Problem 1

The senior auditor instructed you to prepare a four column proof of cash receipts and disbursements
for the month of August 2008.
The bank reconciliation prepared by Albarando Company at July 31 is reproduced below (All book
disbursements were recorded in August)
Bank Balance

52,000

Add: Deposit in transit, July 31

900

Book Balance
40,000
Add:
Proceeds of note receivable
by bank in July
8,000
Deposit made in bank

on
Total
Less: Outstanding checks
No. 436
No. 450
No. 451
No. 454
Adjusted balance

52,900
200
1,800
1,400
600

4,000
48,900

July 31 not recorded on

books until August

Total
Less: Service Charge

1,000
49,000
100

Adjusted balance

______
48,900

Upon inquiry about the clients August 31 bank reconciliation, you were informed hat it has been lost
and that no client is too busy at this time to prepare another. Your senior auditor told you to get the
August bank statement and paid checks and to prepare the August 31 reconciliation so that you may
complete the August proof of cash.
The August bank statement is reproduced below:
Davao Bank
Account name: Albarando Company
Date
Debits
Credits
July 31
August 1
1,800
900
August 8
1,400
August 9
600
10,000
August 12
140 EC
140 EC
August 15
1,000
August 20
700
14,000
August 27
1,440
August 29
100 EC
100 EC
August 31
440 SV
August 31
300 DM
August 31
1,820
SV Service Charges; DM Debit Memos; EC Error Corrected; CM Credit Memo
The paid checks accompanying this bank statement (all clearing in August) were: (checks listed in
order of payment by bank)
No. 450
451
454

1,800
1,400
600

No. 455
456

1,000
700

No. 458
459

1,440
1,820

The checks register revealed that the last check issued on August was no. 460 for P1,000 and that
check no. 457 was for P2,400.
Cash received for the period August 21 through 31 of P9,400 was deposited in the bank on September
1.

The debit memo on August 12 and August 31 were customer DAIF checks returned by the bank. The
check on August 12 was immediately redeposited without entry. The check returned on August 31
was redeposited by the client in the bank on September 1 without entry.
Questions: Based on the application of the necessary audit procedures and appropriation of the above
daa, you are to provide the answer to the following:
1. How much is the unadjusted book receipts for August?
a. P 25,140
b. 42,400
c. P 35,540
2. How much is the unadjusted book disbursements for August?
a. P 8,460
b. P 9,740
c. P 8,760

d. P 43,360
d. P 8,360

3. How much is the adjusted book receipts for August?

a. P 33,640
b. P 33,450
c. P 34,400

d. P 33,400

4. How much is the adjusted book disbursement for August?

a. P 9,100
b. P 8,900
c. P 9,200

d. P 9,340

5. How much is the adjusted cash balance as of August 31, 2004?

a. P 73,940
b. P 73,060
c. P 73,400

d. P 73,200