Assignment 1.

Your client, a successful small business, has never given much attention to a sound
internal control. In its employ is Alex Coopit, the company’s cashier bookkeeper. Alex handles cash
receipts, makes small disbursements from the cash receipts, maintains accounting records, and prepares
the monthly bank reconciliation.

The bank statement for the month ended March 31, 2021, shows a cash balance of P590,000. The
following checks are outstanding on March 31, 2021:

No. 7163 P8,623

No. 7284 7,320
No. 7285 10,612
No. 8722 6,322
No. 8724 12,280
No. 8733 6,200

The company’s general ledger shows a cash balance of P696,499 on March 31, 2021.

Realizing that being the cashier-accountant of the company he can easily misappropriate collections and
conceal it, Alex removed all the cash on hand in excess of P127,301 and then prepared the following
reconciliation in an effort to conceal this theft.

Bank Reconciliation
Balance per accounting records P696,499
Add: Outstanding checks
No. 8722 P6,322
No. 8724 12,280
No. 8733 6,200 20,802
Total 717,301
Deduct: 127,301
Balance per bank statement, March 31 P690,000

1. How much was taken by the cashier-accountant?

Answer:
2. What is the amount of cash that should be on hand at March 31
Answer:

Assignment 2. FE Company, organized on March 1, 2020, has a very poor internal control system. The
company’s cashier is also its accountant. After 9 months of operations, the company’s manager suspects
that the cashier-accountant has been misappropriating company collections. You have been engaged to
audit the company’s accounts to determine the extent of fraud, if any.

You started the audit on November 15, 2020. On that date, the cash on hand per your surprise count
was P5,140. Also on that date, the bank confirmed that the balance of the company’s current account
was P26,328. Your examination of the records reveals that a check for P1,852 was outstanding on
November 15, 2020. The company’s mark up is 40% of sales.

Further examination of the company’s records reveals the following balances at November 15, 2020:
Ordinary share capital P300,000
Share premium 20,000
Real property purchased for cash 200,000
Mortgage payable 80,000
Furniture and fixtures (of the acquisition cost,
P6,000 remains unpaid as of Nov. 15) 29,000
Notes payable-bank 32,000
Accounts payable-trade 46,284
Expenses paid (excluding purchases) 60,756
Merchandise inventory at cost 93,920
Accounts receivable-trade 85,380
Total sales 340,000

1. How much was paid for inventory purchases?

Answer:
2. How much was collected from customers?
Answer:
3. How much is the cashier’s accountability at November 15,2020?
Answer:
4. What is the adjusted bank balance as of November 15,2020?
Answer:
5. The cash shortage as of November 15,2020 totaled?
Answer:

Assignment 3. You started the audit of the financial statements of ARCHIE, INC. on January 15, 2021, for
the year ended December 31, 2020. The general ledger shows cash account balance of P247,200 as at
December 31, 2020.

The following items are included in the December 31, 2020, reconciliation prepared by the cashier:
Cash per records, December 31, 2020 P247,200
Cash per bank statement, December 31, 2020 264,095
Outstanding checks 25,325
Check of Tsikoy Co., charged by bank in error on December 28,2020;
Corrected by bank on January 2,2011 750
Deposit in transit 3,500

From January 2, 2021 to January 15, 2021, the date of your cash count, total cash receipts appearing in
the cash records amounted to P53,500. During the same period, the bank had credited total deposits of
P47,965. The following cash and cash items were on hand at the close of business on January 15, 2021:
Currency P1,425
Customer’s checks 1,950
Expense vouchers 375
P3,750
Your further investigation revealed the following:
a. Cash received on account from customers:
Date Amount Entry Made
07/05/2020 P4,000 Allowance for bad debts 4,000
Accounts receivable 4,000
12/10/2020 P3,000 Inventory 3,000
Accounts receivable 3,000

12/15/2020 P3,500 Not recorded

b. Unrecorded but deposited checks received from customers from January 2,2021 to January
15,2021, totaled P2,000.
c. The cashier presented receipts for collections from customers on January 10, 2021, totaling
P4,500; these were unrecorded and undeposited.

