UNIVERSITY OF SANTO TOMAS

AMV-COLLEGE OF ACCOUNTANCY
CA5105 – INTERMEDIATE ACCOUNTING 1
A.Y. 2023-2024, 2nd Term

INTACC1_2401:Cash and Cash Equivalents G. MACARIOLA

INTACC1_2401: CASH AND CASH EQUIVALENTS

I.COMPOSITION OF CASH AND CASH EQUIVALENTS

PROBLEM 1: On December 31, 2023, Wolverine Company reported Cash and Cash
Equivalents of P5,040,000 which is comprised of the following:

Petty cash fund 225,000

Cash in Bank – BDO Checking Account 750,000
Cash in Bank – BPI (overdraft) (75,000)
Check from customer dated December 1, 2023, 37,500
returned by the bank marked NSF
Check from customer, dated January 5, 2024 37,500
Cash in Bank – Security bank including unrestricted 225,000
compensating balances of 25,000
Money order and Traveler’s check 150,000
Cash in Bank – PNB (money market, 90 days) 3,000,000
Restricted cash in Foreign Bank 150,000
IOUs 90,000
Sinking Fund Cash 450,000

How much is the total Cash and Cash Equivalents to be reported by Wolverine
Company for the year ended December 31, 2023?
a. 5,040,000
b. 5,115,000
c. 4,590,000
d. 4,350,000

PROBLEM 2: Magneto Company reported the following information as of Dec. 31, 2023:

• Investment Securities of P1,000,000. These securities are ordinary share investments

in entities that are traded in the PSE. As a result, the shares are very actively traded
in the market.
• A P300,000 investment in redeemable preference shares purchased on December 1,
2023 with a mandatory redemption date on February 28, 2024.
• Investment Securities of P5,400,000. These securities are government treasury bills.
The treasury bills have a 10-year term and purchased on December 31 at which time
they had two months until they mature.
• Investment Securities of P1,200,000. These securities are commercial papers or
money market placements. The term of commercial papers is 9 months and they were
purchased on December 31, at which time they had 3 months until they mature.

What amount should be presented as Cash Equivalents as of December 31, 2023?

a. 7,900,000
b. 4,900,000
c. 3,400,000
d. 6,900,000

PROBLEM 3: Storm Company provided the following data on December 31, 2023:

Cash on hand 2,500,000

Restricted compensating balance – short-term loan 600,000
Check drawn on Storm’s account, payable to a supplier, 500,000
dated and recorded on 12/31/23 but not mailed until 1/2/24
Bond Sinking Fund 750,000
Treasury Bills, purchased November 3, 2023 and maturing 1,250,000
January 31, 2024
Time Deposit, purchased October 1, 2023 and maturing on 1,000,000
January 31, 2024

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 UNIVERSITY OF SANTO TOMAS
AMV-COLLEGE OF ACCOUNTANCY
CA5105 – INTERMEDIATE ACCOUNTING 1
A.Y. 2023-2024, 2nd Term

INTACC1_2401:Cash and Cash Equivalents G. MACARIOLA

What is the total amount that should be reported by Storm Company as Cash and
Cash Equivalents on December 31, 2023?
a. 2,500,000
b. 4,250,000
c. 4,750,000
d. 5,500,000

PROBLEM 4: Cyclops Company provided the following information with respect to the Cash
and Cash Equivalents for the fiscal year ended July 31, 2023:

Checking Account at PNB Bank (100,000)

Checking Account at BPI Bank 500,000
Cash set aside fot the purchase of equipment to be 800,000
disbursed 5 months from the BS date
Payroll Fund 250,000
Foreign Bank Account in Pesos 1,000,000
IOU from Vice President 40,000
Traveler’s Check 150,000
DAUD Check 75,000
PCF (P10,000 in currency, P15,000 expense vouchers) 25,000
Dividend and Tax fund 180,000

What total amount should be presented as Cash and Cash Equivalents on July 31,
2023?
a. 2,090,000
b. 2,105,000
c. 1,990,000
d. 2,890,000

