AUDITING PROBLEM REVIEW

2ND SEMESTER, AY 2018-2019

Problem 1

The following pertains to Pau Company on December 31, 2016:

Postage stamps Php 5,000
Credit memo from a vendor for a purchase Return 100,000
Current account Kapamilya bank (Cash ledger) ( 500,000)
Current account at Kapuso bank (cash ledger) 10,000,000
Employees postdated check 20,000
Foreign bank account-restricted (in equivalent peso) 5,000,000
IOU from Finance Manager’s brother in law 50,000
Trading securities 75,000
Payroll account 2,500,000
Petty cash fund (Php20,000 in currency and
expenses receipts for Php30,000) 50,000
Postal money order 150,000
Traveler’s check 250,000
Treasury bills, due 1/31/17 (purchased 1/31/16) 1,500,000
Treasury bills, due 3/31/17 (purchased 12/31/16) 1,000,000
Treasury warrants 1,500,000

Additional information:
a. Check of Php1,000,000 in payment of accounts payable was recorded on
December 31, 2016 but mailed to suppliers on January 5, 2017.
b. Check of Php500,000 dated January 15, 2017 in payment of accounts
payable was recorded and mailed on December 31, 2016.
c. Check of Php250,000 dated January 15, 2016 in payment of accounts
payable was recorded and mailed on January 15, 2016. As of the reporting
period, the same has not been encashed by the payee and still outstanding.

How much cash and cash equivalents should Pau Company report on the December
31, 2016 statement of financial position?
a. Php15,650,000 c. Php17,170,000 e. answer not given
b. Php17,000,000 d. Php18,650,000
Current account, Kapamilya bank (Cash ledger)
(500,000)+1,000,000+500,000+250,000 1,250,000
Current account at Kapuso bank 10,000,000
Payroll account 2,500,000
Petty cash fund 20,000
Postal money order 150,000
Traveller’s check 250,000
Treasury bill purchased 12/31/16, due 3/31/17 1,000,000
Treasury warrants 1,500,000
------------------
16,670,000
==========

Problem 2
The cash account of Pau Company on December 31, 2016 has a balance of
Php4,620,000 and it consists of the following:
Balance in savings account with a bank closed by the BSP Php 720,000
Bills and coins on hand 1,055,600
Checking account balance in Kapuso bank (per bank 440,000
statement)
Credit memo from supplier’s for purchase returns 130,000
Customer’s check dated January 15, 2016 160,000
Customer’s check dated January 16, 2017 600,000
Customer’s check returned on 12/31/16 for lack of
sufficient fund 1,000,000
 IOU of an employee 8,000
Money order 16,000
Petty cash including paid cash vouchers of Php16,500 40,000
Postage stamps 2,400
Traveler’s checks 448,000
TOTAL Php 4,620,000
The correct cash and cash equivalents balance on December 31, 2016 is _______.
a. Php1,959,600 c. Php1,966,400 e. answer not given
b. Php1,966,600 d. Php1,983,100.

Balance of cash account P 4,620,000

Balance in S/A-closed bank ( 720,000)
Credit memo from supplier’s for purchase return ( 130,000)
Customer’s check dated 1/15/16 (stale check) ( 160,000)
Customer’s check dated 1/15/17 (post dated check) ( 600,000)
NSF checks ( 1,000,000)
IOU employee ( 8,000)
Vouchers-PCF ( 16,500)
Postage stamps ( 2,400)
-------------------------
P 1,983,100
==============
OR
Bills and coins P 1,055,600
Checking account in Kapuso bank 440,000
Money order 16,000
Petty cash fund 23,500
Traveller’s check 448,000
--------------------------
P 1,983,100
===============

