Home > Cash (bank recon and cash shortage) - Audprob sample problem > Cash (bank recon and cash shortage) – audprob sample problem

Cash (bank recon and cash shortage) – audprob sample problem

Nasa comments kasi to. Eh since mukhang worth mabasa ng lahat, ginawa ko nang topic.
4th_Yr_AMV:

Kuya may mga tanong lang poh aq:

May pagkakaiba po b s deposit in transit s undeposited collections? Kung meron, may sign po pa ng weaknesses s internal control nila, para po kasing may nasabi yung prof namin tungkol dun…Kuya paano poh kung s problem nang proof of cash may mga nahalong working funds (PCF, purchasing fund, o kaya payroll fund)…
salamat poh

Walang pinagkaiba ang “Undeposited Collections” sa “Deposit in Transit”. If I remember it correctly, yan pa nga yung term na ginamit sa board exams namin nung nagpacompute ng cash balance.

Regarding Internal Controls, one major internal control procedure over Cash kasi ay “Cash Receipts must be deposited daily”. Any undeposited collection (especially kung matagal nang hindi nadedeposit) is a sign of an internal control weakness. Cash kasi is the asset most susceptible to misappropriation since it is the most liquid asset kaya dapat iminimize ang physical access sa cash. Malaking tulong ang Lockbox System kasi sa lockbox(post office box ito na under ng banko), pag nagbayad ang customer, doon didirecho ang bayad, hindi na dadaan sa mga empleyado ng kumpanya. Isa pa, maccredit agad yung bank account ng company kasi bank na mismo nagmamaintain ng lockbox and at the same time it “is considered an extermely effective control because company employees have no access to cash and bank employees have no access to the company’s accounting records”(Whittington, Delaney, 2009)

Sa bank recon and working funds, depende sa tanong. Kung minsan ang Payroll Fund mismo ang pinarereconcile . Kung bank recon, usually checking account naman ang nirerecon. Tapos pag tinanong ung Adjusted Cash Balance, at walang sinabing exclusion, since cash ung working funds, kasama yun sa Cash on the Balance Sheet/Adjusted Cash Balance. Pero kung ang tinatanong lang ay ang Checking Account lang, edi yung adj balance ng checking account lang.


4th_Yr_AMV:

kuya parang s kwento lang may pagkakiba para kasing ganito yung pagkakaintindi dun s discussion not necessarily ung sinabi ng prof hindi kasi ako sigurado…

Kapag undeposited collections may sign daw ng weakness ng internal control kasi ang entrada raw ng kumpanya ay parang ganito:(medyo mabilis kasi magsalita ung prof pero verify q n rin s classmate ko kung eto yung entry talaga):

Dr: Cash on Hand
Cr: AR

Tapos gagawin din kumpanya yung entry na ito pagkatapos:

Dr. Cash in Bank
Cr: Cash on Hand

Discourage daw ito kasi dapat daw diretso na sa cash in bank account kaya may mga undeposited collections pa xia…

Sa deposit in transit eto yung entrada:

Dr: Cash in Bank
Cr: AR

Deretso n sa cash in bank kaso naabutan ng cut-off date kaya lang in-transit pa.

Ung dilemma q kc kuya yung s undeposited collections may problem kasi sa bank recon dalawa yung treatment na ginawa:

Ung una bawas sa unadjusted balance ng book (diretso bawas hindi adjustment)pero tsaka kinompare dun sa bank para makuha ung shortage tapos inadd dun s adjusted balance ng bank.

Ung pangalawa inadd as adjustments s bank balance.

Parehas yung sagot sa adjusted cash balance, ung unadjusted ung dilemma q,,,anu kaya yung mas theoretically correct…

Ung s working funds kuya hahanapin q yung problem n may nahalo s proof of cash…

kuya pwede rin pa-discuss yung kiting,,,kung paano nagkakaroon ng possible defalcation of funds…

salamat poh uli…xenxia n kung makulit :) )


Oki lang po, kaya ko nga ginawa tong blog para sa mga katanungan.