II.ACCOUNTING FOR PETTY CASH FUND

PROBLEM 5: The petty cash fund of Mystique Company on December 31, 2023 showed the
following:

Bills and Coins 22,000

Petty cash vouchers:
Gasoline 3,000
Medical supplies 1,000
Repairs 1,500
Loans to employees 3,500
A check drawn by the entity payable to the order of Mr.
Gambit, petty cash custodian, representing
replenishment of petty cash fund 15,000
An employee’s check returned by the bank marked NSF 3,000
An envelope with names of several employees together
with contributions for a birthday gift of a co-employee. 5,000

The petty cash general ledger account has an imprest balance of P50,000.

What is the amount of petty cash fund that should be reported in the statement of
financial position on December 31, 2023?
a. 42,000
b. 27,000
c. 37,000
d. 22,000

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 UNIVERSITY OF SANTO TOMAS
AMV-COLLEGE OF ACCOUNTANCY
CA5105 – INTERMEDIATE ACCOUNTING 1
A.Y. 2023-2024, 2nd Term

INTACC1:2401-Cash and Cash Equivalents G. Macariola

PROBLEM 6: The Petty Cash Fund of Rogue Company has an imprest balance of P10,000.
The following items are found in its drawer on December 31, 2023:

Currencies and coins

10 pcs. @ P 100 ?
8 pcs. @ P 50 ?
30 pcs. @ P20 ?
Unreplenished paid vouchers for expenses and loans dated Dec. 16-31, 2023:
Supplies 1,200
Loan to office director 1,800
Unused supplies 200
Check drawn by office manager dated 12/30/23 2,500
Check drawn by employee dated 1/18/24 1,500
Check drawn by customer dated 12/25/23 1,000
Envelope containing cash donations for the departed parent
of one employee, (no currencies attached) 500

Q1. How much is the correct amount of petty cash fund on Dec. 31, 2023?
a. 4,000 c. 1,500
b. 2,000 d. 4,500

Q2. What is the amount of shortage/overage?

a. 1,000 short c. 1,500 short
b. 1,000 over d. 1,500 over

PROBLEM 7: The petty cash fund of Jean Grey Company was counted on January 3, 2024.
The following items were found:

Total bills and coins 2,737.50

Certified check of general manager dated Dec.15, 2023 2,250
Petty cash vouchers not yet replenished
Postage stamps dated 12/29/23 420
Supplies dated 1/2/24 975
IOU of employee dated 12/31/23 750
Company check representing replenishment of petty
7,725
cash fund
Unused postage stamps 180
An envelope containing contributions of employees for
4,500
the death of a fellow employee (contents intact)

The petty cash fund was established at P15,000.

Q1. What is the correct amount of the petty cash fund on December 31, 2023?
a. 14,857.50
b. 12,712.50
c. 10,462.50
d. 13,687.50

Q2. What is the amount of shortage or overage?

a. 142.50 shortage
b. 142.50 overage
c. 322.50 short
d. 0

3
 UNIVERSITY OF SANTO TOMAS
AMV-COLLEGE OF ACCOUNTANCY
CA5105 – INTERMEDIATE ACCOUNTING 1
A.Y. 2023-2024, 2nd Term

INTACC1:2401-Cash and Cash Equivalents G. Macariola

PROBLEM 8: The petty cash fund was established in the amount of P7,500 and contains
P6,000 remaining bills and coins and P1,425 in petty cash vocuhers for disbursements when
it is replenished.

The journal entry to recorded the replenishment should include credit(s) to the
following account(s).
a. Petty cash fund, P1,125.
b. Petty cash fund, P1,000.
c. Cash in bank, P1,425; Cash short or over, P75.
d. Cash in bank, P1,500.

