You are conducting an audit of the Swerte Company for the year ended December 31, 2020. The internal
control procedures surrounding cash transactions were not adequate. The bookkeeper-cashier handles cash
receipts, maintains accounting records, and prepares the monthly bank reconciliations.
The bookkeeper-cashier prepared the following reconciliation at the end of the year:
Balance per statement
350,000
Add: Deposit in transit
175,250
Note collected by bank
15,000
190,250
Total
540,250
Less: Outstanding checks
246,750
Balance per ledger
293,500
In the process of your audit, you gathered the following:
•
•
At December 31, 2020, the bank statement and general ledger showed balances of P350,000 and
P293,500, respectively.
The cut-off bank statement showed a bank charge on January 2, 2021 for P30,000 representing
correction of an erroneous bank credit.
Included in the list of outstanding checks were the following:
0
A check payable to a supplier, dated December 29, 2020, in the amount of P14,750, released
on January 5, 2021.
•
A check representing advance payment to a supplier in the amount of P37,210, the date of
which is January 4, 2021, and released in December, 2020.
•
On December 31, 2020, the company received and recorded customers' postdated check amounting to
P50,000. |
