Auditing

Audit of
Cash
Presented By:
Group Members
TOPICS COVERED
Overview of Cash
Internal Controls for Cash
Assertions and Procedures
Substantive Test for Cash on Hand
Substantive Test for Cash in Bank
ASSERTIONS AND AUDIT PROCEDURE
Assertions Audit Objectives Audit Procedures
Obtain analysis of cash balance and reconcile

to the general ledger.
To determine whether cash exists at year-end Confirm bank balances as of statement of
and cash-related transactions occur within the financial position date.
year. Perform cash count procedures for cash on
Existence or
To determine that all cash balances of the hand.
Occurrence
client are reflected on the statement of Obtain (prepare) bank reconciliations as of
financial position at year-end the statement of financial position date.
Trace all transfers occurring between banks
near year-end.
Obtain a cutoff bank statement containing

transactions several days subsequent to the
statement of financial position date. Examine
items returned with the cutoff bank
statements.
To determine whether all cash transactions are Prepare proof of cash and reconcile cash
Completeness
recorded in the proper accounting period transactions occurring during a specified
period as they are recorded by the bank and
the client.
Verify the client's cutoff of cash receipts and
cash disbursements.
To determine that cash balances are available

Review bank statements and the bank replies
Rights and for use without restrictions or if with
to confirmation letters.
Obligations restrictions, properly indicated in the
statement of financial position.
Verify existence of cash in banks under

receivership, cash subject to court's
Valuation or To determine if cash is recorded and restraining order, in foreign banks and in
Allocation presented at the proper amount. foreign currency. This is in addition to the
foregoing procedures which will enable the
auditor to verify proper valuation of cash.
Investigate any checks representing large or

To determine whether cash is presented in unusual payments to related parties,
Presentation
accordance with applicable Financial Evaluate proper financial statement
and Disclosure
Reporting Standards (FRS). presentation and disclosure of cash.
CASH ON HAND
CASH COUNT
Cash count performed for cash on hand includes undeposited
cash receipts, petty cash fund, and other fund
It is conducted before or after the reporting period
Performing cash count must cover all branches of business
and, if possible, all custodians and tellers
CASH COUNT
How to perform cash count?
Conduct a surprise cash count.
Control all cash fund to prevent transfer or substitution of floats
to hide discrepancies.
Count in the presence of custodians to ensure the auditors
cannot be blamed for any shortage.
List each item on the fund showing the denominations of notes
and coins.
The custodian should sign the record as evidence of the return
of all funds
Agree the total to the cash book balance and investigate any
difference
Items counted shall be compared with the cashier’s accountability
Items counted may include the following: Cashier’s accountability may include the
following:
Currency and coins Imprest balance of the cash fund
Checks Checks or money items for payments to
Checks representing collections another
(dated and posted) Collections temporarily handled by the
Checks for disbursements custodian for remittance to the general
(entrusted to the custodians) cashier
Properly approved petty cash vouchers Other collections handled by the
evidencing payments custodian
IOUs with no supporting vouchers
Cash Shortage
If the cashier's accountability exceeds the items counted, the difference is a cash
shortage.
Cash shortages may indicate that there may have been payments made out of the fund
without properly approved petty cash vouchers or supporting documents.
Any unaccounted cash shortage requires reclassification either as a receivable from the
cashier or part of miscellaneous expenses.
Cash Overage
If the total amount of items counted exceeds the cashier's accountability, the excess is
a cash overage.
The presence of cash overage may indicate that there may have been collections not
properly identified or recorded.
Cash item representing unaccounted cash overage must be taken out of the cash fund
and deposited to the general cash in bank account of the company.
An unaccounted cash overage is generally reclassified as miscellaneous income.
Company
Name of Fund
Cash Count Date
Denomination Quantity Amount Total
BILLS P100.00 P
50.00
FRACTION DENOMINATION P5.00
1.00
TOTAL BILLS AND FRACTIONAL DENOMINATIONS
CASH ITEMS
Checks and PMO’s deposit
Vouchers not yet replenished
Advance or I.O.U.’s
Others
Amount of Fund Per Count
Amount of Fund Books or Receipts
Difference, if any
I hereby certify that the above fund of P___ was counted in my presence by ____ on ____, 20__ at
____AM/PM and the same was returned to me intact. There are no other funds for which I am
accountable for exempt as noted below:
Other Funds: (Simultaneously counted or physically controlled)
_____________________
(Signature of Cashier)
Prepared by: Reviewed by:
Initial Date Initial Date

