Assume that you have audited accounts receivable as of 12/31/2020 and are confident that the ending balance should be $7,188,000. Further, you know that the audited balance as of 12/31/2019 was $8,462,000. You also verified cash deposits from customers through a review of the bank account. Based on that review you believe that cash receipts from customers ranges from an amount of $40,000,000 to $41,000,000. Which amount below would represent an overstatement of revenue for the year ending 12/31/2020, based on the facts above?

Assume that you have audited accounts receivable as of 12/31/2020 and are confident that the ending balance should be $7,188,000. Further, you know that the audited balance as of 12/31/2019 was $8,462,000. You also verified cash deposits from customers through a review of the bank account. Based on that review you believe that cash receipts from customers ranges from an amount of $40,000,000 to $41,000,000. Which amount below would represent an overstatement of revenue for the year ending 12/31/2020, based on the facts above?

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments

Section: Chapter Questions

Problem 21RQSC

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You are auditing Abra Inc.’s cash in bank for the year ended December 31, 2021. You assessed control risk over cash related cycles at the maximum level, thus you have decided to render an extensive substantive test procedure. As a result you ascertained the following information related to the company’s bank reconciliation items for two months: November 30 December 31 Cash per books P82,350 P221,425 Cash per bank statements 535,410 689,085 Undeposited collections 41,005 ? Outstanding checks 138,590 ? Bank service charges 3,600 3,000 Insufficient fund check 4,250 Company’s notes receivable collected by bank 359,075 404,500 The bank statement and the company’s cash records show the following totals: Checks and debit memos per bank statement, P1,091,865 Cash receipts per cash records, P1,182,260 Cash disbursements per cash records, P1,043,185 Deposits and credit memos per bank statement, P1,245,540 The…
You are auditing Abra Inc's cash in bank for the year ended December 31, 2021. You assessed control risk over cash related cycles at the maximum level, thus you have decided to render an extensive substantive test procedure. As a result you ascertained the following information related to the company's bank reconciliation items for two months: November 30 December 31 Cash per books P82,350 P221,425 Cash per bank statements 535,410 689,085 Undeposited collections 41,005 Outstanding checks 138,590 Bank service charges 3,600 3,000 Insufficient fund check 4,250 Company's notes receivable collected by bank 359,075 404,500 The bank statement and the company's cash records show the following totals: Checks and debit memos per bank statement, P1,091,865 Cash receipts per cash records, P1,182,260 Cash disbursements per cash records, P1,043,185 Deposits and credit memos per bank statement, P1,245,540 The insufficient fund check was redeposited in the same month. The company recorded the receipt…
The auditor has gathered the following information to test the accuracy of the one prepared by the controller. In particular, the auditor is testing the accuracy of the outstanding cheques. Use the following information to prepare the bank reconciliation and calculate what the total of the outstanding cheques should be. 1. Cash balance - March 31 $39,500 2. Outstanding Deposits $13,810 3. NSF cheque from a customer $750 4. Bank Statement Balance - March 31 $127,100 5. The bank recorded a deposit as $10,000 when the deposit was actually $1,000 6. The bank credited the company's bank account with $3,900 of interest earned 7. The bank statement showed an EFT from a customer for $16,300 8. The bank charged a service charge of $45 9. The company posted cheque #1730 as $890 when the actual amount was properly debited by the bank for $980 a) Outstanding Cheques= $73,095 b) Outstanding Cheques= $76,995 c) Outstanding Cheques=$82,095 d) Outstanding Cheques= $56,795
You are auditing the cash account of Vhina Inc. for the fiscal year ended July 31, 2020. The client has not prepared the July 31, bank reconciliation. The following information were made available: Audit notes: a. Bank reconciliation in June included the following information: Bank statement balance, June, P172,590; Deposits in transit, P18,000; Outstanding checks, P52,260, and; Balance per general ledger, June, P140,330. b. Checks clearing the bank in July, outstanding by the end of June was at P50,760. c. Checks clearing the bank in July and were recorded in the July cash disbursement journal was at P614,010. d. A check for P31,800 cleared the bank, but had not been recorded in the cash disbursement journal. It was for a payment of an accounts payable. e. A check for P11,880 was erroneously charged by the bank to Vhina Inc. f. Deposits included P18,000 from June and P733,680 from July. g. The bank charged Vhina Inc.'s account for a non-sufficient-fund check totaling to P9,330 The…
