Quiz No.

1 – Cash and Cash Equivalents:

On December 31, 2019, ABC Co. reported the following account balances:
Cash on Hand P125,000
Cash in Bank-BPI 700,000
Cash in Bank-RCBC (Overdraft) (150,000)
Cash in Bank-BDO 1,000,000
Cash in Bank-PNB 1,200,000
Cash in Bank-Rural Bank of Florida 780,000
Investment in Commercial Papers 500,000
Investment in SMC Ordinary Shares 300,000
Petty Cash Fund 10,000
Additional information:
1. Cash on hand is composed of the following:
Currencies and coins P 25,000
Postal money orders 30,000
Customer’s check dated December 31, 2019 20,000
Customer’s check dated January 5, 2020 50,000
Total P 125,000
2. The cash in bank-BPI is a checking account which includes a P100,000 compensating balance in relation to
a short-term loan. ABC Co. is legally required to maintain a minimum deposit balance of P100,000. In
addition, P200,000 creditors’ checks prepared and recorded on December 30, 2019 are still in the
company’s vault as of December 31, 2019.
3. The cash in bank-RCBC is a checking account where withdrawals have exceeded the deposits.
4. The cash in bank-BDO is a savings account which has been set aside for the payment of a bank loan which
is due on May 31, 2020.
5. The cash in bank-PNB is a time despite account which was placed with the bank on April 1, 2019 and will
mature on March 31, 2020.
6. Rural Bank of Florida has been closed and placed under receivership by the BSP on Oct. 2019. As of
December 31, 2019, ABC CO. has been informed that it can collect only P500,000 of its P780,000 deposit.
The collection can be made sometime in July 2020.
7. Investment in commercial papers represents one-year debt securities that were issued by a multi-national
corporation on February 1, 2019 and will mature on January 31, 2020. ABC Co. purchased these
commercial papers on November 15, 2019.
8. SMC ordinary shares are actively traded in the stock exchange. Their market value on December 31, 2019
was P327,000. There is no intention on the part of ABC Co. to sell them in the near future. These securities
are for the purpose of earning dividends.
9. The petty cash fund has not been replenished. A cash count conducted on January 4, 2020 revealed the
following composition:
Currencies and coins P 3,300
Unreplenished vouchers:
2019
Dec 20 Transportation 400
25 Gasoline-service vehicle 700
26 Office supplies 500
27 Repair-equipment 500
31 Transportation 300
2020
Jan 02 Gasoline-service vehicle 600
04 Change oil-service vehicle 1,500
Employee check dated Jan. 10, 2020 2,000
A sheet of paper with names of employees who made
contributions for a birthday gift amounting to 2,500
Use the following accounts in making your adjusting entry: Transportation Expense; Gas & Oil Expense; Office
Supplies Expense; Repair and Maintenance; Advances to Employees; Receivable from Petty Cashier.