Lesson 2 AP: Audit of Cash - Problem A

 Problem:

In lieu with your audit of Bonne Chance Company for the year ended December 31, 20x1, you gathered the following information:

Current account at BDO                                                          P 1,500,000
Current account at Landbank                                                         (75,000)
Payroll account                                                                              375,000
Foreign bank account - restricted (in USD)                                    15,000
Postage stamps                                                                                     750
Employee's post dated check                                                            3,000
IOU from a key officer                                                                     7,500
Credit memo from a vendor for a purchase return                         15,000
Traveler's check                                                                              37,500
Customer's not-sufficient-funds check                                           11,250
Money Orders                                                                                 22,500
Petty cash fund (P3,000 in currency and
     expense vouchers for P4,500)                                                      7,500
Treasury bills, due 3/31/20x2 (purchased 12/31/20x1)                150,000
Treasury bills, due 1/31/20x2 (purchased 1/1/20x1)                    225,000
Change fund                                                                                     2,500
Bond sinking fund                                                                        250,000

The current exchange rate as of December 31, 20x1 is at P50 for every 1 USD.

What is the total cash and cash equivalent to be reported by the company in its December 31, 20x1 Statement of Financial Position?

Solution:

Current account at BDO                                                          P 1,500,000  Cash in Bank
Current account at Landbank                                                         (75,000) Current Liability
Payroll account                                                                              375,000  Current Fund
Foreign bank account - restricted (in USD)                                    15,000   Legally Restricted
Postage stamps                                                                                     750   Office Supplies
Employee's post dated check                                                            3,000   Can't encash it yet
IOU from a key officer                                                                     7,500   Receivable from Officers
Credit memo from a vendor for a purchase return                         15,000    Purchase Returns
Traveler's check                                                                              37,500   Undeposited Check
Customer's not-sufficient-funds check                                           11,250   Restore Receivable
Money Orders                                                                                 22,500  Good as Cash
Petty cash fund (P3,000 in currency and                                                      Petty Cash on Hand
     expense vouchers for P4,500)                                                      7,500  Record as Expenses
Treasury bills, due 3/31/20x2 (purchased 12/31/20x1)                150,000  Acquired 3 months
                                                                                                                        before  maturity
Treasury bills, due 1/31/20x2 (purchased 1/1/20x1)                    225,000  Short-term Investments
Change fund                                                                                     2,500   Current Fund
Bond sinking fund                                                                        250,000   Long-term Investments

Adding up the amounts in bold format, we will arrive at P 2,090,500.
Refer to: http://nerdtayo.blogspot.com/2014/01/lesson-2-ap-audit-of-cash-and-cash.html

Sources: Financial Accounting 1 (Valix et. al), Advanced Auditing (Espenilla) & The Accounting Standards