Problem 3
In connection with your audit of Camil Company for the year ended December 31,
2016, you gathered the following:
Savings account at Kapatid Bank Php 4,000,000
Current account at Kapuso Bank ( 200,000)
Demand deposit, Kapamilya bank 2,000,000
Cash collection not yet deposited 700,000
Payroll account 1,000,000
Travel advances of Php720,000 for executive travel
for the first quarter of the next year (employee to
reimburse through salary deduction) 720,000
A separate cash fund in the amount of P6,000,000 is
restricted for the retirement of a long term debt 6,000,000
Camil Company has received a check dated
January 2, 2017 300,000
Camil Company has agreed to maintain a cash
balance at all times at Kapuso bank to ensure
future credit availability 400,000
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, 2017 140,000
A check dated May 31, 2016 drawn by the
Corporation against the kapuso Bank in payment of
custom duties. Since the importation did not
materialize , the check was returned by the customs
broker. This was an outstanding check in the
reconciliation of the Kapuso Bank account 820,000
Foreign bank account- restricted (in equivalent 2,000,000
 pesos)
Credit memo from a vendor for a purchase return 40,000
Traveler’s check 100,000
Money order 60,000
Petty cash fund (Php8,000 in currency and expense
receipts for Php11,900) 20,000
Treasury bills, due 2/28/17 (purchased 12/15/2016) 400,000

Additional information related to Demand deposit at Kapamilya Bank:

a. Check of Php200,000 in payment of accounts payable was recorded on
December 31, 2016 but mailed to suppliers on January 5, 2017.
b. Check of Php100,000 dated January 5, 2017 in payment of accounts
payable was recorded and mailed on December 31, 2016.
c. The company uses the calendar year. The cash receipts journal was held
open until January 15, 2017, during which time Php400,000 was
collected and recorded on December 31, 2016.

Based on the above information and the result of your audit. Compute for the cash and
cash equivalents that will be reported on the December 31, 2016 statement of financial
position, ______________.
Savings Account-Kapatid Bank (4,000,000-300,000) P 3,700,000
Current Account-Kapuso Bank [(200,000)+820,000
+ 200,000+100,000-400,000 = 520,000] 520,000
Demand deposit – Kapuso bank 2,000,000
Cash collection 700,000
Payroll account 1,000,000
Traveller’s check 100,000
Money order 60,000
Petty cash fund 8,000
Treasury bills purchased 12/15/16, due 2/28/17 400,000
-----------------------
P 8,488,000
==============

Problem 4

You were able to gather the following from the December 31, 2016 trial balance of Mari
Corporation in connection with your audit of the company:
Cash on hand Php 1,000,000
Petty cash fund 20,000
Kapuso bank current account 2,000,000
Kapatid bank current account No. 1 2,160,000
Kapatid bank current account No. 2 ( 160,000)
Kapamilya savings account 2,400,000
Kapamilya time deposit 1,000,000

Cash on hand includes the following items:

a. Customer’s check for Php80,000 returned by bank on December 26, 2016 due to
insufficient fund but subsequently redeposited and cleared by the bank on
January 8, 2017.
b. Customer’s check for Php40,000 dated January 2, 2017, received on December
29, 2016.
c. Postal money orders received from customers, Php60,000.

The petty cash fund considered of the following items as of December 31, 2016.
Currency and coins Php 4,000
Employees’ vales 3,200
Currency in an envelope marked “collections
for charity” with names attached 2,400
Unreplenished petty cash vouchers 2,600
Check drawn by Mari Corporation, payable
to the petty cashier 8,000
 -------------------
20,200
===========

Included among the checks drawn by Mari Corporation against the Kapuso bank
current account and recorded in December 2016 are the following:
 Check written and dated December 29, 2016 and delivered to payee on
January 2, 2017, Php160,000.
 Check written on December 27, 2016, dated January 2, 2017, delivered to
payee on December 29, 2016, Php80,000.

The credit balance in the Kapatid bank current account no. 2 represents checks drawn
in excess of the deposit balance. These checks were still outstanding at December 31,
2016.

The savings account deposit in Kapamilya Bank has been set aside by the board of
directors for acquisition of new equipment. This account is expected to be disbursed in
the next 3 months after the end of the reporting period.

Based on the above and the result of your audit, determine the adjusted balances of the
following:
1. Cash on hand
a. Php820,000 c. Php940,000 e. answer not given
b. Php1,060,000 d. Php880,000

Cash on hand per record P 1,000,000

Customer’s PDC ( 40,000)
NSF check ( 80,000)
------------------------
P 880,000
==============

2. Petty cash fund

a. Php12,000 c. Php4,000 e. answer not given
b. Php14,400 d. Php9,800

Currency and coins P 4,000

Check payable to petty cash custodian 8,000
------------------
P 12,000
==========

3. Kapuso bank current account

a. Php2,000,000 c. Php2,160,000 e. answer not given
b. Php2,240,000 d. Php2,080,000

Kapuso Bank, Current account P 2,000,000

Undelivered check 160,000
Post dated check 80,000
------------------------
P 2,240,000
==============
4. Cash and cash equivalents
a. Php5,834,400 c. Php6,104,000 e. answer not given
b. Php6,149,800 d. Php6,132,000

Cash on hand P 880,000

Petty cash fund 12,000
Kapuso Bank current account 2,240,000
Kapatid Bank Current account # 1 2,160,000
Kapatid Bank Current account # 2 ( 160,000)
Kapamilya time deposit 1,000,000
--------------------
P 6,132,000
============

Problem 5

Shown below is the bank reconciliation for Mari Company for May 2016:
Balance per bank, May 31, 2016 Php 300,000
Add: Deposits in transit 48,000
----------------------
Total Php 348,000
Less: Outstanding checks Php 56,000
Bank credit recorded
in error 20,000
-------------------- 76,000
----------------------
Cash balance per books, May 31, 2016 Php 272,000
============

The bank statement for June 2016 contains the following data:

Total deposits Php 220,000

Total charges, including an NSF check
of Php16,000 and a service charge
of Php800 192,000

All outstanding checks on May 31, 2016, including the bank credit, were cleared in the
bank in June 30, 2016.

There were outstanding checks of Php60,000 and deposits in transit of Php76,000 on

June 30, 2016.

Based on the above and the result of your audit, answer the following:

1. How much is the cash balance per bank on June 30, 2016?
a. Php308,000 c. Php328,000 e. answer not given
b. Php300,000 d. Php344,800

2. How much is the June receipts per books?

a. Php248,000 c. Php220,000 e. answer not given
b. Php192,000 d. Php296,000

3. How much is the June disbursements per books?

a. Php192,000 c. Php179,200 e. answer not given
b. Php159,200 d. Php196,000

4. How much is the cash balance per books on June 30, 2016?
a. Php300,000 c. Php360,800 e. answer not given
b. Php340,800 d. Php324,000
5. The adjusted cash in bank balance as of June 30, 2016 is
a. Php283,200 c. Php344,000 e. answer not given
b. Php324,000 d. Php392,000

June
---------------------------------
May Deposits Withdrawal June
Balances 300,000 220,000 192,000 328,000
Deposits in transit
May 48,000 ( 48,000)
June 76,000 76,000
Outstanding checks
May ( 56,000) ( 56,000)
June 60,000 ( 60,000)

Erroneous bank
Credit, May ( 20,000) ( 20,000)
-----------------------------------------------------------------------------
272,000 248,000 176,000 344,000
============================================

May CRB CDB June

Balances 272,000 248,000 159,200 360,800

NSF check 16,000 ( 16,000)

Bank service
Charge 800 ( 800)
-------------------------------------------------------------------------------
272,000 248,000 176,000 344,000
=============================================

Problem 6

In the audit of Pau Company’s cash account, you obtained the following information:

The company’s bookkeeper prepared the following bank reconciliation as of August 31,
2016:

Bank balance, Aug 31, 2016 Php 181,600

Undeposited collections 10,000
Bank charges 200
Bank collection of customer’s note ( 16,000)
Outstanding checks:
Number Amount
2059 Php 6,000
2067 10,000
2915 4,000
-------------------- ( 20,000)
----------------------
Book Balance-August 31, 2016 Php 155,800
============
Additional data are given as follows:
1. Company recordings for September:
Total collections from customers Php 330,000
Total checks drawn 196,000

2. Bank statement totals for September:

Charges 247,600
Credits 338,000
 3. Check2059 dated August 25, 2016, was entered as Php6,000 in payment
of a voucher for Php60,000. Upon examination of the checks
returned by the bank, the actual amount of the check was Php60,000.

4. Check No. 3010 dated September 22, 2016 was issued to replace a
mutilated check (No.2067), which was returned by the payee. Both
checks were recorded in the amount drawn, Php10,000 but
no entry was made to cancel check No. 2067.

5. The September bank statement included a check drawn by Mike

Company for Php3,000.

6. Undeposited collections on September 30, 2016 – Php16,000.

7. The service charge for September was Php300 which was charged by
the bank to another client.

8. The bank collected a note receivable of Php14,000 on September 27,

2016, but the collection was not received on time to be recorded
by Pau Company.

9. The outstanding checks on September 30, 2016 were:

Check No. Amount Check No. Amount
2067 Php 10,000 3015 Php 4,600
3056 2,600 3043 8,200

Based on the above and the result of your audit, determine the following:

1. Unadjusted cash balance per books as of September 30, 2016

a. Php305,600 c. Php289,800 e. answer not given
b. Php305,500 d. Php331,400

2. Adjusted cash balance as of August 31, 2016

a. Php171,600 c. Php127,600 e. answer not given
b. Php117,600 d. Php181,600

3. Adjusted book receipts for September 2016

a. Php341,000 c. Php344,000 e. answer not given
b. Php364,000 d. Php346,000

4. Adjusted bank disbursement for September 2016

a. Php240,300 c. Php250,300 e. answer not given
b. Php152,300 d. Php196,300

5. Adjusted cash balance as of September 30, 2016

a. Php265,300 c. Php275,600 e. answer not given
b. Php275,300 d. Php269,300
 September
----------------------------------
August Deposits Withdrawal September
Balances 181,600 338,000 247,600 272,000
Undeposited coll
Aug 10,000 ( 10,000)
September 16,000 16,000
Outstanding checks
Aug ( 20,000) ( 20,000)
Sept 15,400 ( 15,400)
Erroneous
Withdrawal ( 3,000) 3,000
Bank error 300 ( 300)
-------------------------------------------------------------------
171,600 344,000 240,300 275,300
======================================

August Receipts Disb September

Balances 155,800 346,000 196,200 305,600
Bank charges ( 200) ( 200)
Customer note
collected by
the bank-Aug 16,000 ( 16,000)
-Sept 14,000 14,000
Understated in
CDB(60,000-
6,000) 54,000 ( 54,000)
Mutilated checks ( 10,000) 10,000
Bank service charge 300 ( 300)
----------------------------------------------------------------------
171,600 344,000 240,300 275,300
=======================================

Problem 7

Upon examination of the petty cash fund of Kapuso Company on June 3, 2017, the
following
items were found:
Total bills and coins Php 18,250
Certified check of general manager
dated December 15, 2016 15,000
Petty cash vouchers (PCVs) not yet
replenished:
PCV No.0021 Postage stamps 2,800
PCV No.0022 Supplies 6,500
PCV No.0023 IOU employee 5,000
Company check representing replenishment
of petty cash fund 51,500
Unused stamps 1,200
An envelope containing contributions of
employees for the death of a fellow
employee (contents intact) 30,000

The petty cash fund was established for an amount of Php100,000.

1. What is the correct amount of petty cash fund at December, 2016?

a. Php99,050 c. Php69,750 e. answer not given
b. Php84,750 d. Php18,250.
(18,250+ 51,500 = 69,750)
2. What is the amount of cash shortage or overage?
a. Php950 shortage c. Php2,150 shortage
b. Php250 overage d. cannot be determined

Total per count P130,250

Accountability
(100,000+30,000) 130,000
--------------
Overage P 250
========

Problem 8

Camila Company is making a four column bank reconciliation at December 31 from the
following data. The amounts per bank statement were:
Balance November 30, Php650,000; December Receipts, Php1,300,000; December
Disbursements, Php1,100,000. The amounts per books were: Balance November 30,
Php763,500; December Receipts, Php1,154,800; December Disbursements,
Php 1,123,500; Balance, December 30, Php794,800.

November 30 December 31
Deposits in transit ? Php 150,000
Outstanding checks ? 84,000
The bank overlooked a check for Php7,500
when recording a deposit on Dec 10
Note collected by bank, recorded after
receiving the bank statement 180,000
Service charge, recorded after
receiving the bank statement 4,500 6,000
NSF checks, recorded after
receiving the bank statement 56,000 48,000
Camila recorded a Php37,400 check
received from a customer in December
as Php34,700.

1. The corrected cash balance on December 31 is _____________.

a. Php908,500 c. Php923,500 e. answer not given
b. Php916,000 d. Php1,007,500.