Illustrative Problem
The following items were found in the petty cash box upon conducting a cash count of
the petty cash fund at 9:00 am on January 4, 2022:
Bills and coins

Denomination Number of pieces
P1,000.00 5
500.00 2
100.00 4
20.00 3
5.00 2
1.00 8
Checks:
Date Drawer Amount
12/20/2021 Jose, employee 1,200
12/29/2021 X Company, customer 8,000
12/29/2021 Juan, employee 2,000
01/15/2022 Jose, employee, cashed Dec. 12, 2021 4,800
IOU representing loans to A. Bautista, an employee 3,000

Vouchers:
Date Voucher no. Particulars Amount
12/15/2021 88 Office supplies 4,050
12/18/2021 89 Transportation 2,065
12/27/2021 90 Freight on merchandise sold 2,250
01/03/2022 91 Transportation 450
01/04/2022 92 Representation 670
Unused office supplies, estimated at 1,200
Unsigned pay envelope payable to Dante Sison, an employee 2,000

on leave, previously recorded as disbursed.
(opened with no money inside)
The check from X Company represents an unrecorded collection on account. It was turned over by
Cristina Sanchez, the petty cashier, to the general cashier on January 6, 2022.
The petty cash fund has an imprest balance of P25,000.
Required:
(A) Prepare a cash count sheet for ABC Company as of January 4, 2022.
(B) Prepare all the necessary audit adjusting entries as a result of the foregoing.
Requirement A:
Prepare a cash count sheet for ABC Company as of January 4, 2022.
ABC Company
Cash Count Sheet
January 4, 2022
Bills and Coins:
Denomination Number of pieces Amount
P1,000.00 5 P5,000.00
500.00 2 1,000.00
100.00 4 400.00
20.00 3 60.00
5.00 2 10.00
1.00 8 8.00 P6,478.00
CASH ITEMS
Advance or I.O.U.’s
Others
Amount of Fund Books or Receipts
Difference, if any
Requirement B:
Prepare all the necessary audit adjusting entries as a result of the foregoing.
Particulars Dr Cr
Miscellaneous Receivables - Employees Php7,800.00

Office Supplies Expense 4,050.00
Transportation Expense 2,065.00
A.
Freight Out 2,250.00
Cash Shortage 37.00
Petty Cash Fund Php16,202.00
Unused Supplies 1,200.00

B.
Cash in Bank 8,000.00

C.
Accounts Receivable 8,000.00

D.
Salaries Payable 2,000.00
Requirement B:
Particulars Dr Cr
Miscellaneous Receivables - Employees Php7,800.00

Transportation Expense 2,065.00
A.
Freight Out 2,250.00
Cash Shortage 37.00
Petty Cash Fund Php16,202.00
A Adjust the unreplenished expenses in order to state the

correct petty cash balance.
Requirement B:
Particulars Dr Cr
Unused Supplies 1,200.00

B.
B Adjust prepaid items, unused supplies, to reflect the

correct balance.
Requirement B:
Particulars Dr Cr

C.
Accounts Receivable 8,000.00
C Adjust prepaid items, unused supplies, to reflect the

correct balance.
Requirement B:
Particulars Dr Cr

D.
Salaries Payable 2,000.00
Requirement B: Complementary Petty Cash Fund Computation
Cash Items Composition of Petty Cash Fund Balance
Items Amounts
Bills and Coins as of January 4 Php6,478.00
Checks dated December 2021 (1,200+8,000+2,000) 11,200.00

Petty Cash Vouchers Dated January 2022
(Undisbursed as of December 31) (450+670) 1,120.00
Total Cash Items as of December 31 Php18,798.00
Collections from Customers (for deposit) (8,000.00)

Unreleased Salaries (must be returned to payroll envelope) (2.000.00)
Petty Cash Fund, per Audit Php8,798.00

CASH IN BANK
BANK
CONFIRMATION
When applying bank confirmations as a substantive test of
details, the auditor should send out confirmations to all
banks that the company has engaged with during the year.
The auditor should advise the entity to send a letter to all its
bankers to, directly confirm the balances to the auditor.
BANK
CONFIRMATION
BANK
RECONCILIATION
Bank Reconciliation is a schedule prepared that accounts
for the differences between cash balances per book and per
bank statement.
In the procedures of audit cash, we usually review the bank

reconciliation statement at the year-end to make sure that
client has taken into account all adjusting and reconciling
items, such as deposits in transit, outstanding check, and
bank charges, into the bank reconciliation.
BANK
RECONCILIATION
Bank reconciliations are prepared to:
01 Explain the difference between cash reported on the

bank statement and cash balance on the entity’s book.
02 Arrive at the adjusted cash balance, which is to be shown

in the financial statements.
03 Provide information for reconciling journal entries.

