Financial Accounting & Reporting AIRIVERA

Cash & Cash Equivalents

2017-001
Postdated checks received
1. You received a customers’ checks totaling P100,000. What is the entry to
record the receipt of the checks?
2. At the end of the reporting period, you determined that a customer’s check
of P20,000 included in the collections is postdated. What is the adjusting
entry of this transaction?
3. How much would be reported as cash in the financial statements?

Unused Credit Line

4. You applied for a line of credit of P100M in a bank. During the year, you
borrowed P70M borrowed. How much is to be reported as cash?

Unreleased checks drawn and postdated checks drawn

5. You write the following checks today:
a. Check #1 is drawn for P10,000 and dated today but yet to be delivered to
payee Mr. A next year
b. Check #2 is drawn for P15,000 and was delivered to payee Mr. B today but
the check is dated 100 years from now

If financial statements are prepared today, what would be the treatment on

the above transactions?

Cash Equivalents
6. AIR Co. holds the following short-term investments as of December 2015:

 1-year Treasury bill maturing on March 30, 2016 acquired only on July 1,
2015
 1-year Treasury bill maturing on March 30, 2016 acquired on December 31
2015.

Which of the investments may qualify as cash equivalent?

7. At year end, MBA Co reported cash and cash equivalents which comprised the
following:

Cash on hand 700,000

Demand deposit 4,200,000
Certificate of deposit 2,200,000
Postdated customer check 500,000
Petty cash fund 250,000
Traveler's check 400,000
Manager's check 300,000
Money order 350,000

What total amount should be reported as “cash” at year end?

Cash Balance
8. The books of AIR Co. show the following balances at December 31, 2015

Cash on hand 100,000

Cash in Bank – Current Account 350,000
Cash in Bank – Peso Savings Account 2,000,000
Cash in Bank – Dollar Deposit (Unrestricted) $100,000
Cash in Bank – Dollar Deposit (Restricted) 20,000
Cash in Money Market Account 250,000
6-month Time Deposit $60,000
Treasury Bill, purchased 12/1/2015, maturing
800,000
on 02/28/2016
Treasury Bill, purchased 03/01/2015, maturing
500,000
on 02/28/2016

Albert I. Rivera, CPA, MBA, CRA

 Treasury Note 200,000
Unused Credit Line 2,000,000
Redeemable preference shares, purchased
370,000
12/01/2015 due on 03/01/2016
Treasury shares, purchased 12/15/2016, to be
50,000
reissued on 03/05/2015
Sinking Fund 200,000

Additional information:
 Cash on hand includes a P20,000 check payable to AIR Co. dated January
10, 2016
 During December 2015, checks amounting to P60,000 and P40,000 were drawn
against Cash in Bank – current account in payment of accounts payable.
The P60,000 check is dated January 15, 2016. The P40,000 check is dated
December 31, 2016 but was delivered to the payee only on a January 15,
2016
 The Cash in Bank – peso savings deposit includes a deposit in escrow in
the amount of P340,000 and a compensating balance amount to P250,000 which
is legally restricted
 The Cash in Bank – dollar deposit (unrestricted) account includes interest
of 2,000, net of tax, directly credited to AIR Co.’s account. The exchange
rate at year –end is $1 is to P40.

Compute for the amount of cash and cash equivalents

Bank Overdraft
9. The cash balance of AIR Co. comprises the following:

Cash on hand 150,000

Cash in Bank – Savings BPI 250,000
Cash in Bank – Current BPI (130,000)
Cash in Bank – Deposit in Escrow -
100,000
Metrobank
Cash in Bank – Current - Metrobank (70,000)
Cash in Bank – Current - BDO 80,000

Additional information:
 Cash on hand includes undeposited collections P70,000
 The cash in bank – savings maintained at BPI includes a P100,000
compensating balance which is not restricted.

Compute for the amount of cash to be reported in the financial statements.

