ADAMSON UNIVERSITY

Intermediate Accounting 1 – (CASH) Prelims Assignment 3

Prof. Judith Francisco – Luna

Name _____________________________________________ Schedule _____________ Date ________________

FAMILY NAME FIRST NAME M.I.

I. TRUE-FALSE
Write in CAPITALS the word TRUE if the statement is correct or the word FALSE if the statement is incorrect.
___________ 1. Cash is always presented as the first item on the statement of financial position.
___________ 2. Collections from customers which are still on hand are not yet cash.
___________ 3. If a check from a customer is post-dated, it is not yet cash until the arrival of the date which is
indicated on the check.
___________ 4. Cash in foreign currency is not considered part of cash.
___________ 5. An imprest petty cash system records expenses when the fund is replenished.
___________ 6. The cash short or over account is a real account.
___________ 7. If a cash shortage is found to be the doing of the petty cash custodian, the shortage is charged
to a loss account.
___________ 8. From an accounting viewpoint, cash means money only.
___________ 9. If the cash balance is high, that is an indicator of excellent financial health.
__________ 10. The petty cash box should always contain paid petty cash receipts and money equal to the
amount of the fund.
__________ 11. With the establishment of an imprest petty cash fund, one person is given the authority and
responsibility for issuing checks to cover minor cash disbursements.
__________ 12. The amount of coin and currency in the petty cash fund, maintained on an imprest basis, is the
same after the fund is replenished.
__________ 13. The petty cash book is a book of original entry.
__________ 14. Disbursements out of the petty cash fund need not be vouchered since these are immaterial in
amount.
__________ 15. The requirement that cash receipts should always be deposited is a feature of the imprest
system.
II. Write the CAPITAL LETTER of the best answer for each of the following items.
_____ 1. In a bank to book method of bank reconciliation, the following items are added except
A. Note collected in favor of the company creditor
B. Deposit in transit
C. Bank loan maturity
D. Interest from a customer note collected by the bank
_____ 2. A petty cash system is designed to
A. cash checks for employees.
B. handle cash sales.
C. account for all small cash receipts and disbursements.
D. pay small miscellaneous expenses.
_____ 3. Which of the following is not true?
A. The imprest petty cash system in effect adheres to the rule of disbursement by check.
B. Entries are made to the Petty Cash account only to increase or decrease the size of the fund or to
adjust the balance if not replenished at year-end.
C. The Petty Cash account is debited when the fund is replenished.
D. The account “Cash Short and Over” if debit balance, is presented as part of operating expenses.
_____ 4. Which is not considered as cash equivalent?
A. 65-day money market placement
B. 90-day Treasury bill
C. A 2-year treasury note, maturity: July 31 of the current year, purchased: June 15 of the current year
D. A 2-year treasury note, maturity: July 31 of the current year, purchased: March of the current year
_____ 5. How many vouchers should the company prepare if remittance will be made to the BIR for the
employees’ withholding tax and to the SSS for the SSS contributions made by the employees?
A. one B. two C. three D. four
_____ 6. The petty cash fund is established in the amount of P5,000 and contains P4,000 in cash and P950 in
receipts for disbursements when it is replenished. The journal entry to record replenishment should include
credit/s to the following account/s
A. Petty Cash, P750 C. Cash in Bank,P950; Cash Over and Short, P50
B. Petty Cash, P1,000 D. Cash in Bank, P1,000.
_____ 7. The bank statement showed a cash balance of P12,500 while the cash in bank ledger showed a balance
of P15,000. The depositor received a credit memo for P2,500 and a debit memo for P500. The adjusted balance
of the cash account will be
A. P17,000 B. P13,000 C. P14,500 D. P10,500
_____ 8. Gem Co. had the following cash balances at December 31, 2019:
Petty cash fund P 1,500
Customer’s certified check 5,000
Customer’s NSF check 2,000
Customer’s postdated check 4,000
Unrestricted demand deposits 486,000
Company checks written and deducted from the demand deposits
but not scheduled to be mailed until January 2, 2020 12,000
Time deposits restricted for use (expected use in 2020) 300,000
In exchange for a guaranteed line of credit, Gem has agreed to maintain a minimum balance of P100,000 in its
unrestricted demand deposits account. How much should Gem report as “Cash” in its December 31, 2019
statement of financial position?
A. P399,500 B. P404,500 C. P480,500 D. P504,500
____ 9. The cash account shows a balance of P450,000 before reconciliation. The bank statement does not
include a deposit of P23,000 made on the last day of the month. The bank statement shows a collection by the
bank of P9,400 and a customer’s check for P3,200 was returned because it was NSF. A customer’s check for
P4,500 was recorded on the books at P5,400, and a check written for P790 was recorded as P970.
The correct balance in the cash account was
A. P455,120 B. P455,480 C. P457,280 D. P478,480

_____ 10. The following information pertains to RCA Co. at December 31, 2019:
Checkbook balance P12,000
Bank statement balance 16,000
Check drawn on RCA’s account payable to
a vendor, dated and recorded 12/31/2019
but not mailed until 1/10/2020 2,200
On RCA’s December 31,2019 balance sheet, what amount should be reported as cash?
A. P12,000 B. P13,800 C. P14,200 D. P16,000
_____ 11. West Company’s bank statement for the month of May included the following information:
Ending balance, May 31 P38,283
Bank service charge for May 100
Interest paid by bank to West for May 1,500

In comparing the bank statement to its own cash records, West found the following:
Deposits made but not yet recorded by the bank P 5,110
Checks written and mailed but not yet recorded by the bank 3,460
In addition West discovered that it had erroneously recorded a check for P1,450
that should have been recorded for P1,540.

What is West’s correct cash balance at May 31?

A. P41,333 B. P39,933 C. P39,843 D. P36,633
_____ 12. In preparing its August 31, 2019 bank reconciliation, Jade Company has the following information:
Balance per bank statement, 8/31/2019 P18,050
Deposit in transit, 8/31/2019 3,250
Return of customer’s check for insufficient funds, 8/31/2019 600
Outstanding checks, 8/31/2019 2,750
Bank service charges for August 100
What is Jade Company’s correct cash balance at August 31, 2019?
A. P18,550 B. P17,850 C. P19,250 D. P18,050
_____ 13. The following information is available from the general ledger and bank statement of May Company
for the month of October 2019:
Balance statement balance, October 31 P1,342.50
Note collected by the bank for May Company 600.00
Interest on the note collected 25.00
NSF check returned with bank statement 212.60
Outstanding checks, October 31 684.70
Deposit in transit, October 31 329.42
Bank service charge for October 50.00
What is the unadjusted cash balance per books on October 31, 2019?
A. P624.82 B. P1,324.62 C. P1,672.78 D. P2,060.18

_____ 14. Using the information of No. 13, what is the adjusted cash balance on October 31,2019?
A. P1,704.90 B. P1,697.78 C. P1,349.62 D. P987.22

_____ 15. At month end Kelly Co. has a balance in its general ledger Cash account. The bank statement shows a
balance of P6,426. Reconciling items are shown below:
- Bank service charge P36
- A P213 check made payable to Olch, Inc. in partial payment of a payable was recorded as P321
- Deposit in transit, P1,602
- Bank collection of a note plus interest for Kelly P990
- Outstanding checks, P1,494
- A check of Pelly Co. charged in error against Kelly’s account P486.
The reconciled cash balance is:
A. P7,488 B. P7,020 C. P6,804 D. P6,552