FORMS OF BANK
RECONCILIATION
01 Book to Bank Method
02 Bank to Book Method
03 Adjusted Balance Method

01 Book to Bank Method
Under this method, the book balance is reconciled with the bank balance or the
book balance is adjusted to equal the bank balance.
02 Bank to Book Method
Under this method, the bank balance is reconciled with the book balance or the
bank statement is adjusted to equal the book balance.
Under this method, the book balance and the bank balance are brought to the
correct cash balance that must appear on the statement of financial position.
Book Balance xx Bank Balance xx

Add: Credit Memos xx Add: Deposits in Transit xx
Less: Debit Memos xx Less: Outstanding Checks xx
Add/Less: Book Errors xx Add/Less: Bank Errors xx
Adjusted Book Balance xx Adjusted Bank Balance xx
RECONCILING
ITEMS
A transaction or item that represents a difference between
the cash records of the depositor and the bank statement
received from the bank.
A reconciling item will be added or subtracted to the bank

or book side of the reconciliation.
Book Reconciling Items
Credit Memos
These are collections or deposits made by the bank to the account of
the company but not yet recorded by the entity
Collections made by the bank on behalf of the entity.

Proceeds of bank loan credited to the account of the entity.
Matured time deposits transferred by the bank to the
current account of the depositor
Interest income credited to the account.
Book Reconciling Items
Debit Memos
These are charges and deductions made by the bank to the account of
the entity but not yet recorded by the entity.
Bank Service Charges

NSF/DAIF Checks
Reduction of Loan
Bank Reconciling Items
Deposits in Transit
These are deposits already recorded in the cash books in one period
but were taken up by the bank only on the next period.
Collections already forwarded to the bank for deposit but

too late to appear in the bank statement.
Undeposited collections awaiting delivery to the bank for
deposit
Bank Reconciling Items
Outstanding Checks
These are checks written and released to the payees and are already
recorded in the cash book but are not yet presented for encashment or
deposit to the bank.
Checks drawn and already given to payees but not yet

presented for payment.
Bank or Depositor Errors
Errors made by the company or the bank that must be for the
reconciliation to balance.
Effects of the Errors Treatment
Understatement of Cash Receipts Add on the unadjusted cash in bank balance
Overstatement of Cash Receipts Deduct from the unadjusted cash in bank balance
Understatement of Cash Disbursements Deduct from the unadjusted cash in bank balance
Overstatement of Cash Disbursements Add on the unadjusted cash in bank balance

On October 31, of the current year, the bank statement for the checking account of
ABC Company shows a balance of P126,300, while the company’s records show a
balance of P123,310. Information that might be useful in preparing a bank
reconciliation is as follows:
Bank Book
Unadjusted Balances P 126,300 P 123,310

a. Outstanding checks are 14,300 which includes a certified check for 2,000.
Bank Book
Outstanding Check, net of certified checks (P 12,300) -
Note: Certified checks are checks that the bank already certified as having sufficiency of funds and thus technically are no longer
outstanding checks.
b. The October 31 cash receipts of 7,850 are not deposited in the bank until
November 2
Bank Book
Deposit in transit P 7,850 -

c. One check written in payment of utilities for 1,370 is correctly recorded by the
bank but recorded by the company as a disbursement of 1,730.
Bank Book
Book Error- Disbursement for Utilities - P 360

d. In accordance with prior authorization, the bank debited 6,500 directly from the
checking account as payment of interest amounting to 500 and the principal
amounting to 6,000. ABC Company has not yet recorded the direct withdrawal.
Bank Book
Debit Memo - (P 6,500)

e. Bank service charges of 240 are listed on the bank statement.
Bank Book
Bank Service Charge - (P 240)

f. A deposit of 5,670 is recorded by the bank on October 31, but it did not belong to
ABC Company. the deposit should have been made to the checking account of AVC
Company, a separate company.
Bank Book
Erroneous Bank Credit (P 5,670) -

g. The bank statement includes a charge of 750 for an NSF. The check is returned
with the bank statement and the company will seek payment from the customer.
Bank Book
NSF Check - (P 750)