10. ABC Company reported that the cash account per ledger had a balance of 31
December 2015 of P4,835,000 which consisted of the following:

Petty cash fund 94,000

Undeposited receipts, including a postdated 1,290,000
customer check for P140,000

Bond sinking fund 920,000

Vouchers paid out of collection, not yet recorded 113,000
IOUs signed by employees, taken from collections 103,000

What amount should be reported as cash as of 31 December 2015?

11. PC had the following balances on 31 December 2015:

Cash in bank - current account 5,200,000

Cash in bank - payroll account 1,200,000
Cash on hand 700,000

Albert I. Rivera, CPA, MBA, CRA

 Cash in bank - restricted account for building 3,200,000
construction expected to be disbursed in 2016
Time deposit, purchased on 15 December 2015 and 2,200,000
due on 15 March 2016

The cash on hand included a P400,000 check payable to PC dated 15 January

2016.

What total amount should be reported as cash and cash equivalents on 31

December 2015?

12. Inigo Company provided the following information with respect to the cash
and cash equivalents on 31 December 2015:

Checking account at First Bank (overdraft) (250,000)

Checking account at Second Bank 3,550,000
Treasury Bonds 1,050,000
Payroll account 550,000
Foreign bank account - unrestricted (in equivalent
pesos) 2,050,000
Postage stamps 100,000
Employee's postdated check 350,000
IOU from president 800,000
Traveler's check 350,000
NSF customer check 200,000
Petty cash fund - comprising P70,000 in currency
and expenses receipts for P80,000 150,000
Money order 230,000

What amount should be reported as unrestricted cash?

13. On 31 December 2015, Renaissance Company reported cash of P3,350,000 with

the following items:

Undeposited collections 60,000

Cash in bank - BDO checking account 500,000
Cash in bank - PNB (overdraft) (50,000)

Undeposited NSF check received from customer,

dated 01 December 2015 15,000
Undeposited check from a customer, dated 15
January 2016 25,000
Cash in Bank - BDO fund for payroll 150,000
Cash in Bank - BDO savings deposit 100,000
Cash in Bank - BDO money market instrument, 90
days 2,000,000
Cash in foreign bank restricted 100,000
Sinking fund cash 450,000

On 31 December 2015, what total amount should be reported as cash and cash
equivalents?

14. Worthy Company reported a total cash and cash equivalent of P3,325,000 on 31
December 2014, which include the following:
 Two certificate of deposits, each totaling P250,000.
These certificates of deposit have a maturity of 120 days.
 A check that is dated 12 January 2015 in the amount of P125,000
 A commercial paper of P2,100,000 which is due in 120 days
 Currency and coins on hand amounted to P100,000

Albert I. Rivera, CPA, MBA, CRA

 Worth Company has agreed to maintain a cash balance of P500,000 in one of
its banks at all times and it is not available for withdrawal and to ensure
future credit availability (this amount was included in the above balance)

How much is the correct amount of cash and cash equivalents that Worthy
Capital should report in its 31 December 2014 statement of financial
position?

15. Tango Company reported petty cash fund which comprised the following:

Coins and currency 3,300

Paid vouchers:
Transportation 600
Gasoline 400
Office supplies 500
Postage stamps 300
Due from employees 1,200
Manager's check returned by
bank marked "NSF" 1,000
Check drawn by the entity to 2,700
the order of petty cash
custodian
A sheet of paper with names of 5,000
several employees together
with the contribution for a
birthday gift of a co-
employee. Attached is a sheet
of paper is a currency of

What is the correct amount of petty cash fund for the statement presentation
purposes?

16. Tsinelas Company has the following balances on 31 December 2015:

Cash in checking account 500,000

Cash in money market account 900,000
Treasury bill, purchased on 01
Nov 2015 maturing on 31 Jan 3,650,000
2016
Time deposit purchased on 01
Dec 2015 maturing on 31 March 4,150,000
2016

What amount should be reported as cash and cash equivalents on 31 December

2015?