1. What adjusting entries would you provide for items a. through c.?
Answer:
2. What is the total cash shortage as of December 31, 2020?
Answer:
3. What is the total cash shortage as of January 15, 2021?
Answer:

Assignment 4. The accountant of Santiago Company is in the process of preparing the company’s
financial statements for the year ended December 31, 2020. He is trying to determine the correct
balance of cash and cash equivalents to be reported as a current asset on the statement of financial
position. The following items are being considered:

 Balances in the company’s accounts at the Metropolitan Bank:

Current account P 81,000
Savings account P132,600
 Undeposited customer checks of P22,200 (including a customer’s check dated January 2, 2021
for P3,000)
 Currency and coins on hand of P3,480
 Savings account at the Northern Philippines Bank with a balance of P2,400,000. This account is
being used to accumulated cash for future plant expansion (in 2021)
 Petty cash of P4,000 (currency of P1,200 and unreplenished vouchers for P2,800)
 P120,000 in a current account at the Northern Philippines Bank. This represents a 20%
compensating balance for P600,000 loan with the bank. Santiago Company is legally restricted
to withdraw the funds until the loan is due in 2023.
 Treasury bills
Two-month maturity bills P90,000
Seven-month bills 120,000
 Time deposit P100,000

What is the correct balance of cash and cash equivalents to be reported in the current assets
section of the statement of financial position? Answer:
Assignment 5. The cash account of Velasco Company shows the following activities:

Date Particulars Debit Credit Balance

Nov. 30 balance P115,000
Dec. 2 November bank charges P50 114,950
Dec. 4 November bank credit for
notes receivable collected P10,000 124,950
Dec. 15 NSF check 1,300 123,650
Dec. 20 Loan Proceeds 48,500 172,150
Dec. 21 December bank charges 60 172,090
Dec. 31 Cash receipts book 707,300 879,390
Dec. 31 Cash disbursements book 408,000 471,390

CASH BOOKS
RECEIPTS PAYMENTS
Date O.R. NO. Amount Check No. Amount
12/01/2020 110-120 P11,000 801 P2,000
12/02/2020 121-136 21,300 802 3,000
12/03/2020 137-150 20,000 803 1,000
12/04/2020 151-165 56,000 804 3,000
12/05/2020 166-190 39,000 805 12,000
12/08/2020 191-210 66,000 806 19,000
12/09/2020 211-232 88,000 807 26,000
12/10/2020 233-250 77,000 808 30,000
12/11/2020 251-275 21,000 809 61,000
12/12/2020 276-300 30,000 810 7,000
12/15/2020 301-309 55,000 811 8,000
12/16/2020 310-350 8,000 812 16,000
12/17/2020 351-390 19,000 813 20,000
12/18/2020 391-420 9,000 814 22,000
12/19/2020 421-480 17,000 816 36,000
12/22/2020 481-500 21,000 817 11,000
12/23/2020 501-525 32,000 818 50,000
12/23/2020 - - 819 7,000
12/23/2020 - - 820 4,000
12/26/2020 526-555 74,000 821 3,000
12/28/2020 556-611 5,000 822 12,000
12/28/2020 - - 823 13,000
12/29/2020 612-630 38,000 824 29,000
12/29/2020 - - 825 2,000
12/29/2020 - - 826 11,000
Totals P707,300 P408,000
 BANK STATEMENT
Date Check No. Charges Credits
12/01/2020 792 P2,500 P8,500
12/02/2020 802 3,000 11,000
12/03/2020 - - 21,300
12/04/2020 804 3,000 20,000
12/05/2020 EC 81,000 81,000
12/08/2020 805 12,000 95,000
12/09/2020 CM 16 - 12,000
12/10/2020 799 7,050 154,000
12/11/2020 DM 57 1,300 77,000
12/12/2020 808 30,000 21,000
12/15/2020 803 1,000 -
12/16/2020 809 61,000 85,000
12/17/2020 DM 61 60 8,000
12/18/2020 813 20,000 19,000
12/19/2020 CM 20 - 48,500
12/22/2020 815 6,000 -
12/23/2020 816 36,000 47,000
12/23/2020 811 8,000 -
12/23/2020 801 2,000 -
12/26/2020 814 22,000 32,000
12/28/2020 818 50,000 74,000
12/28/2020 DM112 120 -
12/29/2020 821 3,000 5,000
12/29/2020 CM 36 - 12,000
12/29/2020 820 4,000 -
Totals P353,030 P831,300

Additional information:
1. DMs 61 and 112 are for service charges.
2. EC is error corrected.
3. DM 57 is for an NSF check.
4. CM 20 is for loan proceeds, net of P150 interest charges for 90 days.
5. CM 16 is for the correction of an erroneous November bank charge.
6. CM 36 is for customers’ notes collected by bank in December.
7. Bank balance on December 31 is P592,270.

1. The total outstanding checks at November 30 should be?

Answer:
2. The total outstanding checks at December 31 should be?
Answer:
3. The deposit in transit at November 30 should be?
Answer:
4. The deposit in transit at December 31 should be?
Answer:
5. The adjusted book balance at November 30 should be?
 Answer:
6. The adjusted bank receipts for the month of December should be?
Answer:
7. The adjusted book disbursements for the month of December should be?
Answer:
8. The adjusted bank balance at December 31 should be?
Answer: