AUDITING PROBLEM Cash and Cash Equivalents Practice Problems Set 1 PROBLEM You were able to gather the following from the December 31, 2011 trial balance of Rhea Inc. in connection with your audit of the company: Petty cash fund Cash on hand Cash in bank-Metrobank current Cash in bank-BDO account 1 Cash in bank-BDO account 2 Cash in bank-Coco bank savings Time deposits-BPI
50,000 1,500,000 4,000,000 3,160,000 (160,000) 4,500,000 2,000,000
The petty cash fund consisted of the following items as of December 31, 2011: Currency and coins 10,000 Employees’ vales 8,000 Currency in an envelope marked “collections for charity with names attached 6,000 Unreplenished petty cash vouchers 6,500 Check drawn by Rhea, payable to the petty cashier 20,000 Unused postage stamps 1,500 Cash on hand represents undeposited collections as of December 31, 2011 and includes the following items: a. Customer’s check for P160,000 returned by bank on December 26, 2011 due to insufficient fund but subsequently redeposited and cleared by the bank on January 3, 2012. b. Customer’s check for P80,000 dated January 2, 2012, received on December 29, 2011. c. A customer’s check for P90,000 dated June 1, 2011 received on the same date and yet to be deposited since the same has been missing. d. Postal money orders received from customers, P100,000. Included among the checks drawn by Rhea against the Metrobank current account and recorded in December 2011 are the following: a. Check written on December 29, 2011 dated January 2, 2012, delivered to payee on December 29, 2011, P160,000. b. Check written and dated December 29, 2011 and delivered to payee on January 2, 2012, P200,000. The credit balance in the BDO current account no. 2 represents checks drawn in excess of the deposit balance. These checks were still outstanding at December 31, 2011. The savings account deposit in Coco Bank has been set by the Board of Directors for acquisition of new computers. This account is expected to be disbursed in the next 3 months from the balance sheet date. The time deposit with BPI was purchased on November 1, 2011 and shall mature on November 1, 2012.
Determine the audited balances of the following: 1. Petty cash fund a. 30,000 b. 36,000 c. 10,000 2. Petty cash shortage/overage a. 4,000 short b. 5,500 short c. 2,000 over 3. Cash on hand a. 1,070,000 b. 1,170,000 c. 1,260,000 4. Cash in bank-Metrobank current a. 4,000,000 b. 4,160,000 c. 4,200,000 5. Cash and cash equivalents to be reported in the 2011 balance sheet a. 8,560,000 b. 8,566,000 c. 10,560,000
d. 24,500 d. 500 over d. 1,500,000 d. 4,360,000 d. 15,060,000
