On January 10, 2021 you started you started the audit of the financial records of the...
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On January 10, 2021 you started you started the audit of the financial records of the Paolo Company for the year ended December 31, 2020. From your investigation, you discovered the following: a. The bookkeeper acts also as the cashier. Her December 31, 2020, year- end cash reconciliation contained the following items: Cash per ledger, 12/31/2020 Cash per bank, 12/31/2020 Checks outstanding Yen Co. check charged by bank in error 12/20/2020; corrected by bank 01/05/2021 Cash in transit, credited by bank 01/02/2021 P 61,400.00 64,850.00 5,220.00 150.00 720.00 b. The cash account balances per ledger as of 12/31/2020 were: Cash – P 61,400.00, petty cash- P 150.00. c. The count of the cash on hand at the close of business on January 10, 2021, including the petty cash, was as follows: Currency in coin Expense vouchers Employees' IOU's dated 01/05/2021 Customers' checks in payment of account P 385.00 20.00 25.00 290.00 P 750.00 d. From January 2, 2021 to January 10, 2021, the date of your cash count, total cash receipts appearing in the cash records were P 8,600.00. According to the bank statement for the period from January 2, 2021 to January 10, 2021, total deposits were P 7,600.00. e. On July 5, 2020, cash of P 400.00 was received on account from a customer; the allowance for doubtful account was charged and accounts receivable credited. f. On December 5, 2020, cash P 300.00 was received on account from a customer, Inventory was charged, and accounts was charged and accounts was charged and accounts receivable credited. g. Cash of P 730.00 received during 2020 was not recorded. h. Checks received from customers from January 2, 2021 to January 10, 2021, totaling P 420.00, were not recorded but were deposited in the bank. i. On July 1, 2020, the bank refunded interest of P 20.00 because a note of the Paolo was paid before maturity. No entry had been made for the refund. j. In the cashier's petty cash, there were receipts for collections from customers on January 9, 2021, totaling P 850.003; these were unrecorded and undeposited. k. In the outstanding checks, there is one for P 50.00 made payable to a trade creditor; investigation shows that this check had been returned by the creditor on June 14, 2020, and a new check for P 100.00 was issued in its place, the original check for P 50.00 was made in error as to amount. Required: a. Compute the correct bank balance as of 12/31/2020. b. Compute the cash shortage as of 12/31/2020. c. Compute the cash shortage for the period 1/01/2021 to 1/10/2021. On January 10, 2021 you started you started the audit of the financial records of the Paolo Company for the year ended December 31, 2020. From your investigation, you discovered the following: a. The bookkeeper acts also as the cashier. Her December 31, 2020, year- end cash reconciliation contained the following items: Cash per ledger, 12/31/2020 Cash per bank, 12/31/2020 Checks outstanding Yen Co. check charged by bank in error 12/20/2020; corrected by bank 01/05/2021 Cash in transit, credited by bank 01/02/2021 P 61,400.00 64,850.00 5,220.00 150.00 720.00 b. The cash account balances per ledger as of 12/31/2020 were: Cash – P 61,400.00, petty cash- P 150.00. c. The count of the cash on hand at the close of business on January 10, 2021, including the petty cash, was as follows: Currency in coin Expense vouchers Employees' IOU's dated 01/05/2021 Customers' checks in payment of account P 385.00 20.00 25.00 290.00 P 750.00 d. From January 2, 2021 to January 10, 2021, the date of your cash count, total cash receipts appearing in the cash records were P 8,600.00. According to the bank statement for the period from January 2, 2021 to January 10, 2021, total deposits were P 7,600.00. e. On July 5, 2020, cash of P 400.00 was received on account from a customer; the allowance for doubtful account was charged and accounts receivable credited. f. On December 5, 2020, cash P 300.00 was received on account from a customer, Inventory was charged, and accounts was charged and accounts was charged and accounts receivable credited. g. Cash of P 730.00 received during 2020 was not recorded. h. Checks received from customers from January 2, 2021 to January 10, 2021, totaling P 420.00, were not recorded but were deposited in the bank. i. On July 1, 2020, the bank refunded interest of P 20.00 because a note of the Paolo was paid before maturity. No entry had been made for the refund. j. In the cashier's petty cash, there were receipts for collections from customers on January 9, 2021, totaling P 850.003; these were unrecorded and undeposited. k. In the outstanding checks, there is one for P 50.00 made payable to a trade creditor; investigation shows that this check had been returned by the creditor on June 14, 2020, and a new check for P 100.00 was issued in its place, the original check for P 50.00 was made in error as to amount. Required: a. Compute the correct bank balance as of 12/31/2020. b. Compute the cash shortage as of 12/31/2020. c. Compute the cash shortage for the period 1/01/2021 to 1/10/2021.
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Answer 1 60500 2 2400 3 1420 Explanation 1 Incorrect bank charges made by bank should be added to th... View the full answer
Related Book For
Principles of Managerial Finance
ISBN: 978-0133507690
14th edition
Authors: Lawrence J. Gitman, Chad J. Zutter
Posted Date:
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