III.BANK RECONCILIATION/PROOF OF CASH

PROBLEM 9: In preparing the bank reconciliation for the month of December, Iron Man
Company provided the following information:

Balance per bank statement 2,707,500

Deposit in transit 487,500
Return of customer’s check for insufficient
90,000
fund
Outstanding checks 412,500
Bank service charge for December 15,000

What amount should be reported as adjusted cash in bank?

a. 2,782,500
b. 2,692,500
c. 2,677,500
d. 2,632,500

PROBLEM 10: ProfessorX Company received the bank statement for the month ended April
2022 which included the following information:

Bank service charge for April 22,500

Check deposited by ProfessorX during April was returned and marked NSF
60,000
by the bank
Deposits made but not reflected by bank 195,000
Checks written and mailed but not yet recorded by bank 150,000

The company found a customer’s check for P52,500 payable to ProfessorX Company
that had not yet been deposited and had not been recorded.

The general ledger showed cash in bank with balance of P1,380,000.

What amount should be reported as adjusted cash in bank on April 30?

a. 1,350,000
b. 1,297,500
c. 1,395,000
d. 1,447,500

PROBLEM 11: Iceman Company keeps all its cash in a checking account. An examination of
the company’s accounting records and bank statement for the month ended June 30, 2023
revealed the following information:

• The cash balance per books on June 30, 2023 was P8,500,000.
• A deposit of P1,000,000 that was placed in the bank’s night depository on June 30
does not appear on the bank statement.
• The bank statement shows on June 30, the bank collected note for Iceman and
credited the proceeds of P950,000 to the company’s account.
• Check outstanding on June 30 amounted to P300,000.

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 UNIVERSITY OF SANTO TOMAS
AMV-COLLEGE OF ACCOUNTANCY
CA5105 – INTERMEDIATE ACCOUNTING 1
A.Y. 2023-2024, 2nd Term

INTACC1:2401-Cash and Cash Equivalents G. Macariola

• Iceman discovered that a check written in June for P200,000 in payment of an

accounts payable, had been recorded in the company’s records as P20,000.
• Included with the June bank statement was NSF check for P250,000 that Iceman
had received from a customer on June 26.
• The bank statement shows a P20,000 service charge for June.

What amount should be reported as adjusted cash in bank on June 30, 2023?
a. 9,000,000
b. 8,300,000
c. 9,360,000
d. 9,180,000

PROBLEM 12: On March 31, 2023, Thanos Company received its bank statement. However,
the closing balance of the account was unreadable. Attempts to contact the bank after hours
did not secure the desired information. The following data are available in preparing a bank
reconciliation:
February 28 book balance 2,190,000
Note collected by the bank 150,000
Interest earned on note 15,000
NSF check of customer 195,000
Bank service charge on NSF check 3,000
Other bank service charges 4,500
Outstanding checks 303,000
Deposit of February 28 placed in night
127,500
depository
Check issued by Sentinel Company
30,000
charged to Thanos account in error

Q1. What is the unadjusted bank balance on February 28, 2023?

a. 2,152,500
b. 2,298,000
c. 2,007,000
d. 2,335,500

Q2. What is the adjusted cash balance on February 28, 2023?

a. 2,152,500
b. 2,298,000
c. 2,007,000
d. 2,335,500

PROBLEM 13: Xmen Company had the following bank reconciliation at March 31, 2023:

Balance per bank statement, 03/31 P490,000

Add: Deposit in transit P100,000
Debit memo. 10,000 110,000
Total P600,000
Less: Outstanding checks P 125,000
Credit memo 60,000 185,000
Balance per book, 03/31 P415,000

All reconciliation items at March 31, 2023 cleared through the bank in April. Outstanding
checks at April 30, 2023, totaled P75,000; deposits in transit amounted to P150,000;
Credit memo for April-P80,000; Debit memo for April P15,000, Bank receipts for April-
P600,000 including erroneous bank credit of P100,000 corrected by the bank in April
and Bank disbursements for April -P500,000 including erroneous bank charge of P50,000
corrected by the bank in May.

Q1. How much is the adjusted cash receipts in April?

Q2. How much is the adjusted cash disbursements in April?
Q3. How much is the adjusted cash balance on April 30, 2023?

