CASH AND CASH EQUIVALENTS

PART I. IDENTIFYING CASH AND CASH EQUIVALENTS

1. The composition of Anita Company’s “cash account” as of December 31, 2021 is as
follows:

Demand deposit account P2,000,000

Time deposit - 30 days 1,000,000
NSF check of customer 40,000
Money market placement (due June 30, 2022) 1,500,000
Savings deposit in a closed bank 100,000
IOU from employee 20,000
Pension fund 3,000,000
Petty cash fund 10,000
Customer's check dated January 1, 2022 50,000
Customer's check outstanding for 18 months 40,000
Total P7,760,000

Additional information follows:

• Check of P200,000 in payment of accounts payable was recorded on December 31,
2021 but mailed to suppliers on January 5, 2022.
• Check of P100,000 dated January 15, 2022 in payment of accounts payable was
recorded and mailed on December 31, 2021.
• The company uses the calendar year. The cash receipts journal was held open until
January 15, 2022, during which time P400,000 was collected and recorded on
December 31, 2021.

The cash and cash equivalents to be shown on the December 31, 2021 balance sheet is:
a. P3,310,000
b. P1,910,000
c. P2,910,000
d. P4,410,000
2. Juan Company reported the checkbook balance on December 31, 2021 at P8,000,000. In
addition, the entity held the following items in the safe on that date:

Check payable to the entity, dated January 2, 2022 in P1,000,000

payment
of a sale, not included in December 31 check book
balance

Check payable to the entity, deposited December 15 3,000,000

and
included in December 31 checkbook balance, but
returned by bank on December 30 stamped "NSF".
The check was
redeposited on January 2, 2022 and cleared on
January 5, 2022

Check drawn on the entity's account, dated and 2,500,000

recorded on December 31, 2021 but not mailed until
January 15, 2022

Coins and currencies on hand 800,000

Three-month money market instruments 1,500,000

What is the correct amount of Cash on December 31, 2021?

a. P7,500,000
b. P9,300,000
c. P8,300,000
d. P9,000,000
3. On December 31, 2021, the cash account of Christopher Company has a debit balance of
P3,500,000. An analysis of the cash account shows the following details:

Undeposited collections P60,000

Cash in bank-PCIB checking account 500,000
Cash in bank-PNB (overdraft) (50,000)
Undeposited NSF check received from a customer, dated Dec. 1, 2021 15,000
Undeposited check from a customer, dated January 15, 2022 25,000
Cash in bank-PCIB (fund for payroll) 150,000
Cash in bank-PCIB (savings deposit) 100,000
Cash in bank-PCIB (money market instrument, 90 days) 2,000,000
Cash in foreign bank (restricted) 100,000
IOUs from officers 30,000
Sinking fund cash 450,000
Listed stock held as temporary investment 120,000
P3,500,00
0

Cash and cash equivalents on its December 31, 2021 statement of financial position should
be
a. P2,760,000
b. P2,810,000
c. P2,885,000
d. P2,935,000
4. The current assets of Rosendy Company on December 31, 2021 include the following:

Cash on hand P 50,000

Petty cash fund 10,000
Cash in bank 200,000
Accounts receivable 400,000
Inventory 500,000
Marketable equity securities 145,000
Deferred charges 20,000
Total P1,325,000

A. Cash on hand includes:

• Customer's check of P4,000 returned by bank on December 26, 2021 due to
insufficient funds but subsequently redeposited and cleared by bank on January 5,
2022.
• Customer's check for P6,000 dated January 15, 2022, received December 22, 2021.
• Postal money orders received from customers, P5,000.
• Cash withheld from wages for income tax of employees, P15,000.

B. The petty cash fund consists of the following items on December 31, 2021:
• Currency and coins, P2,800.
• Employees' vales, P2,000.
• Currency in envelope marked "collections for birthday party", P1,000.
• Unreplenished petty cash vouchers, P2,000.
• Check drawn payable to petty cashier, P2,200.

C. Included among the checks in payment of accounts payable drawn by the company
against its current account and recorded in December 2021 are:
• Check written and dated December 22, 2021 and delivered to payee on January 5,
2022, P10,000.
• Check written December 26, 2021 and dated January 21, 2022, delivered to payee
on December 26, 2021, P15,000.
Question 1: How much is the adjusted cash on hand on December 31, 2021?
a. P40,000
b. P1,328,000
c. P5,000
d. P225,000

Question 2: How much is the adjusted petty cash fund balance on December 31, 2021?
a. P40,000
b. P1,328,000
c. P5,000
d. P225,000

Question 3: How much is the adjusted cash in bank balance on December 31, 2021?
a. P40,000
b. P1,328,000
c. P5,000
d. P225,000