17. Yankee Company provided the following information on 31 December 2015.

Petty cash fund 100,000

Current account - First Bank 4,050,000
Current account - Second Bank (overdraft) (200,000)
Money market placement - Third Bank 1,050,000
Time Deposit - Fourth Bank 2,050,000

 The petty cash fund included unreplenished December 2015 petty cash
expense vouchers for P15,000 and an employee check for P5,000 dated 31
January 2016.
 A check for P100,000 was drawn against First Bank current account dated
and recorded December 29, 2015 but delivered to payee on 15 January 2016.
 The Fourth Bank time deposit is set aside for land acquisition in early
January 2016.

What total amount should be reported as cash and cash equivalents on 31

December 2015?

Albert I. Rivera, CPA, MBA, CRA

18. RC had the following transactions all throughout the year 2014 which is its
first year of operations

Sales (90% collected in first year) 1,500,000

Bad debt written-off 60,000
Disbursement for cost and expenses 1,200,000
Disbursement for income taxes 90,000
Purchases of fixed assets 400,000
Depreciation of fixed assets 80,000
Proceeds from issuance of ordinary share 500,000
Proceeds from short-term borrowings 100,000
Payments on short-term borrowings 50,000

What is the cash balance at 31 December 2014?

19. On 31 December 2015, EC reported cash account balance per ledger of

P3,600,000 which included the following:

Cash in bank - demand deposit 1,500,000

Time deposit - 30 days 500,000
NSF check of customer 20,000
Money market placement due on 30 June 2016 1,000,000
Saving deposit 50,000
IOU from an employee 30,000
Pension fund 400,000
Petty cash fund 10,000
Customer check dated 31 January 2016 60,000
Customer check outstanding for 18 months 30,000

 Check of P100,000 in payment of accounts payable was dated and recorded

on 31 December 2015 but mailed to creditors on 15 January 2016.
 Check of P500,000 dated 31 January 2016 in payment of accounts payable
was recorded and mailed 31 December 2015
 The cash receipts journal was held open until 15 January 2016, during
which time P200,000 was collected and recorded on 31 December 2015

What total amount should be reported as cash and cash equivalents on 31

December 2015?

20. Electric Company reported the following information at the current year end:
 Investment securities of P1,000,000. These securities are share
investments in entities that are traded in the Philippine Stock Exchange.
As a result, the shares are actively traded in the market.
 Investment securities of P2,000,000. These securities are government
treasury bills. The treasury bills have a 10-year term and purchased on
December 31 at which time they had 2 months to go until they mature.
 Cash of P3,400,000 in the form of coin, currency, saving account and
checking account.
 Investment securities of P1,500,000. These securities are commercial
papers. The term of the papers is 9 months and they were purchased on 31
December at which time they had 3 months to go until they mature.

What total amount should be reported as cash and cash equivalents at the
current year-end?

21. KFC provided the following information on 31 December 2015:

Albert I. Rivera, CPA, MBA, CRA

 Cash on hand 500,000
Petty cash fund 20,000
Security Bank current account 1,000,000
PNB Current account No. 1 400,000
PNB Current account No. 2 (overdraft) (50,000)
BSP treasury bill - 60 days 3,000,000

 The cash on hand include a customer postdated check of P100,000 and postal
money order of P40,000
 A check for P200,000 was drawn against Security Bank account dated 15
January 2016, delivered to the payee and recorded 31 December 2015.

What total amount should be reported as cash and cash equivalents on 31

December 2015?

22. EC provided the following information about the composition of its cash on
31 December 2014:

 Commercial savings account of P600,000 and a commercial checking account

balance of P900,000 are held at BPI
 Money market fund account held by Citibank that permits EC to write checks
in this balance, P5,000,000
 Travel advances of P180,000 for executive travel for the first quarter of
next year (employee to pay through salary deduction)
 A separate cash fund in the amount of P1,500,000 is restricted for the
retirement of long term assets
 Petty cash fund, P10,000

What is the correct amount of cash and cash equivalents EC should report in its
31 December 2014 statement of financial position?

