College of Business Administration

ACTG 109A – APPLIED AUDITING

Audit of Cash and Cash Equivalents

NAME:_____________________________________________COURSE & YEAR: __________________

Problem 1
You are conducting an audit of the PRTC Company for the year ended December 31, 2012. The internal control
procedures surrounding cash transactions were not adequate. The bookkeeper-cashier handles cash receipts,
maintains accounting records, and prepares the monthly bank reconciliations. The bookkeeper-cashier prepared
the following reconciliation at the end of the year:
Balance per bank statement P350,000
Add: Deposit in transit P175,250
Note collected by bank 15,000 190,250
Total 540,250
Less outstanding checks 246,750
Balance per general ledger P293,500
In the process of your audit, you gathered the following:
 At December 31, 2012, the bank statement and general ledger showed balances of P350,000 and
P293,500, respectively.
 The cut-off bank statement showed a bank charge on January 2, 2013 for P30,000 representing
correction of an erroneous bank credit.
 Included in the list of outstanding checks were the following:
a. A check payable to a supplier, dated December 29, 2012, in the amount of P14,750, released
on January 5, 2013.
b. A check representing advance payment to a supplier in the amount of P37,210, the date of
which is January 4, 2013, and released in December, 2012.
 On December 31, 2012, the company received and recorded customer’s postdated check amounting to
P50,000.

QUESTIONS:
Based on the above and the result of your audit, answer the following:
1. The adjusted deposit in transit as at December 31, 2012 is
2. The adjusted outstanding checks as at December 31, 2012 is
3. The adjusted cash to be presented in the statement of financial position at December 31, 2012 is
4. The cash shortage as of December 31, 2012 is
5. The net adjustment to the cash account as of December 31, 2012 is

Problem 2
The cash account of the Matinik Corporation as of December 31, 2017 consists of the following:
On deposit in current account with Signos Bank P1,800,000
Cash collection not yet deposited to the bank 700,000
A customer’s check returned by the bank for insufficient fund 300,000
A check drawn by the Vice-President of the Corporation
dated January 15, 2018 140,000
A check drawn by a supplier dated December 28, 2017 for goods
returned by the corporation 120,000
A check dated May 31, 2017 drawn by the corporation against the
Palaban Bank in payment of customs duties. Since the importation did
not materialize, the check was an outstanding check in the recon-
ciliation of the Piggy Bank account 820,000
Petty Cash fund of which P10,000 is in currency; P7,200 in form of
employees’ IOUs; and P2,800 is supported by approved petty cash
vouchers for expenses all dated prior to closing of the books on
December 31, 2017 20,000
Total 3,900,000
Less: Overdraft with Palaban Bank secured by a Chattel mortgage
On the inventories 600,000
Balance per ledger P3,300,000

Required: The amount that will appear as “Cash” on December 31, 2017 Statement of Financial Position.
2,850,000

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