Baliwag Polytechnic
  College
Dalubhasaan Kong Mahal
Institute of Business and Accountancy

ACT15 –  Intermediate Accounting part 1 M. Manayao, CPA

Problem 6: For Classroom Discussion

Cash
1.   The records of SML Co. on December 31, 20x1 show the following
1.
Checks drawn but not yet issued to payees P 120,000
Customers’ checks dated January 15, 20x2 35,000
Customers’ checks dated December 31, 20x1 40,000
SML’s check dated January 15, 20x2 already mailed to payee 16,000
Cash on hand 130,000
Employee’s checks representing unclaimed salaries, held by
the treasurer 14,000
Petty cash fund (fully replenished) 20,000

 Requirement:  How much is included as cash on December 31, 20x1?

Cash Equivalents
2.   Behringer Co. holds the following securities on December 31, 20x1:
2.
   Treasury bill acquired on November 1, 20x1, maturing on January 31, 20x2 P 300,000
   Money market placements to RCBC trust, made on December 15, 20x1,
maturing on August 31, 20x2 800,000
   Redeemable preference shares acquired on December 31, 20x1 and redeemable
on March 31, 20x2 1,600,000
   Three-month time deposit with UCPB 950,000
   Investment ins shares of stocks acquired on December 31, 20x1
to be sold in January 20x2 450,000

 Requirement:  How much is presented as cash equivalent?

FS presentation, Measurement and Deposit in foreign bank

3.   Smile CO. has the following items on December 31, 20x1:
3.
Cash on hand P 1,800,000
Cash on hand (USD, translated at P50:$1) 2,900,000
Revolving fund 200,000
Contingency fund 80,000
Cash in bank  –  BPI 6,000,000
Cash in bank  –  Swiss Savings Account (translated at P51:CHF1) 1,400,000
Treasury bill acquired September 28, 20x1, maturing January 28, 20x2 600,000

Additional information:
  The current exchange rates on December 31, 20x1 are as follows:
P52:$1 and P49:CHF1
  The Swiss Savings Account is restricted as to withdrawal.

 Requirement: How much is presented as cash and cash equivalents in Smile Co. ’s December 31, 20x1
statement of financial position?

CHAPTER 2 – ACT15 | M. MANAYAO,CPA 1

 

 
Compensating balance and Bank overdraft
4.   Cloudy Co.’s cash in bank consists
4. c onsists of the following:
Piggy Bank savings account 480,000
Piggy Bank checking account (20,000)
Oink Bank checking account 360,000
Porky Bank savings account #5100342120 200,000
Porky Bank savings account #6234210342 (70,000)
Unused credit line  –  Bombay Bank 250,000

Additional information:
  The Piggy Bank savings account includes P40,000
P40,00 0 compensating balance that is not legally restricted.
  The Oink Bank checking account includes P100,000 compensating balance that is legally restricted.
  The Porky Bank savings account #5100342120
# 5100342120 represents a cash bond that is mandated by a law to be
held pending the final settlement of an on-going litigation.

 Requirement:  What amount of cash in bank is presented in the financial statements?

Accounting for Petty Cash Fund

5.   An entity established a petty cash fund (PCF) of P30,000 on October 1, 20x1. During the month, P24,260
5.
have been disbursed from the PCF, and by the end of the month, the PCF box contains coins and currencies
amounting to P5,625.

 Requirement: Provide the journal entries including the replenishment of the fund at month-end. Use a
suspense account to record any discrepancy.

6.   Use the information in #5 above but assume the PCF is not replenished and financial statements are
6.
 prepared at month-end. Assume further that all the discrepancies in the PCF are cchargeable
hargeable to the petty
cash custodian.

 Requirement:  Provide the adjusting entry and determine the amount of PCF that will be reported in the
financial statements.

- End - 

CHAPTER 2 – ACT15 | M. MANAYAO,CPA 2