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Cash and Cash Equivalents

The document discusses cash and cash equivalents. It presents two problems. The first problem involves Angelic Corporation and calculates their total cash and cash equivalents as ₱1,225,000. The second problem involves Heater Company, whose cash balance was reported as ₱555,000 but included several non-cash items. After adjusting for these items, Heater Company's correct cash balance is calculated to be ₱404,000.

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Angelo Christian B. Oreñada
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253 views2 pages

Cash and Cash Equivalents

The document discusses cash and cash equivalents. It presents two problems. The first problem involves Angelic Corporation and calculates their total cash and cash equivalents as ₱1,225,000. The second problem involves Heater Company, whose cash balance was reported as ₱555,000 but included several non-cash items. After adjusting for these items, Heater Company's correct cash balance is calculated to be ₱404,000.

Uploaded by

Angelo Christian B. Oreñada
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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CHAPTER 1

CASH AND CASH EQUIVALENTS

Problem 1-1
Angelic Corporation had the following account balances at December 31,
2014:
Cash on hand and in banks ₱ 975,000
Cash restricted for additions to plant (expected to
be disbursed in 2016) 600,000
Bank certificates of deposit (due January 16, 2015) 250,000

In the current assets section of Angelic’s December 31, 2014 statement of financial
position, what is the total amount that should be reported under the caption “Cash
and Cash Equivalents”?
Answer: ₱ 1,225,000

Cash on hand and in banks ₱ 975,000


Bank certificate of deposit 250,000
Total cash and cash equivalents ₱ 1,225,000

This study source was downloaded by 100000807881422 from CourseHero.com on 02-21-2022 00:35:29 GMT -06:00

https://www.coursehero.com/file/77005113/Cash-and-Cash-Equivalentsdocx/
Problem 1-2
The cash account in the current asset section of the balance sheet for Heater
Company showed a balance of 555,000. It was found to include the following items:
Petty cash fund (1,000 is in the form of paid vouchers) ₱ 5,000
Checking account balance, per bank statement
(A 25,000 check is still outsatanding) 255,000
Undeposited receipts, including a post-dated check for
5,000 120,000
Currencies and coins awaiting deposit 55,000
Bond sinking fund – cash 100,000
Check drawn by manager, returned by bank marked NSF 20,000

What is the correct cash balance for Heater Company’s statement of financial
position?
Answer: ₱ 404,000

Petty cash fund ₱ 4,000


Checking account, per bank, (net of outstanding check) 230,000
Undeposited receipts 115,000
Currencies and coins 55,000
Correct Cash Balance ₱ 404,000

* The postdated check is shown as account receivable


* The bond sinking fund is shown as long-term investment
* The NSF check drawn by the manager is shown as non-trade receivable.
* Paid petty cash vouchers not yet replenished should be recognized as expense at
the end of the accounting period.
* The outstanding check is deducted from the balance per bank.

This study source was downloaded by 100000807881422 from CourseHero.com on 02-21-2022 00:35:29 GMT -06:00

https://www.coursehero.com/file/77005113/Cash-and-Cash-Equivalentsdocx/
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