AURA COLLEGE

PROBLEM 1
CASE ON CASH AND CASH EQUIVALENT
Wag Kang Aayaw Company

On December 31, 2019, Wag Kang Aayaw Company's cash and cash equivalents account balance per ledger of P5,700,0

Manager's Checks
Traveler's Checks
Treasury Note
Treasury shares, purchased on 12-1-19 to reissued on 3-1-20
Escrow Deposit
Bank Draft
Postal Money Orders
Demand Deposit
Treasury Bills, purchased 12-16-19 due 3-15-20
160-day Treasury bill
Time Deposit - PCIB, one-year. Due 3-31-20
Time Deposit - PNB - 90 days
Time Deposit - BPI - 120 days
Money Market Instrument - Due 2-28-20
Money Market Instrument - Due 6-1-20
Cash in Bank - Metrobank, which includes a compensating balance of 50,000 for short-term
borrowing arrangement. The compensating balance is not legally restricted as to withdrwal
Cash in Bank - Metrobank
Cash in Bank - Firstbank, which includes a compensating balance of 50,000 for short-term
borrowing arrangement. The compensating balance is legally restricted as to withdrwal
Cash in Bank - Secondbank
Cash in Bank - Seatacbank, which which includes a compensating balance of 50,000 for short-term
borrowing arrangement. The compensating balance is legally restricted as to withdrwal
Cash in Bank - Seabank, which includes a compensating balance of P40,000 for short-term
borrowing arrangements
Petty Cash Fund, which includes an unreplenished voucher for P4,000
Payroll Fund
Travel Fund
Interest Fund
Tax Fund
Sinking Fund
Preferred Redumption Fund
Contingent Fund
Insurance Fund
Fund for acquisition of PPE expected to be disbursed in 2020
IOU from Officers
 Customer's Postdated Checks
Customer's Checks returned by bank marked "NSF"
Redeemable preferred shares - acquired 3 months to maturity date
Unused Credit Line
Revolving Fund
Visa Card-Credit Limit
TOTAL

Requirement:
1. Compute the cash and cash equivalents that shows in the statement of financial position.
2. What is the proper classification those which are excluded from cash and cash equivalent.

Answer:

1. Manager's Check 70,000

Traveler's Check 100,000
Bank Drafts 20,000
Postal Money Orders 20,000
Demand Deposit 100,000
Treasury Bill, Purchase 50,000
Time Deposit- 90 Days 170,000
Money Market Investment 40,000
Cash in Bank- Metro Bank (Compensating Balance) 1,050,000
Cash in Bank-Metro Bank 100,000
Cash First Bank- Compensating Balance (P450,000-50,000) 400,000
Cash in Bank- SeaBank (150,000-40,000) 110,000
Total Cash and Cash Equivalent ₱ 2,230,000

2. CLASSIFICATION
Treasury Notes Assumed Investment
Treasury Share Deductions
Escrow Deposit Othe Non-Current Asset
Time Deposit- PCIB Short-Term Investment
Time Deposit BPI Short-Term Investment
Money Market Instrument Short-Term Investment
Cash in Bank- Second Bank Non-Current Investment
Sinking Fund Non-Current Investment
Contingent Fund Non-Current Liabilities
Insurance Fund Non-Current Liabilities
Fund for Acquisition PPE Non-Current Liabilities
IOU from Officers Advances to Officers
Customers Post dated Checks Accounts Receivables
NSF Customers Checks Accounts Receivables
 Unused Credit Line Disclosed in the Notes
VISA Card Credit Limit Not Yet Cash
balance per ledger of P5,700,000 includes:

₱70,000
100,000
50,000
150,000
200,000
20,000
20,000
100,000
50,000
30,000
180,000
170,000
45,000
40,000
70,000

1,050,000
(100,000)

450,000
(60,000)
r short-term
150,000

250,000
10,000
100,000
20,000
40,000
30,000
420,000
100,000
200,000
500,000
800,000
20,000
 70,000
20,000
15,000
200,000
100,000
20,000
₱5,700,000

cial position.
sh equivalent.
AURA COLLEGE
PROBLEM 2
CASE ON PETTY CASH FUND
Perlita Company

has been engaged to examine the financial statements of Perlita Company for the year ended December 31, 2016. In con
You conducted your count at 9:15 a.m. on January 4, 2017 in the presence of Mr. Rodel E. Ocon, the cashier and at the s
of Rodel E. Ocon showed composition as follows:

CURRENCIES:
Denomination Quantity
Bills ₱1,000.00 3
500.00 7
100.00 6
50.00 4
20.00 5
Coins 10.00 48
5.00 20
1.00 20

CHECKS:

Maker Date Payee Particulars Amount

Payment for cah advances
Rodel Ocon 3/1/2015 Client drawn from the petty cash fund ₱9,600.00
January 1, 2016.
Payment for cash advances
drawn from the petty cash fund
Merilou - Employee 12/2/2015 Client ₱1,000.00
but was returned by the bank
for insufficiency fund.
Payment for cash advances
Deborah - President 12/20/2015 Client drawn from the petty cash fund ₱3,000.00
December 1, 2016

PettyCash Replenishment of Petty Cash

Perlita Company 12/28/2015 ₱16,000.00
Custodian Fund

VOUCHERS:
Particulars Date Amount
Taxi Fare 12.15.16 ₱2,400.00
Gasoline 12.16.16 ₱1,600.00
Office Supplies 12.22.16 ₱2,000.00
OR # 647 - post office 12.23.16 ₱1,200.00
IOU signed by Ligo - Company Messenger 12.24.16 ₱4,800.00
 OTHERS:
Unused stamps P 400
The general ledger shows an imprest petty cash fund balance of P 50,000

Requirement:
1. Prepare the working papers for Petty Cash Fund.
2. Compute for any petty cash shortage or overage.
3. Compute for the adjusted petty cash fund.
4. Prepare the adjusting journal entries.

Answer:

1. Petty Cash Imprest Balance P 50,000

Stale checks of Rodel Ocon 9,600
Petty Cash Accountabilities 59,600

2. Petty Cash Allocated P 49,600

Less: Petty Cash Accountabilities 59,600
Petty Cash Shortage (10,000)

3. Coins and Currency P 8,000

Replenishment of Petty Cash Fund 16,000
Adjusted Petty Cash Fund 24,000

4. Adjusting Entries

a. Transportation Expense 2,400

Gasoline and Oil Expense 1,600
Office Supplies 2,000
Postage Expense 1,200
Advances to Employees 4,800
Petty Cash Fund 12,000

b. Unused Postage Stamps 400

Postage Expense 400

c. Advances to Employees 4,000

Petty Cash Fund 4,000

d. Receivable from Custodian 10,000

Petty Cash Fund 10,000
ecember 31, 2016. In connection with --- you have been assigned to audit the petty cash fund.
n, the cashier and at the same time the petty cash custodian. A count of the petty cash fund under the custody

Amount

₱9,600.00

₱1,000.00

₱3,000.00

₱16,000.00

Amount
₱2,400.00
₱1,600.00
₱2,000.00
₱1,200.00
₱4,800.00
AURA COLLEGE
PROBLEM 3
CASE ON ONE-MONTH BANK RECONCILIATION
Driftwood Company

On October 31, 2015, the bank statement for the checking account Driftwood Company shows a balance of P 126,300, wh
might be useful in preparing a bank reconciliation is as follows:
a. Outstanding checks are P14,300 which includes a certified check for P2,000.
b. The October 31 cash receipts of P7,850 are not deposited in the bank until November 2.
c. One check written in payment of utilities for P1,370 is correctly recorded by the bank but is recorded by Driftwoo
d. In accordance with prior authorization, the bank withdraws P6,500 directly from the checking account as payme
the direct withdrawal.
e. Bank service charges of P240 are listed on the bank statement.
f. A deposit of P5,670 is recorded by the bank on October 31, but it did not belong to Driftwood. The deposit shou
a separate company.
g. The bank statement includes a charge of P750 for an NSF check. The check is returned with the bank statemen

Requirement:
1. Prepare a bank reconciliation as of July 31.