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 UNIVERSITY OF SANTO TOMAS
AMV-COLLEGE OF ACCOUNTANCY
CA5105 – INTERMEDIATE ACCOUNTING 1
A.Y. 2023-2024, 2nd Term

INTACC1:2401-Cash and Cash Equivalents G. Macariola

THEORIES

1. Which of the following should not be considered cash for financial reporting
purposes?
a. Petty cash funds and change funds
b. Money orders, certified checks and personal checks
c. Coin, currency and available funds
d. Customer’s Postdated checks and IOUs

2. Cash equivalents are

a. Short-term and highly liquid investments that are readily convertible into cash.
b. Short-term and highly liquid investments that are readily convertible into cash with
remaining maturity of three months.
c. Short-term and highly liquid investments that are readily convertible into cash and so
near their maturity that they represent insignificant risk of changes in value because
of changes in interest rates.
d. Short-term and highly liquid marketable equity securities.

3. Bank overdraft, if material, should be:

a. Reported as a deduction from the current asset section.
b. Reported as a deduction from cash.
c. Netted against cash and a net cash amount reported.
d. Reported as a current liability.

4. Entries to record the replenishment of petty cash fund result in a debit to

various expense accounts and a credit to cash in bank. This accounting
procedure typically exemplifies the
a. Imprest petty cash system.
b. Fluctuating petty cash system.
c. Internal control.
d. Administrative control.

5. A cash over or short account

a. Is generally not accepted
b. Is debited when the petty cash fund proves out over.
c. Is debited when the petty cash fund proves out short.
d. Is a contra account to cash.

6. If the cash balance shown in a company’s accounting records is more than

the correct cash balance and neither the company nor the bank has made any
errors, there must be:
a. Deposits credited by the bank but not yet recorded by the company.
b. Deposits in transit.
c. Outstanding checks.
d. Bank charges not yet recorded by the company.

7. If the cash balance in a company’s bank statement is more than the correct
cash balance and neither the company nor the bank has made any errors,
there must be:
a. Deposits credited by the bank but not yet recorded by the company.
b. Outstanding checks
c. Bank charges not yet recorded by the company.
d. Deposits in transit.

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 UNIVERSITY OF SANTO TOMAS
AMV-COLLEGE OF ACCOUNTANCY
CA5105 – INTERMEDIATE ACCOUNTING 1
A.Y. 2023-2024, 2nd Term

INTACC1:2401-Cash and Cash Equivalents G. Macariola

8. When preparing a bank reconciliation, bank credits not yet recorded are
a. Added to the bank statement balance
b. Deducted from the bank statement balance
c. Added to the balance per book
d. Deducted from the balance per book

9. A Proof of Cash is used to:

a. Conduct a physical count of cash as proof of the amount presented in the financial
statements.
b. State the total amount of receipts of the company and as well as the bank.
c. Used to reconcile the receipts and payments within the 2-month period.
d. Is used to reconcile the previous month and current month balances and as well as
the reconciliation of cash receipts and disbursements of the current month.

10.Deposit in transit:
a. Increases recorded by the bank but not yet recorded by the depositor.
b. Decreases recorded by the bank but not yet recorded by the depositor.
c. Increases recorded by the depositor but not yet recorded by the bank.
d. Decreases recorded by the depositor but not yet recorded by the bank.

11.These are charges to the company’s or depositor’s account made directly by

the bank such as returned checks, bank service charge, charge for the cost of
check booklets and payment of bank loans:
a. Debit memo
b. Credit memo
c. Deposit in transit
d. Outstanding checks

12.These are deposits or credits made directly by the bank to the depositor’s
account such as notes collected by the bank in favor of the depositor,
proceeds of bank loan, and interest earned on the depositor’s account.
a. Debit memo
b. Credit memo
c. Deposit in transit
d. Outstanding checks

“Remember… No matter how much it hurts right now, one day you’ll back and
realize, it made you stronger “