Unadjusted Book Balance P 123,310 Unadjusted Bank Balance P 126,300
Credit Memo - Deposit in transit 7,850
Total P 123,310 Total P 134,150
Debit Memo:
Note charged by the bank & interest (P 6,500) Outstanding Check (12,300)
NSF Check (750) Total P 121,850
Bank service charge (240) (7,490)
Total P 116,180
Error: Over Disbursement 360 Erroneous bank credit (5,670)
Adjusted Book Balance P 116,180 Adjusted Bank Balance P 116,180

Adjusting entries to be recorded in company’s books.
Cash in Bank 360

Utilities Expense 360
Notes Payable 6,000

Interest Expense 500
Cash in Bank 6,500
Bank Service Charge 240

Cash in Bank 240
Accounts Receivable 750

Cash in Bank 750
PROOF OF CASH
A proof of cash is an expanded reconciliation that includes
proof of receipts and disbursements.
Simply stated, proof of cash is a TWO-DATE BANK

RECONCILIATION.
PROOF OF CASH
Basic steps in analyzing proof of cash (FAR Approach)
01 Analyze the beginning and ending column of the format

as if it is bank reconciliation.
02 Analyze the middle columns based on the nature of the

item.
PROOF OF CASH
Current
Book Previous
Month
Receipts Disbursements
Current
Month
Unadjusted Balance XX XX XX XX
Credit Memo:
Prior Month XX (XX)
Current Month XX XX
Debit Memo:
Prior Month (XX) (XX)
Current Month XX (XX)

PROOF OF CASH
Current
Credit Memo Previous

Month
Current
Month
Proceeds from loans directly

credited by the bank:
Effect if occurred in the Prior Month US OS
Prior Month XX (XX)
Effect if occurred in the Current Month US US
Current Month XX XX
PROOF OF CASH
Current
Debit Memo Previous

Month
Current
Month
Service Charge debited by the

bank:
Effect if occurred in the Prior Month 0S OS
Effect if occurred in the Current Month US OS

PROOF OF CASH
Current
Bank Previous
Month
Current
Month
Unadjusted Balance XX XX XX XX
Deposit in Transit
Prior Month XX (XX)
Current Month XX XX
Outstanding Checks

ERRORS
Concept to remember in analyzing errors
Prior Analysis of error is based on the Journal Entry.

Month
Current Analysis of error is based on the nature of the error.

Month
PROOF OF CASH
Current
Previous Current
Errors in Receipts
Month Month
Under Receipt
Prior Month XX (XX)
Current Month XX XX
Over Receipt
Current Month (XX) (XX)

PROOF OF CASH
Current
Previous Current
Errors in Disbursements
Month Month
Under Disbursement
Over Disbursement
Prior Month XX (XX)
Current Month (XX) XX

BOOK & BANK ERRORS
1. Errors in the current month corrected in the same month (have diff.
adjustments for book and bank.)
2. Errors in the current month not yet corrected
3. Errors in the prior month corrected in the current month
4. Errors in the prior month not yet corrected in the current month
BOOK & BANK ERRORS
Concept to remember!
Whenever there is an error, the bank/book will always adjust it using an addition to either
receipts or disbursements.
Hence, if the bank/book corrects the error, the ending cash balance will always be correct
but the journey towards the ending balance is incorrect. (Receipts and disbursement are
erroneous).
BOOK & BANK ERRORS
Steps in adjusting/correcting errors in proof of cash:
Step 1: Analyze the given scenario/problem. (What are the assumptions)

Step 2: Identify what type of error occurred in the scenario. (If under/over,
receipt/disbursement, occurred prior/current month, corrected/not yet corrected)
Step 3: Plot the errors occurred
Step 4: Plot the correction made by the book/bank
Step 5: Plot the appropriate adjustments
BOOK ERRORS
Case 1:
NSF Check amounting to 3,399 returned in February. This was deposited in January.
Over Receipt in the Prior Month Corrected in the Current Month
February
Book Error January February
CR CD
Balances 20,000 30,000 5,000 45,000
Book over receipt in the prior month 3,399 3,399
Current month correction 3,399 (3,399)
Ending balances (Unadjusted) 23,399 30,000 8,399 45,000
Adjustments (3,399) (3,399)
Ending balances (Adjusted) 20,000 30,000 5,000 45,000

