Name: Jessa Cardenas Section : 11004 Date: 02/01/2021

Score

Quiz on Cash and Cash Equivalents – Prelim Term Period Quiz 1

ADAPTED: Conrado T. Valix, Jose F. Peralta, & Christian Aris M. Valix, Intermediate Accounting,
Volume 1, 2020 Edition

Problem: ( 30 points )

Argentina Company reported the following accounts on December 31, 2020:

Cash on hand 1,000,000

Petty cash fund 50,000

Security Bank current account 2,000,000

PNB current account 1,500,000

BDO current account (overdraft) (200,000)

BSP treasury bill – 120 days 3,000,000

BPI time deposit – 90 days 2,000,000

Bond sinking fund 2,500,000

Additional information:

a. The cash on hand included a customer postdated check of P150,000 and postal money order of
P50,000.

b. The petty cash fund included unreplenished petty cash vouchers for P10,000 and an employee
check for P5,000 dated January 31, 2021.

c. The BPI time deposit is set aside for acquisition of land to be made in early January 2021.

d. The bond sinking fund is set aside for payment of bond payable due December 31, 2021.

Required:

1. Prepare adjusting entries on December 31, 2020.

2. Compute the total amount of cash and cash equivalents.

3. Explain the presentation of the items excluded from cash and cash equivalents.
Requirement 1
a. Accounts Receivable 150,000
Cash on Hand 150,000
b. Expenses 10, 000
Receivable from employee 5,000
Petty cash fund 15,000

___________________________________________
Requirement 2
Cash on Hand 1,000,000
Postdated customer check (150,000)
Adjusted Cash on Hand 850,000

Petty Cash Fund 50,000

Unreplenished petty cash (10,000)
Postdated employee check ( 5,000)
Adjusted petty cash fund 35,000

_______
Cash on Hand 850,000
Petty Cash Fund 35,000
Security Bank current account 2,000,000
PNB current account 1,500,000
Bond sinking fund 2,500,000
Total cash and cash equivalents 6,885,000

___________________________________________
Requirement 3
• BSP treasury bill – 120 days= 3,000,000 – separately shown as current asset because more than 3
months but within 1 year acquisition to maturity.
• BPI time deposit – 90 days= 2,000,000 – shown as non-current investment because it is restricted for
the acquisition of land in Jan, 2021.
• BDO current bank account=200,000 – shown as curren liability because it is an overdraft in BDO.