Theoretically, ang assumption kasi ang Undeposited Collections ay nakareflect na sa books tapos Bank Adjustment yan. Ngayon since aud prob ito, baka sa particular na problem na yan, may hinala yung auditor ng misappropriation of cash kaya sinubukang hanapin yung cash shoratage kaya binawas sa unadjusted balance at kinumpara sa unadjusted bank balance, depende sya sa kwento ng problem. It’s better if you’ll be able to supply the problem here para madiscuss, ang aud prob kasi, maraming possibilities na kailangang i-take into consideration para masolve.


4th_Yr_AMV:

During your audit of ABC Corporation, you established the following data concerning the cash position as of December 31, 2009

Bank Credit Memo 15000
Bank Debit Memo 450
Balance per bank statement 82 200
Cash on hand and in bank, per books 72630
Outstanding Checks 12365
Cash on Hand per count 8625
Check of BAC Corporation erroneously charged by the bank 2100
Check No. 1111 for 1950 in payment to a supplier was erroneously recorded as 1590.

Solution 1:

|–Bank–||–Book–|
|-82 200-||-64 005-|
|(12 365)||-15 000-|
|–2 100-||—(450)|
|———-–||—(360)|
|——-—–||——–|
|–71935-||–78195-|

Shortage 6260
Adjusted Cash Balance 71935 + 8625 = 80 560

Solution 2:

|–Bank–||–Book–|
|-82 200-||-72 630-|
|(12 365)||-15 000-|
|–2 100-||—(450)|
|–8 625-||—(360)|
|——-—–||——–|
|–80560-||–86820-|

Shortage: 6260
Adjusted Cash Balance: 80560

Question: Unadjusted Balance, per books


Medyo Magulo ata yung post

Sol1:
Bank 82 200 – 12365 + 2100 = 71935
Book 64 005 + 15 000 – 450 -360 = 78195

Sol2:
Bank 82 200 – 12365 + 2100 + 8625
Book 72 630 + 15000 – 4500 – 360


I see what happened!!

Ang theoretically correct when it comes to the solution ay yung Solution number 1. Ang logic kasi ng solution 1:

1. Kinuha ung adjusted CASH IN BANK Balance
2. Kunyari, wala kang alam sa nangyaring stolen cash so (72,630 – 8,625) kung baga, ito yung unadjusted Cash In Bank base sa data.
3. Since yung 72,630 ay Cash in Bank AND on Hand, sinegregate yung Cash in bank and Cash on hand.
4. Nung kinompute mo pareho pababa, hindi equal yung bank at book. Mas malaki yung records kesa sa actual na naideposito.
5. So yung diperensya, since mas malaki yung narecord mo kesa sa actual na deposito, malamang napunta kung saan yun, thus the shortage.

Yung Solution number 2 naman, alternative solution. Dito, ang ginawa naman, pinagsama-sama na yung mga pera saka binilang yung kulang. Maganda tong solution na to kasi mabilis yun nga lang, yung logic, mahirap makita kasi tago.

Inassume nya, yung 8,625 ay “Deposit in Transit” kunyari. Sa particular problem na to kasi, yung 8,625 hindi naman sinabi kung idedeposit ba sa bank or hawak lang talaga dapat ng company as a working fund. Inassume nalang ng solusyon na depo in transit sya.

Ang proseso:
1. Knuha yung ADJUSTED CASH (hindi lang cash in bank, as compared dun sa sol 1) BALANCE. Ihinalo na yung Cash on Hand sa solution at inassume na Deposit in Transit.
2. Then ito yung catch sa solution na to. Since hinalo mo yung cash on hand mo sa computation as an adjustment to the bank, magsisimula ka ngayon sa 72,630 as Unadjusted Bank Balance mo (kunyari kasi wala ka pang alam na nangyaring nakawan, inosente ka pa, kaya pababa rin gagawin mong computation).
3. So, pag tinuloy-tuloy mo yung solution, magkakatalo ngayon ung makokompute mo sa books mo na Cash in Bank vs. sa Adjusted Bank Balance based on the Bank Statement.
4. Kung papansinin mo, mas malaki yung recorded sa books kumpara sa actual na naideposit lang sa bank. So lumalabas, agrabyado ka sa banko, kulang yung naideposito sa bank. So wala kang gagawin kundi iadjust yung Book balance mo from 86,820 down to 80,560 and charge the adjustment as a Shortage.