23. Central Company had the following account balances on 31 Dec 2015.

Petty cash fund 70,000

Cash in bank - current account 4,020,000
Cash in bank - sinking fund 2,020,000
Cash on hand 520,000
Cash in bank - restricted account for plant
1,520,000
addition and expected to be disbursed in 2016
Treasury bills 1,020,000

The petty cash fund included unreplenished Dec 2015 petty cash expense
vouchers of P30,000 and employee IOU of P25,000.

The cash on hand included a P120,000 customer check payable to Central

Company dated 15 January 2016.

In exchange for a guaranteed line of credit, the entity has agreed to maintain
a minimum balance of P220,000 in the unrestricted current bank account.

The sinking fund is set aside to settle a bond payable that is due on 30
June 2016.

What total amount should be reported as cash and cash equivalents on 31

December 2015?

24. CC provided the following information on 31 December 2015:

Cash on hand 250,000

Philippine Bank current account 5,050,000
Manila Bank current account 4,050,000
City Bank curent account (overdraft) (50,000)

Albert I. Rivera, CPA, MBA, CRA

 Asia Bank saving account for equipment
300,000
acquisition
Asia Bank time deposit, 90 days 2,050,000

Included among the checks drawn by CC against the Philippine Bank current
account and recorded in Dec 2015 are:
 Check written and dated 23 December 2015 and delivered to payee on 03
January 2016, P100,000
 Check written 26 December 2015, dated January 30, 2016 delivered to payee
on 28 December 2015, P150,000

What total amount should be reported as cash and cash equivalents on 31

December 2015?

25. The following information is shown in the accounting records of CC:

1-Jan 31-Dec
Cash 186,000 -
Accounts Receivable 201,000 273,000
Merchandise Inventory 258,000 234,000
Accounts Payable 159,000 144,000

Total sales and cost of sales for 2014 were P2,394,000 and P1,749,000,
respectively. All sales and purchases were made on credit. Various operating
expenses of P321,000 were paid in cash. Assume there were no other pertinent
transactions

What is the cash balance on 31 December 2014?

26. In preparing the 31 August 2015 bank reconciliation, AC provided the

following information.

Balance per bank 1,805,000

Deposit in transit 325,000
Return of customer's check for
insufficient fund 60,000
Outstanding checks 275,000
Bank service charge for August 10,000

On 31 August 2015, what is the adjusted cash in bank?

27. In preparing the bank reconciliation on 31 December 2015, CC provided the

following data:

Balance per bank statement 3,800,000

Deposit in transit 520,000
Amount erroneously credited by bank to CC
account 40,000
Bank service charge for December 5,000
Outstanding checks 675,000

What is the adjusted cash in bank on 31 December 2015?

28. MC provided the following data on 31 December 2015?

Balance per book 1,000,000

Bank service charges 3,000
Outstanding checks 235,000
Deposit in Transit 300,000
Customer note collected by bank 375,000
Interest on customer note 15,000

Albert I. Rivera, CPA, MBA, CRA

 Customer check returned NSF 62,000
Depositor's payment of note payable charged
250,000
to account

What is the adjusted cash in bank of 31 December 2015?

29. CC provided the following data for the purpose of reconciling cash balance
per book with the balance per bank statement on 31 December 2015:

Balance per bank statement 2,000,000

Outstanding checks, including certified check
500,000
of P100,000
Deposit in Transit 200,000
December NSF checks (of which 50,000 had been
150,000
redeposited and cleared by December 27)
Erroneous credit to CC account, representing
300,000
proceeds of loan granted to another company
Proceeds of note collected by bank for CC, net
750,000
of service charge of 20,000

What amount should be reported as cash in bank on 31 December 2015?

30. The following information pertains to Bustos Company as of December 31,

2015:

Cash balance per general ledger 15,000,000

Cash balance per bank statement 14,550,000
Checks outstanding (including certified check
1,000,000
of P100,000)
Bank service charge shown in December bank
50,000
statement
Error made by Bustos in recording a check that
cleared the bank in December (check was drawn
200,000
in December for P500,000 but recorded at
P700,000)
Deposit in transit 1,500,000

At the December 31, 2015 balance sheet cash in bank should be?

Albert I. Rivera, CPA, MBA, CRA