Question 4: How much is the correct cash balance on December 31, 2021?
a. P270,000
b. P265,000
c. P275,000
d. P280,000
PART II. PETTY CASH FUND
1. Tigers company established a petty cash fund. The petty cash fund included the following
details:

Coins and currency P2,000

Paid vouchers
Transportation P1,600
Gasoline 400
Office supplies 500
Postage stamps 300
Due from employees 1,200 2,000
Employee’s check returned 1,000
by bank marked “NSF”
Check drawn to the order of 4,000
petty cash custodian
What amount of petty cash should be reported?
a. P2,000
b. P7,000
c. P6,000
d. P9,000

2. As of December 31, 2021, the petty cash fund of ABC Co. with a general ledger balance of
P5,000 comprises the following:
Coins and currencies P850
Petty cash vouchers:
Gasoline for delivery equipment 1,000
Medical supplies for employees 650
IOUs:
Advances to employees 740
A sheet of paper with names of 800
several employees together with
contribution to bereaved employee,
attached is a currency of
Checks:
Check drawn to the order of the 1,000
petty cash custodian
Personal check drawn by petty cash 800
custodian

Question 1: What amount of petty cash fund should be included in cash?

Question 2: What is the cash short or over?
PART III. BANK RECONCILIATION
1.
CASH IN BANK- BPI
Dec.1 Deposit P100,000 Dec.4 Check 101 P5,000
Dec. 21 Deposit 50,000 Dec. 6 Check 102 15,000
Dec. 27 Deposit 10,000 Dec. 8 Check 103 40,000
Dec. 31 Deposit 80,000 Dec. 8 Check 104 10,000
Dec. 10 Check 105 30,000
Dec. 14 Check 106 25,000
Dec. 28 Check 107 50,000

DEPOSIT LIABILITY – ANITA COMPANY

DATE CHECK WITHDRAWA DEPOSIT BALANCE
NO. L
Dec. 2 100,000 100,000
Dec. 18 104 10,000 90,000
Dec. 20 101 5,000 85,000
Dec. 22 106 25,000 60,000
Dec. 27 50,000 110,000
Dec. 29 10,000 120,000
Dec. 29 103 40,000 80,000
Dec. 29 CM 30,000 110,000
Dec. 31 Service charge DM 2,000 108,000

The credit made by bank on December 29 represents the proceeds of a note received from
a customer which was given to the bank for collection by the entity on December 26.

Requirements:
a. Prepare a bank reconciliation on December 31.
b. Prepare adjusting entries.

2. CPA company provided the following information for the month of December:
Balance per bank statement, December 31 P2,800,000
Bank service charge for December 12,000
Interest paid by bank to CPA company for December 10,000
Deposits made but not yet recorded by the bank 350,000
Checks written but not yet recorded by the bank 650,000

The entity discovered that it had drawn and erroneously recorded a check for P46,000 that
should have been recorded for P64,000.

What is the cash balance per ledger on December 31?

 a. P2,500,000
b. P2,520,000
c. P2,540,000
d. P2,800,000

3. BSA Company provided the following data relating to the cash transactions and bank
account for the month of July:
Cash balance per ledger ?
Cash balance per bank statement ?
Debit memo for July service charge 5,000
Deposit of July 31 nor recorded by bank 450,000
until August 1
Outstanding checks, including certified 750,000
check of P50,000
Proceeds of bank loan not recorded in 500,000
ledger
Proceeds from a customer note, face 435,000
P450,000, collected by bank, collection fee
of P15,000
A creditor check had been entered into the 200,000
book as P20,000 and was erroneously
deducted by the bank at
A customer check was returned by bank 50,000
marked DAIF (NSF)
Correct cash balance 3,000,000

PART IV. PROOF OF CASH

1. Shown below is the bank reconciliation for Johanna Company for November 2021:
Balance per bank, Nov. 30, 2021 P150,000
Add: Deposit in transit 24,000
Total P174,000
Less: Outstanding checks P28,000
Bank credit recorded in error 10,000 38,000
Cash balance per books, Nov. 30, 2021 P136,000

The bank statement for December 2021 contains the following data:
Total deposits P110,000
Total charges, including NSF check of P8,000 and a service charge of P400 96,000
All outstanding checks on November 30, 2021, including the bank credit, were cleared in
the bank in December 2021. There were outstanding checks of P30,000 and deposits in
transit of P38,000 on December 31, 2021.

Question 1: How much is the cash balance per bank on December 31, 2021?
Question 2: How much is the December receipts per book?
Question 3: How much is the December disbursements per books?
Question 4: How much is the cash balance per books on December 31, 2021?
Question 5: How much is the adjusted cash in bank balance as of December 31, 2021?