Problem Set For AR (Ctto)

Auditing Problems
P R O B L E M S E T
Mariane Jean D. Guerrero
Friday
1. The deposit in transit of LETTY COMPANY at December 31 is:
a. P 3,100 b. P 3,000 c. P 2,900 d. P 2,000
2. The outstanding checks of LETTY COMPANY at December 31 is:
a. P 2,650 b. P 1,500 c. P 2,050 d. P 2,350
3. The adjusted cash balance of LETTY COMPANY at December 31 is:
a. P 56,050 b. P 55,950 c. P 55,650 d. P 55,550
4. The cash shortage of LETTY COMPANY at December 31 is:
a. P 0 b. P 400 c. P 500 d. P 6020
01 Solution
Deposit in Transit
DIT, beg ₱ 2,000
Add: Book Receipts 93,300
Total ₱ 95,300
Less: Bank deposits 92,300
Collections from customers ₱ 3,000
Outstanding Checks
OC, Beginning ₱ 1,500
Add: Book disbursements 83,000
Total ₱ 84,500
Less: Bank disbursements 81,850
OC, End ₱ 2,650
01 Solution Adjusted Cash Balance
Book Bank
Unadjusted Balances ₱ 31,300 ₱ 54,900
Credit memos 25,000
Debit memos (70)
NSF Check (180)
Error (100)
Error 300
DIT 3,000
OC (2,650)
Total 55,950 ₱ 55,550
Cash Shortage (400)
Cash Balance ₱ 55,550
02 Solution
Book Receipts
Bank Receipts ₱ 346,000
Less: DIT, Nov. 30 ₱ 39,458
NSF Check 11,143 50,601
Book Receipts ₱ 295,399
Bank Disbursements
Bank Balance, Dec. 1 ₱ 145,000
Add: Bank Receipts, Dec. 346,000
Total ₱ 491,000
Less: Bank Balance, Dec. 31 114,500
Bank Disbursements ₱ 376,500
02 Solution
Book Disbursements
Bank Disbursements ₱ 376,500

Add: OC, Dec. 31 94,162
Total ₱ 470,662
Less: OC, Nov. 30 ₱ 67,000
NSF Check 11,143 78,143
Book Disbursements ₱ 392,519
PROBLEM 3
The following information was obtained in connection with the audit of Osmond Company’s cash account as of December
31, 2018:
Outstanding checks, Nov. 30, 2018 P 16,250
Outstanding checks, Dec. 31, 2018 12,500
Deposit in Transit, Nov. 30, 2018 12,500
Cash balance per general ledger Dec. 31, 2018 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 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 2019.
1. What is the deposit in transit on December 31, 2018?
2. What is the total amount of company checks issued in December?
3. What is the total book disbursements in December?
03 Solution
Deposit in Transit
DIT, Nov. 30 ₱ 12,500
Add: Company Collections 152,500
Total ₱ 165,000
Less: Deposits credited by Bank 145,000
DIT, Dec. 31 ₱ 20,000
Bank Disbursements
OC, Dec. 31 ₱ 12,500

Add: Checks paid by bank, Dec. 130,000
Total ₱ 142,500
Less: OC, Nov. 30 16,250
Checks issued in December ₱ 126,250
03 Solution
Book Disbursements
Checks issued in December ₱ 126,250

Add: Bank Service Charge 2,500
Book Disbursements in December ₱ 128,750
PROBLEM 4
The following table summarizes the cash receipts and disbursements of Mixjess Company for the last six months
of 2018:
Month Receipts Disbursements

July P 102,000 P 60,000
August 70,000 110,000
September 120,000 68,000
October 172,000 92,000
November 260,000 122,000
December 280,000 180,000
P 964,000 P668,000
Additional Information:
1. Bank balance, July 1, 2018 P 200,000
2. Bank balance, December 31, 2018 524,000
3. Outstanding checks, December 31, 2018
(No checks were outstanding on July 1) 42,000
4. Undeposited Receipts, December 31, 2018
(included in the December receipts) 24,000
5. Bank deposits, July 1 through December 31 914,000
Questions
1. What is the total cash shortage?
04 Solution Book Balance, July 1 ₱ 200,000
Add: Total book receipts 1,004,000
Cash Shortage Total ₱ 1,204,000
Less: Total book disbursements 632,000
Corrected Book Balance ₱ 572,000
Bank Balance, December 31 ₱ 524,000

Add: Undeposited Receipts 24,000
Total ₱ 548,000
Less: OC 42,000
Adjusted Bank balance ₱ 506,000
Corrected Book Balance (572,000)
Cash shortage ₱ (66,000)
PROBLEM 5
Excellence Co. was organized on January 2, 2018. The following items are from the company’s trial balance on December 31, 2018.
Ordinary share capital P 1,500,000

Share premium 150,000
Merchandise Inventory 69,000
Land 1,000,000
Building 1,400,000
Furniture and fixtures 367,000
Accounts Receivable 165,400
Accounts Payable 389,650
Notes payable – bank 500,000
Sales 6,235,200
Operating expenses (including depreciation
of P400,000) 1,005,150
Additional information is as follows:

Deposits in Transit, December 31 P384,660
Service Charge for December 2,000
Outstanding checks for December 31 475,000
Bank balance, December 31 892,000
Excellence Co.’s mark up on sales in 30%
Questions
1. What is the total collections from sales?
2. What is the total payment for merchandise purchases?
01 Solution
Collections from Sales

Sales ₱ 6,235,200
Less: Accounts Receivable 165,400
Collections from customers ₱ 6,069,800
Payment for Purchases
Cost of Sales ₱ 6,235,200

Add: Merchandise Inventory 69,000
TGAS ₱ 4,433,640
Less: Accounts Payable 389,650
Payments for Purchases ₱ 4,043,990
0
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Auditing Problems

Mariane Jean D. Guerrero

Bank Disbursements ₱ 376,500

The cash receipts book of December is underfooted by P2,500

OC, Dec. 31 ₱ 12,500

Checks issued in December ₱ 126,250

Month Receipts Disbursements

Bank Balance, December 31 ₱ 524,000

Ordinary share capital P 1,500,000

Additional information is as follows:

Collections from Sales

Payment for Purchases

Cost of Sales ₱ 6,235,200

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