expenses 308
Your audit also disclosed the following:
§ The balance of Petty cash fund per general ledger is P18,000.
§ Cash sales on January 2, 2023 totaled P17,300 per Sales book while the Cash Receipts book and bank
validated deposit slips showed that only P15,300 was deposited in the bank on January 3, 2023.
§ The following employees’ pay envelopes had been opened and the money removed. Each envelope was
marked “Unclaimed.”
Im Yoon-ah P665
Jessica Jung 495
Questions: Based on the above and result of your audit, answer the following:
15. What is the amount of cash shortage?
A. 6,797 B. 22,097 C. 3,637 D. 5,637
16. What adjusting entry should be made on December 31, 2022 to correct the Sales account?
A. Sales – P2,000 C. Cash – P15,300
Cash – P2,000 Sales – P15,300
B. Cash – P17,300 D. No adjusting entry is necessary.
Sales – P17,300
17. What adjusting entry should be made on December 31, 2022 for the unclaimed salaries?
A. Cash in bank – P1,160 C. Salaries Expense – P P1,160
Salaries Expense –P1,160 Salaries Payable – P1,160
B. Cash in bank – P1,160 D. No adjusting entry is necessary.
Salaries Payable – P1,160
18. What is the cashier’s total accountabilities?
A. 21,160 B. 18,000 C. 20,000 D. 19,160
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19. The following information is available for the Jacobs Company on March 31 of the current year:
Bank statement balance, March 31 146,570
Note collected by bank, including interest of P2,500, not yet taken up on the books 62,500
NSF check returned with the bank statement 21,260
Outstanding check as of March 31 68,470
Bank service charges for March 1,285
Credit memo for interest credited by bank for the month of March 105
What is the correct cash balance at March 31?
A. 38,145 B. 78,100 C. 78,205 D. 76,815
PROBLEM 4
The following information pertains to the cash of House-boy Company:
November 30 December 31
Balance shown on bank statement 27,380 26,960
Balance shown in general ledger before reconciling the bank account 25,780 25,000
Outstanding checks 8,630 10,150
Deposits in transit 6,850 12,450
December
Receipts shown in bank statement 55,880
Charges shown on bank statement 56,300
Cash receipts shown in company’s books 53,980
Cash payments shown in company’s books 54,760
Additional information:
a. The bank service charge was P180 in November (recorded by the company during December) and P240 in
December (not yet recorded by the company).
b. Included with the December bank statement was a check for P5,000 that had been received on December
25 from a customer on account. The returned check marked “NSF” by the bank, has not yet been recorded
on the company’s books.
c. During December the bank collected P7,500 of bond interest for the company and credited the proceeds to
the company’s account. The company earned the interest during the current accounting period but has not
yet recorded it.
d. During December the company issued a check for P6,960 for equipment. The check, which cleared the bank
during December, was incorrectly recorded by the company for P8,960.
Questions: Based on the above and the result of your audit, answer the following:
20. The adjusted cash receipts of House-boy at December 31 is:
A. 61,480 B. 53,980 C. 50,280 D. 46,480
21. The adjusted cash disbursements of House-boy at December 31 is:
A. 63,980 B. 61,980 C. 57,820 D. 54,780
22. The adjusted December 31 cash balance of House-boy is:
A. 29,760 B. 29,260 C. 27,160 D. 25,600
23. The adjusted November 31 cash balance of House-boy is:
A. 29,160 B. 27,260 C. 26,160 D. 25,600
24. The check issued but was incorrectly recorded as P8,960 should be adjusted by:
A. Accounts payable 2,000 C. Cash 2,000
Cash 2,000 Accounts payable 2,000
B. Equipment 2,000 D. Cash 2,000
Cash 2,000 Equipment 2,000
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PROBLEM 5
Nome Company has just hired you as an accounting supervisor. You are reviewing Nome’s bank reconciliations
prepared by a junior clerk, and have decided to prepare your own reconciliation first, to compare it to the clerk’s
results. You have collected the following information as of December 31, 2022:
Outstanding checks 22,000
NSF check returned by bank 1,500
Balance per bank statement on December 31 40,100
Check paid to supplier for cleaning services rendered in November 2022, which was incorrectly 5,000
recorded by the company as P5,005, but correctly included on bank statement December 15, 2022
as P5,500
Deposit made December 31, 2022 but not recorded on January bank statement 10,000
Bank service charges 40
25. The unadjusted general ledger balance as of December 31, 2022 would be how much?
A. 27,135 B. 29,145 C. 30,135 D. 56,135
26. After completing the bank reconciliation and reviewing the clerk’s bank reconciliation, you have instructed
the clerk to prepare all the journal entries necessary to correct the general ledger. The net effect of the
adjustments on 2022 net income would be how much?
A. P965 increase B. P455 increase C. P455 decrease D. P535 decrease
PROBLEM 05
The following information was provided by Luminous Inc. as of the fiscal year ended September 30, 2017:
August 31 September 30
Loans proceeds directly credited by the bank 200,000 250,000
Note payable payment by the bank 120,000 80,000
Undeposited collections 450,000 ?
Outstanding checks 180,000 ?
Total credits per bank statement 1,955,000
Total debits per bank statement 1,655,000
Total debits per books 1,795,000
Total credits per books 1,800,000
Additional information:
• A P100,000 collections were erroneously recorded twice in the books in September, the company discovered
the error and corrected the same immediately in September.
• A P50,000 disbursement check was recorded in the books as P5,000 in August. The correction was made in
September.
• The bank erroneously credited the company P80,000 in August for a collection of Illuminati Corporation. The
bank corrected the error in September.
• The unadjusted balance per book in August was P640,000. The unadjusted balance per bank in September
was at P785,000.
Questions: Based on the above and the result of your audit, answer the following:
27. What is the correct cash in bank balance as of August 31, 2017?
A. 755,000 B. 835,000 C. 675,000 D. 720,000
28. What is the correct deposit in transit as of September 30?
A. 20,000 B. 240,000 C. 290,000 D. 90,000
29. What is the correct outstanding checks as of September 30?
A. 270,000 B. 220,000 C. 595,000 D. 370,000
30. What is the correct cash in bank balance as of September 30?
A. 965,000 B. 885,000 C. 705,000 D. 805,000
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