Note: You are supposed to make adjustments in the month when the error is brought to your attention.
BOOK ERRORS
Case 2:
NSF Check amounting to 8,900 deposited in February and returned in March.
Over Receipt in the Current Month Not Yet Corrected
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book over receipt in the current 8,900 8,900

month

BOOK ERRORS
Case 3a:
NSF check recorded as reduction of cash receipts: Returned January recorded February, 300.
Over Receipt in the Prior Month that Should be Corrected in the Prior Month but
Corrected in the Current Month.
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book over receipt in the prior month 300 300
NSF check recorded as reduction of (300) (300)

cash receipts in the current month
Adjustments (300) 300

BOOK ERRORS
Case 3b:
NSF check recorded as reduction of cash receipts: Returned February recorded February, 500
Under Receipts and Disbursements in the Current Month
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book under receipts in the current (500) (500)

month
Book under disbursements in the (500) 500

current month
Adjustments 500 500

BOOK ERRORS
Case 4:
Unrecorded disbursements January corrected in February, 800
Under Disbursements in the Prior Month Corrected in the Current Month
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book under disbursement in the prior 800 800

month
Current month correction 800 (800)
Adjustments (800) (800)

BOOK ERRORS
Case 5:
Unrecorded receipts January corrected in February, 1,000.
Under Receipts in the Prior Month Corrected in the Current Month
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book under receipt in the prior month (1,000) (1,000)
Current month correction 1,000 1,000

Adjustments 1,000 (1,000)

BOOK ERRORS
Case 6:
Unrecorded disbursements January not yet corrected in February, 1,200.
Under Disbursements in the Prior Month Not Yet Corrected in the Current Month
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book under disbursements in the prior 1,200 1,200

month

BOOK ERRORS
Case 7:
Unrecorded receipts January not yet corrected in February, 1,400.
Under Receipts in the Prior Month Not Yet Corrected in the Current mMonth
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book under receipt in the prior month (1,400) (1,400)
Adjustments 1,400 1,400

BOOK ERRORS
Case 8:
Unrecorded disbursements for the month of February, 1,600.
Under Disbursements in the Current Month Not Yet Corrected
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book under disbursements in the (1,600) 1,600

current month

BOOK ERRORS
Case 9:
Unrecorded receipts for the month of February, 1,800.
Under Receipts in the Current Month Not Yet Corrected
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book under receipt in the current (1,800) (1,800)

month

BOOK ERRORS
Case 10:
Post-dated or unreleased check of the company included as outstanding checks of the
company for the month of February, 2,000.
Over Disbursement in the Current Month Not Yet Corrected
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book over disbursements in the 2,000 (2,000)

current month
Adjustments (2,000) 2,000

BOOK ERRORS
Case 11:
Post-dated check from customer February recorded as receipts in February, 1,200.
Over Receipts in the Current Month Not Yet Corrected
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book over receipts in the current 1,200 1,200

month

BOOK ERRORS
Case 12:
Cancellation of company's checks recorded by a reduction of cash disbursements, 2,600
Under Disbursements in the Current Month Not Yet Corrected
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book under disbursements in the (2,600) 2,600

current month

BOOK ERRORS
Case 13:
Check of the company issued in January was mutilated and returned by the payee. A
replacement check was issued. Both checks were entered in the check register but no entry
was made to cancel the mutilated check, 2,700. (in addition, this should not be included as
part of the outstanding checks in January).
Over Disbursements in the Prior Month Not Yet Corrected in the Current Month.
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book over disbursements in the prior (2,700) (2,700)

month not yet corrected

BOOK ERRORS
Case 14:
Checks issued in January and included in the outstanding checks in January were recorded for
3,000 but when the bank statement was received in February the correct amount of this
check was 300. No correction was made in February. (300 should be included as outstanding
checks in January)
Over Disbursements in the Prior Month Not Yet Corrected in the Current Month.
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book over disbursements in the prior (2,700) (2,700)

month not yet corrected

BOOK ERRORS
Case 15:
The company issued a stop payment order to the bank in February which was not received by
the payee. A new check was written and recorded in the check register in February. The old
check was written off by a journal entry also in February, 3,200.
Over Disbursements in the Current Month Corrected in the Current Month.
February
CR CD
Balances 20,000 30,000 5,000 45,000
Book over disbursements in the 3,200 (3,200)

current month
Current month correction 3,200 3,200

BANK ERRORS
Case 1:
Customer's NSF check returned by bank in January and redeposited and cleared in February.
(No entry in January and February), 3,400
Over Receipt in the Prior Month and Under Receipt in the Current Month
February
Bank Error January February
CR CD
Balances 20,000 30,000 5,000 45,000
Bank over receipts in the prior month 3,400 3,400
Bank under receipts in the current

month for the redeposit and clearing (3,400) (3,400)
of Customer’s Check for January.
Adjustments (3,400) 3,400