In the course of your audit of the financial statements of Apayao Corp. for the period ended December 31, 2021, you gathered the following information regarding the entitiy’s current account in BPI: Balances taken from the company’s general ledger: Cash balance, November 30, 2021 P629,860 Cash balance, December 31, 2021 576,420 Receipts, December 1 – 31, 2021 306,220 Balances taken from the December bank statement: Bank balance, November 30, 2021 P685,180 Bank balance, December 31, 2021 637,220 Disbursements (debit) 356,080 Outstanding checks, November 30, 2021 (P26,140 was paid by the bank in December), P72,140. Deposit in transit, November 30, 2021, P15,260. A bank credit memo was issued in December to correct an erroneous charge made in November, P1,500. Note collected by bank in December (company was not informed of the collection), P2,060. A check for P2,020 (payable to a supplier) was recorded in the Check Register in…
In the course of your audit of the financial statements of Apayao Corp. for the period ended December 31, 2021, you gathered the following information regarding the entitiy’s current account in BPI: Balances taken from the company’s general ledger: Cash balance, November 30, 2021 P629,860 Cash balance, December 31, 2021 576,420 Receipts, December 1 – 31, 2021 306,220 Balances taken from the December bank statement: Bank balance, November 30, 2021 P685,180 Bank balance, December 31, 2021 637,220 Disbursements (debit) 356,080 Outstanding checks, November 30, 2021 (P26,140 was paid by the bank in December), P72,140. Deposit in transit, November 30, 2021, P15,260. A bank credit memo was issued in December to correct an erroneous charge made in November, P1,500. Note collected by bank in December (company was not informed of the collection), P2,060. A check for P2,020 (payable to a supplier) was recorded in the Check Register in…
QUESTIONS:Based on the above and result of your audit, determine the following:The net adjustment to cash account on May 31,2018
In the course of your audit of the financial statements of Apayao Corp. for the period ended December 31, 2021, you gathered the following information regarding the entitiy’s current account in BPI: Balances taken from the company’s general ledger: Cash balance, November 30, 2021 P629,860 Cash balance, December 31, 2021 576,420 Receipts, December 1 – 31, 2021 306,220 Balances taken from the December bank statement: Bank balance, November 30, 2021 P685,180 Bank balance, December 31, 2021 637,220 Disbursements (debit) 356,080 Outstanding checks, November 30, 2021 (P26,140 was paid by the bank in December), P72,140. Deposit in transit, November 30, 2021, P15,260. A bank credit memo was issued in December to correct an erroneous charge made in November, P1,500. Note collected by bank in December (company was not informed of the collection), P2,060. A check for P2,020 (payable to a supplier) was recorded in the Check Register in…
In the course of your audit of the financial statements of Apayao Corp. for the period ended December 31, 2021, you gathered the following information regarding the entitiy's current account in BPI: • Balances taken from the company's general ledger: Cash balance, November 30, 2021 P629,860 Cash balance, December 31, 2021 576,420 Receipts, December 1 31, 2021 306,220 o Balances taken from the December bank statement: Bank balance, November 30, 2021 P685,180 Bank balance, December 31, 2021 637,220 Disbursements (debit) 356,080 Outstanding checks, November 30, 2021 (P26,140 was paid by the bank in December), P72,140. o Deposit in transit, November 30, 2021, P15,260. o A bank credit memo was issued in December to correct an erroneous charge made in November, P1,500. o Note collected by bank in December (company was not informed of the collection), P2,060. • A check for P2,020 (payable to a supplier) was recorded in the Check Register in December as P3,000. • A check for P2,240 was charged…
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You are auditing the cash account of GSP Company with a balance of P 840,000 as of December 31, 2022. On deposit in a current account with the Banco de Oro Cash collections not yet deposited to the bank A customer's check returned by the bank for insufficient fund A check drawn by the Vice President of the company dates January 15, 2023 A check drawn by a supplier dated December 28, 2022 for goods returned by GSP Petty Cash Fund of which P 12,000 is in currency; P 4,000 in form of IOUS, and P 4,0 by approved petty cash vouchers for expenses all dated prior to closing of the books 31, 2022 TOTAL Less: Overdraft with BPI secured by a chattel mortgage on the inventories Balance per ledger What is cash balance that would be reported in the statement of financial position as at December 31, 2022? O 1,208,000 O 1,182,000 O 1,220,000 O 1,350,000
QUESTIONS:Based on the above and result of your audit, determine the following: Cash receipts per bank in May