Driftwood Company
Bank Reconciliation
July 31, 2015

Bank's Cash Balance

Before Reconciliation P 126, 300
Add: Deposits Outstanding 7,850
Less: Checks Outstanding 12,300
Bank Error 5,670

After Reconciliation P 116,180

Company's Cash Balance

Before Reconciliation P 123,320 123,310
Add: Company Error 360
Less: Electronic Fund Transfer for note 6,500
Services Fee 240
NSF Check 750
After Reconciliation P 116,190 116,180

2. Prepare the necessary adjusting entries.

DEBIT CREDIT
Cash 360
Utilities Expense

Note Payable 6,000

Interest Expense 500
Service Fee Expense 240
Accounts Receivable 750
Cash 7,490
ows a balance of P 126,300, while the company's records show a balance of P123,320. Information that

bank but is recorded by Driftwood as a disbursement of P1,730.

he checking account as payment is P500 and the principal is P6,000. Driftwood has not recorded

to Driftwood. The deposit should have been made to the checking account of Hollybuster Company,

eturned with the bank statement and the company will seek payment from the customer.
AURA COLLEGE
PROBLEM 4
CASE ON DEPOSIT IN TRANSIT
Ellen Company

The following data are available for the Cash in Bank of Ellen Company for February of the current year:
a. Deposit made by the company this February, P120,000
b. Deposit in transit, January 31, P200,000
c. Customer's check representing receipts in January amounting to P21,000 was erroneously recorded by the com
d. Check of the company in January amounting to P2,000 was erroneously recorded by the company s P20,000
e. Deposit acknowledged by the bank in February. P150,000
f. Erroneous bank charge in January 31, P13,000
g. Erroneous bank credit in February 28, P14,000
h. Customer's note collected, Januarfy 31, P10,000
i. Customer's note collected, February 28, P12,000

Requirement:
1. Deposit in transit in February 28
2. Unadjusted book receipts in February
3. Unadjusted bank receipts in February

Answer:

1. Deposit in Transit, January 31 200,000

Deposit made by the Company 120,000
320,000
Less: Deposit Acknowledge 150,000
Deposit in Transit, February 28 170,000

2. Deposit made by the Company 120,000

Customer's note collected 10,000
Errors in January corrected in February (Book Receipts):
Understatement of Cash Receipts (21,000-12,000) 9,000
Overstatement of Cash Disbursements in January
for customers check (P20,000-P2,000) 18,000
Unadjusted Book Receipts in February 157,000

3. Deposit acknowledge by the bank- February 150,000

Add: Credit Memo in February (customer's note collected) 12,000
Errors in January corrected in February Bank Receipts:
Overstatement of Cash Disbursements 13,000
Unadjusted Bank Receipts in February 175,000
ously recorded by the company as P12,000
he company s P20,000
AURA COLLEGE
PROBLEM 5
CASE ON OUTSTANDING CHECKS
Rizza Company

The following data are available for the Cash in bank Rizza Company for February of the current year:
a. Checks issued by the company this February, P150,000
b. Outstanding checks, January 31, P52,000
c. Customer's check representing receipts in January amounting to P12,000 was erroneously recorded by the com
d. Check of the company in January amounting to P20,000 was erroneously recorded by the company as P2,000.
e. Checks paid by the bank in February. P130,000
f. Erroneous bank in January 31, P10,000
g. Erroneous bank charge in February 28, P12,000
h. Bank service charge January 31, P2,000
i. Bank service charge February, P3,000

Requirement:
Compute for the following:
1. Outstanding checks in February 28.
2. Unadjusted book disbursements in February.
3. Unadjusted bank disbursements in February.

Answer:

1. Outstanding Checks, January 31 52,000

Add: Checks issued by the Company- February 150,000
Total Checks 202,000
Less: Checks paid by the Bank- February 130,000
Outstanding Checks- February 28 72,000

2. Checks issued by the Company- February 150,000

Add: Debit memo in January (Bank Service Charge) 2,000
Overstatement of Cash Receipts in January for
customer's check (P21,000- P12,000) 9,000
Understatement of Cash Disbursements in January for
customer's check (P20,000- P2,000) 18,000
Total Unadjusted Book Disbursements 179,000

3. Check's paid by the Bank- February 130,000

Add: Debit memo in February( Bank Service Charge) 3,000
Overstatement of Cash Receipts in January
(Erroneous Bank credit January 31) 10,000
Overstatement of Cash Disbursements in February
 (Erroneous Bank Charge) 12,000
Total Unadjusted Bank Disbursements 155,000
ously recorded by the company as P21,000
the company as P2,000.