BANK ERRORS
Case 2:
Payment directly from the collections (Paid out in currency), 1,000.
Under Receipts and Disbursements in the Current Month.
February
CR CD
Balances 20,000 30,000 5,000 45,000
Bank under receipts in the current (1,000) (1,000)

month
Bank under disbursements in the (1,000) 1,000

current month

BANK ERRORS
Case 3:
Erroneous Bank credit made in February corrected by Debit/Disbursements also in February,
3,100.
Over Receipts in the Current Month Corrected in the Current Month
February
CR CD
Balances 20,000 30,000 5,000 45,000
Bank over receipts in the current 3,100 3,100

month
Current month correction 3,100 (3,100)

BANK ERRORS
Case 4:
Customer's dishonored checks in February are recorded as reduction of cash receipts. The
dishonored checks are redeposited also in February and are recorded as regular receipts,
2,400.
Over Disbursements and Receipts in the Current Month
February
CR CD
Balances 20,000 30,000 5,000 45,000
Bank over disbursements in the 2,400 (2,400)

current month
Bank over receipt for the redeposit 2,400 2,400

and recording of dishonored checks

BANK ERRORS
Case 5:
NSF Check amounting to 2,000 returned this month and redeposited this month (no entry
was recorded in the books both on the return and redeposit)
Over Disbursements and Receipts in the Current Month
February
CR CD
Balances 20,000 30,000 5,000 45,000
Bank over disbursements in the 2,000 (2,000)

current month
Bank over receipt for the redeposit of 2,000 2,000

NSF checks

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Audit of

Assertions Audit Objectives Audit Procedures

Obtain analysis of cash balance and reconcile

Assertions Audit Objectives Audit Procedures

Obtain a cutoff bank statement containing

Assertions Audit Objectives Audit Procedures

To determine that cash balances are available

Assertions Audit Objectives Audit Procedures

Verify existence of cash in banks under

Assertions Audit Objectives Audit Procedures

Investigate any checks representing large or

Denomination Quantity Amount Total

FRACTION DENOMINATION P5.00

TOTAL BILLS AND FRACTIONAL DENOMINATIONS

Checks and PMO’s deposit

Vouchers not yet replenished

Amount of Fund Per Count

Amount of Fund Books or Receipts

Prepared by: Reviewed by:

Initial Date Initial Date

Bills and coins

IOU representing loans to A. Bautista, an employee 3,000

Unused office supplies, estimated at 1,200

Unsigned pay envelope payable to Dante Sison, an employee 2,000

The petty cash fund has an imprest balance of P25,000.

Bills and Coins:

Denomination Number of pieces Amount

1.00 8 8.00 P6,478.00

Amount of Fund Books or Receipts

Miscellaneous Receivables - Employees Php7,800.00

Unused Supplies 1,200.00

Cash in Bank 8,000.00

Cash in Bank 2,000.00

Miscellaneous Receivables - Employees Php7,800.00

A Adjust the unreplenished expenses in order to state the

Unused Supplies 1,200.00

B Adjust prepaid items, unused supplies, to reflect the

Cash in Bank 8,000.00

C Adjust prepaid items, unused supplies, to reflect the

Cash in Bank 2,000.00

Bills and Coins as of January 4 Php6,478.00

Checks dated December 2021 (1,200+8,000+2,000) 11,200.00

Total Cash Items as of December 31 Php18,798.00

Collections from Customers (for deposit) (8,000.00)

Petty Cash Fund, per Audit Php8,798.00

In the procedures of audit cash, we usually review the bank

01 Explain the difference between cash reported on the

02 Arrive at the adjusted cash balance, which is to be shown

03 Provide information for reconciling journal entries.

02 Bank to Book Method

03 Adjusted Balance Method

Book Balance xx Bank Balance xx

A reconciling item will be added or subtracted to the bank

Collections made by the bank on behalf of the entity.

Bank Service Charges

Collections already forwarded to the bank for deposit but

Checks drawn and already given to payees but not yet

Effects of the Errors Treatment

Understatement of Cash Receipts Add on the unadjusted cash in bank balance

Overstatement of Cash Disbursements Add on the unadjusted cash in bank balance