Audit of Cash Quiz

AUDIT OF CASH
ANSWER THE FOLLOWING
You gathered the following November 30 bank reconciliation from the cash records
of PBA Company in connection with your audit of the company’s financial
statements for the year 2020
Balance per bank 560,000
Deposit in transit 123,200
Outstanding checks ( 160,000 )
Balance per books 523,200
Results for the month of December follows:
BANK BOOKS
Balance, December 31 692,000 740,000
December deposits 400,000 464,800
December checks 320,000 248,000
December note collected
(Not included in deposits ) 80,000
December bank service charges 1,200
December NSF checks ,returned by the
Bank (recorded by bank as a charge ) 26,800
Based on the above and the result of your audit, answer the following :
1. The deposits in transit as of December 31, 2020is

a. 64,800
b. 268,000
c. 188,000
d. 108,000
2. The outstanding checks as of December 31, 2020 is

a. 72,000
b. 116,000
c. 88,000
d. 114,800
3. The adjusted cash balance as of December 31, 2020is

a. 684,800
b. 792,000
c. 844,000
d. 765,200
4. From the standpoint of good internal control, the monthly bank statements
should be reconciled by someone under the direction of
a. Controller
b. Treasurer
c. Credit manager
d. Cashier
5. For effective internal control purposes, which of the following individuals

should be responsible for amiling signed checks?
a. Receptionist
b. Accounts payable clerk
c. Payroll clerk
d. Treasurer
On January 10,2021 , you started the audit of the financial records of the PRIMA
COMPANY for the year ended December 31, 2020. From your investigation , you
discovered the following
1. The bookkeeper also acts as the cashier. On December 31, 2020, the
bookkeeper’s year end cash reconciliation contains the following items
Cash per ledger 12/31/20 491,200
Cash per bank 12/31/20 518,800
Outstanding checks 41,760
PRISA COMPANY check charge by bank in error

12/20/20 corrected by bank on 1/15/21 1,200
Cash in transit credited by bank on 1/2/21 5,760
2. The cash account balances per ledger as of 12/31/20 were :

Cash 491,200 petty cash 1,200
3. The count of the cash on hand at the close of business on January 10,2021
including the petty cash was as follows:
Currency and coins 3,080
Expense vouchers 160
Employees IOU’s dated 1/5/21 440
Customer’s checks in payment of account 2320
Total 6000
4. From January 2, 2021 to January 10, 2021 the date of your cash count, total
cash receipts appearing in the cash records were 68,800. According to the
bank statement for the period from January 2, 2021 to January 10,2021 total
deposits were 60,800.
5. On July 5, 2020, cash of 3,200 was received from an account customer , the
allowance for doubtful accounts was charged and accounts receivable
credited
6. On December 5, 2020, cash of 2,400 was received from an account customer
Inventory was charged and accounts receivable credited.
7. Cash of 5,840 received during 2020 was not recorded
8. Checks received from customers from January 2, 2021 to January 10, 2021
totaling 3,360 were not recorded but were deposited in bank
9. On July 1, 2020 the bank refunded interest of 160 because a note of the
PRIMA Company was paid before maturity. No entry had been made for the
refund.
10. In the cashier’s petty cash, there were receipts for collections from
customers on January 9, 2021, totaling 6,800. These were unrecorded and
undeposited.
11. In the outstanding checks, there is one for 400 made payable to a
trade creditor; investigation shows that this checks had been returned by the
creditor on June 14, 2020 and a new check for 800 was issued in its place,
the original check for 400 was made in error as to amount.
Based on the above and the result of your audit, answer the following
6. The correct bank balance as of December 31, 2020 is
a. 484,400
b. 484,000
c. 503,200
d. 483,200
7. The cash shortage as of December 31, 2020 is

a. 19,200
b. 18,400
c. 18,800
d. 0
8. The cash shortage for the period January 1 to 10, 2021 is
a. 13,360
b. 10,160
c. 20,320
d. 0
9. Which of the following internal control procedure will most likely prevent the
concealment of a cash shortage resulting from improper write off of a trade
accounts receivable ?
a. Write offs must be approved by a responsible office after review of credit
department recommendations and supporting evidence.
b. Write offs must be supported by an aging schedule showing that only
receivable overdue for several months have been written off
c. Write offs must be approved by the cashier who is in a position to know if
the receivables have in fact , been collected.
d. Write offs must be authorized by company field sales employees who are
in a position o determine the financial standing of the customers.
10. During your examination of a cutoff bank statement you noticed that
the majority of checks listed as outstanding at December 31 had not cleared
the bank. This would indicate
a. A high possibility of kiting
b. A high possibility of lapping
c. That the cash disbursement journal had been held open past December 31
d. That the cash disbursement journal had been closed prior to December 31.

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What is the deposits in transit as of December 31, 2020?

What is the deposits in transit as of December 31, 2020?

What is the cash shortage as of December 31, 2020?

What is the cash shortage as of December 31, 2020?

AUDIT OF CASH

ANSWER THE FOLLOWING

Balance per bank 560,000

Deposit in transit 123,200

Outstanding checks ( 160,000 )

Balance per books 523,200

Results for the month of December follows:

Balance, December 31 692,000 740,000

December deposits 400,000 464,800

December checks 320,000 248,000

December note collected

(Not included in deposits ) 80,000

December bank service charges 1,200

December NSF checks ,returned by the

Bank (recorded by bank as a charge ) 26,800

1. The deposits in transit as of December 31, 2020is

2. The outstanding checks as of December 31, 2020 is

3. The adjusted cash balance as of December 31, 2020is

5. For effective internal control purposes, which of the following individuals

Cash per ledger 12/31/20 491,200

Cash per bank 12/31/20 518,800

Outstanding checks 41,760

PRISA COMPANY check charge by bank in error

Cash in transit credited by bank on 1/2/21 5,760

2. The cash account balances per ledger as of 12/31/20 were :

Currency and coins 3,080

Expense vouchers 160

Employees IOU’s dated 1/5/21 440

Customer’s checks in payment of account 2320

7. The cash shortage as of December 31, 2020 is

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