Any solution will do. Kung baga, yung sol. #2, pareho lang talaga sa logic ng Sol# 1. Iba lang ang presentation.

So, pag tinanong:

SHORTAGE = 6,260
Unadjusted BANK Balance per BOOK = 57,745
CASH ON HAND BALANCE = 8,625
CASH IN BANK BALANCE = 71,935 dapat
CORRECT CASH BALANCE = 80,560

Iba ang TOTAL Cash Balance sa CASH IN BANK lang.

Sa sol. # 2 kasi dumerecho na sa Correct Cash Balance at di na pinakita yung Cash In Bank Balance since di naman tinatanong yung Cash In Bank balance. Mas mabilis nga naman yun. yun nga lang, diba, tago yung logic.

Nagkakatalo lang kasi sa wording ng question ng problem eh. Ano ba sinagot ng prof nyo dun sa unadjusted balance per bank? Kasi kung ako ang tatanungin tapos boss ko yan, yung nasa itaas talaga ang sasabihin ko. I treated the Cash on Hand separately from the Cash in Bank. Una sa lahat kasi hindi naman nilinaw sa problem kung yung 8,625 kung DIT lang or cash on hand lang talaga eh.


Actually there’s another way of solving it, dito medyo mas kita yung logic (wag imemorize ang procedure ng pagsagot, alamin ang logic nya instead)

1. Form the Bank Recon and Compute for the correct Adjusted Bank Balance and the Unadjusted Book Balance (by working back)

Yung 57,745 ay yung UNADJUSTED Cash in Bank.

Remember sabi mayroon tayong Cash on hand AND in Bank na worth  72,630. So evidently, this amount is composed of recorded cash in the bank and recorded cash on hand. Paghiwalayin natin yun. Base sa ginawa mong recon, sa books mo bale eto ang segregation nila:

Cash in Bank : 57,745    (eto ang ginamit nating amount kasi nga based sa records mo ang pinag-uusapan natin)

Cash on Hand: 14,885 (sa records mo, eto ang nakarecord na cash on hand. Dapat pareho ito sa actual count ng cash mo)

Total Coh&b:   72,630   (eto yung cash na nakarecord sa book mo)


Punta muna tayo sa Cash on Hand:

14,885 yung nakarecord sa books mo. After ng count, ang sabi meron ka lang talagang actual na hawak na 8,625. Lumalabas ngayon, since mas malaki yung record mo kesa sa actual na hawak mo, nawawala yung worth 6,260. Thus, the Cash Shortage of 6,260

So kelangan ng proposal of an adjusting entry:


Bilangin natin ang Correct Cash Balance:

Simple and quite logical, diba? (may ganon? hehehe)

Kelangan, lalo sa Aud Prob madiskarte ang pagsagot para mabilis saka always apply Logic and syempre Accounting/Auditing Principles.

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  1. Rm
    December 29, 2009 at 6:20 pm

    Kuya Joseph, looks like someone’s using your lectures and posting them on his site. I think there’s nothing wrong with this, but, as you can see from the link below, he copied verbatim your lecture and there’s no attribution to your name. I think you should deserve credit and have the decision where to put/share your lectures.

    http://pinoyaccountancy.yolasite.com/accounting-discussions/kiting-explained

    The username’s “accountant” and the password is “elite” in case you need them to access the said site. (without the quotes)
    Just concerned. 🙂

  2. Rm
    December 29, 2009 at 6:22 pm

    or… are you the same person? Kasi its say’s his name is Mark Joseph Morales and you’re Kuya Joseph. 🙂

    • December 29, 2009 at 7:45 pm

      I see. Di ko maaccess yung site, i tried the Uname and Pword, it won’t work.

