CASH AND CASH EQUIVALENTS – PART 2

1. On December 31, 2014, Taboo Company reported cash and cash equivalents of P3,500,000. An analysis showed the following
details:

Undeposited collections 150,000

Cash in bank – PCIB checking account 500,000
Cash in bank – PNB (overdraft) (50,000)
Undeposited NSF check received from customer, dated December 1, 2014 15,000
Undeposited check from a customer, dated January 15, 2015 25,000
Cash in bank – PCIB (fund for payroll) 150,000
Cash in bank – PCIB (saving deposit) 100,000
Cash in bank – PCIB (money market, 90 days) 2,000,000
Cash in foreign bank restricted due to exchange control 100,000
IOUs from officers 60,000
Sinking fund cash 450,000
Total P3,500,000

A. Compute the total amount of cash and cash equivalents that should be reported in the statement of financial position.
B. Assume that the Cash in bank – overdraft of 50,000 is from another account in PCIB, how much is the total cash and cash
equivalents?

2. On December 31, 2014, Earnest Company provided the following data:

Cash in bank – PNB Acct. no. 001 1,500,000

Cash in bank – PNB Acct. no. 002 (30,000)
Cash in bank – BDO (10,500)
Time deposit – 30 days 500,000
Money market placement due on June 30, 2015 1,000,000
Saving deposit in closed bank 50,000
Sinking fund for bond payable due on June 30, 2015 400,000
Petty cash fund 10,000

 The cash in bank in PNB included customer check of P80,000 outstanding for 18 months.
 Check of P100,000 in payment of accounts payable was dated and recorded on December 31, 2014 but mailed to creditors
on January 15, 2015.
 Check of P50,000 dated January 31, 2015 in payment of accounts payable was recorded and mailed December 31, 2014.
 The reporting period is the calendar year. The cash receipts journal was held open until January 15, 2015 during which
time P230,000 was collected and recorded on December 31, 2014.

A. Prepare adjusting entries on December 31, 2014.

B. Compute the total amount of cash and cash equivalents that should be reported on December 31, 2014.

3. The correct current position at the end of the current year is as follows:

Current assets 8,400,000

Current liabilities 4,000,000
Current ratio (current assets / current liabilities) 2.1
Working capital (current assets – current liabilities) 4,400,000

The books were kept open and two transactions which occurred in January of the following year were recorded as of the end
of the current year.

a. Sale for P2,000,000 of merchandise costing P800,000:

Accounts receivable 2,000,000
Sales 2,000,000

Cost of sales 800,000

Merchandise inventory 800,000

b. Payment of accounts payable, P800,000:

Accounts payable 800,000
Cash 800,000

Consequently, the resulting balances would be:

Current assets 8,800,000

Current liabilities 3,200,000
 Current ratio (current assets / current liabilities) 2.75
Working capital (current assets – current liabilities) 5,600,000

Prepare adjusting entries for the current year.

4. Zealous Company established a petty cash fund.

a. Established a petty cash fund of P10,000 on January 2.
b. Petty cash expenses – January 2-31 are:
Postage 1,500
Supplies 5,500
Transportation 1,200
Miscellaneous expense 800
c. The fund is replenished on February 1 and increased by P5,000,

Prepare journal entries to record the transactions under the fluctuating fund system and imprest fund system.

5. On December 1, 2013, Wacky Company established a petty cash fund.

2014
Dec. 1 Established an imprest petty cash fund of P10,000 by writing a check on National Bank.
Dec. 20 Replenished the petty cash fund by writing a check on National Bank. The fund contained:

Currency and coins 1,000

Vouchers for selling expenses 5,000
Vouchers for miscellaneous expenses 2,000
Vouchers for equipment 2,000

Dec. 31 The petty cash fund was not replenished. The fund contained:

Currency and coins 6,000

Postdated employee’s check 2,000
Vouchers for selling expenses 1,500
Vouchers for transportation 500

2015
Jan. 15 Encashed the employee’s check. The proceeds were retained in the fund.
Jan. 31 Replenished the petty cash fund by writing a check on National Bank. The petty cash vouchers for January
expenditures are:

Distributions costs 500

Administrative expenses 2,000
Transportation 1,000
Payment for supplier’s invoice 1,200

a. Prepare journal entries to record the transactions.

b. How much is the petty cash on January 31, 2015 before the replenishment?

6. Marjorie Company reported the following information in relation to imprest petty cash fund at year-end:

Coins and currency 22,000

Petty cash vouchers:
Gasoline 3,000
Medical supplies 1,000
Repairs 1,500
IOU from an employee 3,500
Check drawn payable to the order of Ann Cruz, petty cash custodian, representing her salary 15,000
Check of an employee returned by bank marked “NSF” 3,000
A sheet of paper with the names of several employees together with a contribution for a birthday party and 5,000
attached to the sheet of paper is a currency of

The petty cash ledger account had a balance of P50,000. What amount of petty cash fund should be reported at year-end?