2. The corrected December receipts is

a. Php1,157,500 c. Php1,334,800 e. answer not given
b. Php1,330,000 d. Php1,337,500

3. The corrected amount of December disbursements is

a. Php1,083,000 c. Php1,125,000
d. Php1,117,000 d. Php1,130,000

4. Deposits in transit, November 30

a. Php120,000 c. Php127,500
b. Php240,000 d. answer not given

5. Outstanding checks , November 30

a. Php67,000 c. Php120,000
b. Php70,000 d. answer not given
 November Receipts Disbursement December
s
Balances 650,000 1,300,000 1,100,000 850,000
Deposits in transit
November 120,000 (120,000)
December 150,000 150,000
Outstanding checks
November (67,000) (67,000)
December 84,000 84,000
Bank error 7,500 7,500
703,000 1,337,500 1,117,000 923,500

Balances 763,500 1,154,800 1,123,500 794,800

Note collected 180,000 180,000
Bank service charge
November (4,500) (4,500)
December 6,000 (6,000)
NSF Checks
November (56,000) (56,000)
December 48,000 (48,000)
CRB-Under 2,700 2,700
703,000 1,337,500 1,117,000 923,500

Problem 9
Your audit of cash account of Mari Corporation reveals the following information:
(a) Savings account of P3,000,000 and commercial checking account of P1,600,000
with Metropolitan Bank and Trust Company. Balances were taken from Mari’s general
ledger.
(b) Prior to December 30, Mari left a note that matures December 31, 2018, with its
bank for collection. The note is for P400,000 and bears interest at 9%, having been
outstanding for three months. As yet, Mari has not heard from the bank about collection
but is confident of a favorable outcome because of the high credit rating of the maker of
the note. The company plans to include the P400,000 plus interest in its cash balance.
(c) Three certificates of deposit with Metro Bank, each totaling P3,000,000, with maturity
dates of 90 days and less.
(d) Three checks, dated December 31, 2018, totaling P900,000, payable to vendors
who have sold merchandise to Mari on account were not mailed by December 31,
2018. They have ben entered as payments in the check register and ledger.
(d) Money market placements with Accents Group of Companies, not intended to be
terminated until 2018, P13,000,000 face amount. Last value date was December 29,
2018; on which date, cumulative income earned on the instruments is P1,000,000.
(e) A cashier’s check of P200,000 payable to Mari Company is in the cash drawer, it is
dated December 29.
(f) Checking account with Allied Bank for payroll fund, P2,400,000 and another checking
account for tax refund, P1,500,000.
(g) Mari Company has a P20,000 petty cash fund. As of December 31, the fund cashier
reported expense vouchers covering various expenses in the amount of P16,700 and
cash of P3,200.
(h) A check for P350,000 for salaries of an employees on leave was recorded as
disbursed n December 15; the employees have not claimed the check as of December
31.
(i) Mari Company placed a P2,000,000 unit investment trust fund in the portfolio of
balanced fund with the bank in November. As of December 31, the fund has a fair value
of P2,034,000. The Chief Accountant proposes to report the P2,000,000 as “Cash in
Bank”.
(j) Savings account with Allied Bank, P1,800,000 as equipment acquisition fund,
P960,000 of which was earmarked for an equipment to be delivered in March 2019. You
were able to verify that this amount was actually disbursed in March 2019.
(k) A customer’s check for P1,000,000 was included in the December 20 deposit. It was
returned by the bank stamped “DAIF”. No entry had yet been made by Mari Company to
reflect the return.
(l) Checks from customers in settlement of account, both on sales invoices fro the
month of December 2018, totaling P850,000. The checks were verified to have been
recorded in the December cash receipts journal, although one check for P250,000 was
dated January 8, 2019. All checks proved to be good when subsequently deposited.

Problem 10

Pau Company engaged your services to audit its accounts. In your examination of cash,
you find that the Cash account represents both cash on hand and cash in bank. You
further noted that there is very poor internal control over cash.

Your audit covers the period ended December 31, 2018. You made a cash count on
January 15, 2019, and cash on hand on this date was determined to be P52,000.
Examination of the cashbooks and other evidences of transaction disclosed the
following:
 January 1 through 15, 2019 collections per duplicate receipts, P199,000.
 Total of duplicate deposit slips, all dated January 2 through 15, P110,000,
includes a deposit representing collections of December 31.
 Cash book balance on December 31, 2018 is P465,000, representing both
cash on hand and cash in bank.
 Bank statement for December shows a December 31 balance of P434,000.
 Outstanding checks at December 31:
November checks: No. 183 P 4,500
198 12,500
December Checks: No. 252 6,000
254 4,000
280 52,000
301 9,000
319 25,000
 Undeposited collections at December 31 were P48,000.
 An amount of P19,000 representing proceeds of a customer’s note was
credited by bank, but is not yet taken up in the company’s books.
 Bank service charge for December , P1,500.

