CASH AND CASH EQUIVALENTS

DRILL 1

Below is a list of items. Classify each into one of the following statement of financial position categories:

a. Cash c. Short-term Investments

b. Receivables d. Other

1. Compensating balances held in long-term borrowing arrangements

2. Savings account

3. Money market funds

4. Checking account

5. Postage stamps

6. Treasury bills maturing in six months

7. Post-dated checks from customers

8. Certificate of deposit maturing in five years

9. Ordinary shares of another company (to be sold by December 31, this year)

10. Change fund

2. Seeker, Inc. owns the following assets at December 31, 2023.

Cash in bank – savings account P 95,000

Cash on hand 10,300
Checking account balance 250,000
Postdated checks 15,000
Certificates of deposits – 180 days 300,000
Tax refund due 16,700

What amount should be reported as cash?

3. As a step to safeguard the company’s cash balance, the Raj Company established an imprest petty
cash fund in May 2023. The company follows a fiscal period. Assume that the end of the accounting
period is on September 30, 2023. The company from August 2023 through October 2023, completed
the following transactions related to petty cash.

Page 1 of 8 M.S.M.C.
 2023 The company established an imprest petty cash fund. Issued
a check payable to the petty cash custodian.
August 21 P25,000

August 21 – The petty cash custodian paid the following from petty cash
fund, all supported by properly approved petty cash vouchers:
September 15

Transportation P 5,500

Representation 3,900

Freight for merchandise purchased 5,900

Computer repairs 2,800

16 The petty cash custodian submitted the above paid petty cash
vouchers to request for replenishment of the fund. A check
was received

September 16 –30 The petty cash custodian paid the following from petty cash
fund.

Office supplies P5,300

Transportation 1,050

Meals and snacks 2,900

September 30 A count of the petty cash fund revealed the following

composition:

Bills and coins P15,750

Petty cash vouchers for

Office supplies 5,300

Meals and snacks 2,900

Transportation 1,050

The fund was not replenished on this date. Moreover, ¼ of the

office supplies was used in the business.

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 October 9 The fund is replenished. The composition of the fund is as
follows:

Bills and coins P 620

Representation 5,400

Office supplies 8,100

Transportation 1,380

Meals and snacks 3,000

Repairs 6,500

25 Increased the petty cash fund to P30,000

Prepare the necessary journal entries.

4. A cash count showed the following:

Imprest amount P 15,000

Coins and currency 200

Petty cash receipts/expenses 14,700

Prepare the necessary journal entries.

5. A cash count showed the following:

Imprest amount P 15,000

Coins and currency 200

Petty cash receipts 14,900

Prepare the necessary journal entries.

Page 3 of 8 M.S.M.C.
6. Benson Plastics Company deposits all receipts and makes all payments by check. The following
information is available from the cash records:

Bank Reconciliation Statement

July 31, 2023

Balance per bank P26,746

Add: Deposits in transit 2,100

Deduct: Outstanding checks (3,800)

Balance per books P25,046

Month of August Results

Per BankPer Books

Balance August 31 P27,995 P28,855

August deposits 10,784 13,889

August checks 11,600 10,080

August note collected (not included in August deposits) 3,000 -0-

August bank service charge 35 -0-

August NSF check of a customer returned by the bank

(recorded by bank as a charge) 900 -0-

Instructions

(a) Calculate the amount of the August 31:

1. Deposits in transit

2. Outstanding checks

(b) What is the August 31 adjusted cash balance?

7. The books of AAA Service, Inc. disclosed a cash balance of P68,757 on June 30, 2023. The bank
statement as of June 30, 2023 showed a balance of P54,780. Additional information that might be
useful in reconciling the two balances follows:

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 (a) Check number 748 for P3,000 was originally recorded on the books as P4,500.

(b) A customer's note dated March 25 was discounted on April 12. The note was dishonored on
June 29 (maturity date). The bank charged AAA account for P14,265, including a protest fee of
P42.

(c) The deposit of June 24 was recorded on the books as P2,895, but it was actually a deposit of
P2,700.

(d) Outstanding checks totaled P9,885 as of June 30.

(e) There were bank service charges for June of P210 not yet recorded on the books.

(f) AAA account had been charged on June 26 for a customer's NSF check for P1,296.

(g) AAA properly deposited P600 on June 3 that was not recorded by the bank.

(h) Receipts of June 30 for P13,425 were recorded by the bank on July 2.

(i) A bank memo stated that a customer's note for P4,500 and interest of P165 had been collected
on June 27, and the bank charged a P36 collection fee.

Prepare a bank reconciliation statement and the necessary adjusting entries to correct cash balance.

Page 5 of 8 M.S.M.C.
DRILL 2

DRILL 3
In comparing the balance per books of Bench Company with the bank statement obtained from the bank,
together with the canceled checks and other memoranda at December 31, 2016, you observe the
following:

a. Balance per bank statement 892,346.30

b. Balance per books 590,884.60
c. Outstanding checks, 12/31/16 333,788.20
d. Receipts of 12/31/16 53,172.00
deposited on 01/02/17
e. Services charge for December 225.00
2016
f. Proceeds of bank loan, 97,000.00
12/15/16 omitted from
company records (discounted
for 3 months at 12% per
year)
g. Deposit of 12/13/16 omitted 28,924.10
from the bank statement

Page 6 of 8 M.S.M.C.
 h. Check on Rome Product 8,737.40
charged back 12/22/16 for
lack of counter signature,
redeposited on 01/05/17. No
entry was made for the
charge back or the redeposit
i. Error on back statement in
entering deposit of 12/16/16:

Correct amount 31,824.00

Entered in statement 31,814.00 10.00

j. Check #3917 of Birch 26,900.00

Company charge in error to
the company's account
k. Proceeds of note of J. Sumera
& Co. collected by bank on
12/01/16 not entered on
books:

Principal 20,000.00
Interest 400.00
Total 20,400.00
Less collection charge 50.00 20,350.00
l. Erroneous debit memo 50,000.00
12/23/16 to charge
company's account with
settlement of bank loan which
was paid by check #4020 on
the same date

m. Error on bank statement in

entering deposit of 12/04/16

Entered as 48,171.00

Correct amount 48,071.00 100.00

n. Deposit of Birch Company on 18,192.00

12/07/16 erroneously credit in
the company's account

REQUIRED:

Determine the correct cash balance of Bench Company at December 31, 2016.

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DRILL 4
The following data related to ABC Services, Inc.:

Nov. 30, 2016 Dec. 31, 2016

Balance per books 270,311.00
Balance per bank statement 294,771.00 148,986.00
Receipts not yet deposited 21,270.00 32,925.00
Outstanding checks 40,525.00 35,191.00

Bank service charges 295.00 158.00

Interest credit by bank 5,500.00 4,925.00

Other information:
• Receipts and disbursements per books during December are P1,072,850.00 and P1, 195,536.50,
respectively.
• Total deposits/ credits reflected in the bank statement amounted to P1,065,620.00.
• Check No. 137412 for P2,300.00 recorded by depositor as P3,200.00 in error.
• P625 interest chargeable to ABC Trading, Inc. was erroneously charged by the bank to ABC
Services, Inc.
• Customer's check for P5,947.00 deposited on December 28, 2015 was found to be uncollectible.
• No sufficient fund check in the amount of P5,000.00 was returned by the bank and redeposited by
ABC Services, Inc. during December. No entry was made on the books for the return or redeposit.

REQUIRED:

Prepare a four-column reconciliation for ABC Services, Inc.

Page 8 of 8 M.S.M.C.