      Okay lang yun, as the heading of my blog says “to learn and to share what has been learned”

      I think poster din sya dito sa site kaya okay lang kaso natatakot lang ako, sana dito nalang sa site yung mga items para limited lang dito yung liability ko if anything goes wrong. 🙂

      Wala masyadong nappost ngayon ah, mukang bakasyong grande ang lahat ah! hehehhehe

    • December 29, 2009 at 7:59 pm

      Hindi po ako yun, isang poster din sya dito sa site 🙂

  3. 4th_Yr_AMV
    January 6, 2010 at 12:14 am

    w3w kuya…disaster yung quiz s cash…nagkamali p yung gumawa ng exam sa halip ng 6 problems lang naging 7 tuloy n doble kc yung count…parang wala aqng inaral s cash pero may nasagutan nmn aq d q nga lang alam kung tama sana pero maswerte n q kung makapasa aq dun o malapit s pasang awa ang grade q…hayzzz..pero salamat p rin s tulong..it helps…hayzzz wat an unbearable day…

    jusko receivable nmn next week…

    yung s taas “elites” yung password…and nag cite n ata xia ng reference…

    • January 6, 2010 at 6:09 pm

      Sabi ko naman, ang pinakamahirap talagang quiz sa Aud Prob ay Cash at Correcting of Errors. Kasi sakop ng “Correcting of Errors” ang buong financial accounting, hahahha! Ako nga non bagsak din sa quiz na yan at ang tanging pumasa lang sa section namin (4A1) ay yung mga so-called “halimaw” (in a positive way, haha).

      Sa mga susunod na test, madadali nalang yan. Bawi bawi lang. Sa board exam naman, Aud prob pinakamadali sa ating mga Tomasino. Hasa kasi tayo talaga sa problem solving.

      Kaya wag madidisappoint sa first quiz, nasa “relevant range’ ka pa, ika nga. Hehehehe.

      • 4th_Yr_AMV
        January 7, 2010 at 11:26 pm

        sabi nga ni ma’am empleo hindi raw correction of errors yung ginawa namin collection of errors…

  4. 4th_Yr_AMV
    January 6, 2010 at 12:57 am

    it seems that missing a single statement would cost me a lot, as in the whole problem,,,it seems a total mess…

    may item nga dun s petty cash fund ang voucher for supplies 1050 pero nung nagkaroon ng count estimated supplies 2000..d q xia gets wala nmn daw correction,,,pero s trial balance may prepaid na 15 000… anu b logical explanation dun kahit tapos na…

    • January 6, 2010 at 6:09 pm

      if you could complete the problem, i may be able to help. 🙂

      • 4th_Yr_AMV
        January 7, 2010 at 11:27 pm

        cge kuya try qng maitakas yung particular item n yan..lam mo nmn s amv pahirapan..kahit kopyahin q n lang…

      • 4th_Yr_AMV
        January 7, 2010 at 11:30 pm

        at saka nga pala kuya good luck sa exam parang may nakalagay sa side bar..:))

  5. January 8, 2010 at 5:45 pm

    4th_Yr_AMV :

    at saka nga pala kuya good luck sa exam parang may nakalagay sa side bar..:))

    Salamat! Yep, CPA Board Exam naman yan dito sa states.

  6. 4thyramvdin
    January 14, 2011 at 11:00 pm

    Nakakadiscourage nga po yung 1st quiz…I think i did well in finacct, pero bat ganun,,,Grabe lang may naka kuha pa ng 29/30, astounding.! hehe Sana mas-ok na yung mga next quizzes. Kaso cumulative po, sa mga quiz po ba masmaraming percentage yung current topic?…

    • 4thyramvdin
      January 14, 2011 at 11:02 pm

      Ano po madalas itanong sa receivables sa AP, madami padin ba sa factoring/assignment/restructuring,etc?

      • January 25, 2011 at 11:47 pm

        Yes, may mga ganong tanong din. Usually ang tanong regarding sa Aging at adjustments.

    • January 25, 2011 at 11:48 pm

      Kung Aud Prob ang tinutukoy mo, ang pinakamahirap talagang quiz ay ang first quiz, promise. Yan din ang lowest quiz ko noon sa Auditing. Pero the following quizzes went from ok to astounding din. Maganda ang turo ng AP sa atin, yan highest ko sa board noon. hehehe

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