The company cashier presented to you the following reconciliation statement at

December 31, 2018, which he prepared:
Balance per books, December 31, 2018 P 456,000
Add: Outstanding checks
Number 252 P 6,000
254 4,000
280 25,000
 301 900
319 15,000
----------------- 50,900
--------------------
Total P 506,900
Bank charges ( 1,500)
Undeposited collections ( 51,000)
---------------------
Balance per bank P 454,400
============

Required:
(a) Determine the amount of cash shortage as of December 31, 2018.
(b) Prepare a schedule showing how the cashier attempted to conceal his
shortage.
(c) Determine the amount of additional shortage in January 2019.
(d) Prepare the necessary audit adjusting entries at December 31, 2018.

Problem 11

You are auditing the cash in bank account of Pau Company as of December 31, 2018.
Your examination revealed the following:

From the bank statement:

Balance, December 1, 2018 P 876,750
Deposits (20) 9,153,760
Checks (64) plus debit memos ( 8,524,300)
Service charges for new checks ( 2,250)
----------------------
Balance, December 31, 2018 P 1,503,960
=============
From the company’s records:

Cash Ledger
Date Particulars Debit Credit Balance
11/1 Beginning balance P 652,070
11/30 Cash receipts 6,824,290 7,476,360
11/30 6,654,410 821,950
12/1 JB-Bank Reconciliation 38,400 783,550
12/31 Cash receipts 9,198,720 9,982,270
12/31 Cash disbursements 8,574,610 1,407,660

Your review of last month’s bank reconciliation and the current bank statement reveals
the following:
1. Outstanding checks: November 30, 2018 P 254,720
December 31, 2018 335,610

2. Deposits in transit: November 30, 2018 164,220

December 31, 2018 209,180
3. Check No. 359 for office repairs was written for P6,950 but recorded in the cash
disbursements journal as P9,650. The bank deducted the check as P6,950. The error
happened in November and is not yet corrected as of December 31.
4. A check written on the account of the Pam Company for P5,830 was deucted by the
bank from Pau’s account.
5. Included with the bank statement was a debit memorandum dated December 31 for
P24,750 for interest on a note taken out by Pau Company on November 30.
6. The service charge for the new checks has not been recorded.
7. The November 30 bank reconciliation showed as reconciling items a service charge
of P3,500 and a customer’s DAIF check for P34,900.
Required:
(a) Prepare a four-column proof of cash reconciling bank balance and balance per
books to the correct balance.
(b) Prepare the necessary audit adjusting entries.

Problem 12

The treasurer of Camil Company prepared the following correct bank reconciliation as of
April 30, 2019:
Balance per bank statement, April 30 P 570,360
Add: Deposits in transit 29,360
---------------------
P 499,720
Deduct: Outstanding checks 144,800
---------------------
Adjusted Balance P 454,920
============

Balance per ledger, April 30 P 463,040

Less: Customer’s DAIF check P 8,000
Service charges 120
----------- 8,120
----------------------
Adjusted balance P 454,920
============

The Bank statement for May shows:

Balance, May 1, 2018 P 570,360
Deposits 883,200
----------------------
P 1,353,560
Checks cleared P 1,320,320
Service charges 280
----------------- 1,320,600
----------------------
Balance, May 31, 2018 P 132,960
=============

Camil Company deposits shown on the bank statement include the proceeds of a
P240,000 note payable drawn by the treasurer of Camil Company payable to the bank
in 60 days. No entry was made for the note in the company’s books. The total cash
receipts as shown by Camil Company records amount to P654,400 and the total checks
recorded amount to P613,120. This latter does not include one check drawn and signed
by the treasurer payable to himself. The treasurer has disappeared. No record of this
check appears anywhere in the company’s records. Checks outstanding on May 31,
2019, total P133,600. The DAIF check and the service charge for April were recorded
by the company in May.
Required:
(a) By preparing a proof of cash, determine the following:
(1) the unadjusted cash balance a of May 31in the company’s record.
(2) the undeposited receipts, if any, as of May 31.
(3) the amount of the check drawn payable to the cashier; and
(4) the adjusted cash balance as of May 31.
(b) Prepare the necessary audit adjusting entries.