Practice Problem 1 (Cash and Cash Equivalents).

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earn points.
PP1-1 (ACP)

Pygmalion Company had the following account balances on December 31, 2013:

Cash in bank – current account 5,000,000

Cash in bank – payroll account 1,000,000
Cash on hand 500,000
Cash in bank – restricted account for building
construction expected to be disbursed in 2014 3,000,000
Time deposit, purchased December 15, 2013 and
due March 15, 2014 2,000,000

The cash on hand included a P200,000 check payable to Pygmalion, dated January
15, 2014. What total amount should be reported as “cash and cash equivalents”
on December 31, 2013?

a. 6,300,000
b. 8,300,000
c. 6,500,000
d. 8,700,000

PP1-2 (AICPA Adapted)

Thor Company provided the following data on December 31, 2013:

Checkbook balance 4,000,000

Bank statement balance 5,000,000
Check drawn on Thor’s account, payable to supplier,
dated and recorded on December 31, 2013, but
not mailed until January 15, 2014 500,000
Cash in sinking fund 2,000,000

On December 31, 2013, what amount should be reported as “cash under current
assets?
a. 4,500,000
b. 5,500,000
c. 3,500,000
d. 6,500,000

PP1-3 (IAA)

Everlast Company reported the following information at the current year-end:

 Investment securities of P1,000,000. These securities are share investments

in entities that are traded in the Philippine Stock Exchange. As a result, the
shares are very actively traded in the market.

 Investment securities of P2,000,000. These securities are government

treasury bills. The treasury bills have a 10-year term and purchased on
December 31 at which time they had two months to go until they mature.

 Cash of P3,400,000 in the form of coin, currency, saving account and

checking account.

 Investment securities of P1,500,000. These securities are commercial

papers. The term of the papers is nine months and they were purchased on
December 31 at which time they had three months to go until they mature.

What total amount should be reported as cash and cash equivalents at the
current year-end?

a. 5,400,000
b. 6,400,000
c. 6,900,000
d. 7,900,000

PP1-4 (ACP)

On December 31, 2013, the cash account of Roel Company showed the following
details:
Undeposited collections 60,000
Cash in bank – PCIB checking account 500,000
Cash in bank – PNB (overdraft) ( 50,000 )
Undeposited NSF check received from customer,
dated December 1, 2013 15,000
Undeposited check from a customer, dated January 15, 2014 25,000
Cash in bank – PCIB (fund for payroll) 150,000
Cash in bank – PCIB (saving deposit) 100,000
Cash in bank – PCIB (money market instrument, 90 days) 2,000,000
Cash in foreign bank (restricted) 100,000
IOUs from officers 30,000
Sinking fund cash 450,000
Financial asset held for trading 120,000

On December 31, 2013, what total amount should be reported as “cash and cash
equivalents”?

a. 2,660,000
b. 2,810,000
c. 2,770,000
d. 810,000

PP1-5 (AICPA Adapted)

Burr Company had the following account balances on December 31, 2013:

Cash in bank 2,250,000

Cash on hand 125,000
Cash restricted for addition to plant
(expected to be disbursed in 2014) 1,600,000

Cash in bank included P600,000 of compensating balance against short-term

borrowing arrangement. The compensating balance is not legally restricted as to
withdrawal. In the December 31, 2013 statement of financial position, what total
cash should be reported under current assets?
a. 1,775,000
b. 2,250,000
c. 2,375,000
d. 3,975,000

PP1-6 (AICPA Adapted)

On December 31, 2013, West Company had the following cash balances:

Cash in bank 1,800,000

Petty cash fund (all funds were reimbursed on 12/31/2013) 50,000
Time deposit (due February 1, 2014) 250,000

Cash in bank included P600,000 of compensating balance against short-term

borrowing arrangement on December 31, 2013. The compensating balance is
legally restricted as to withdrawal. In the December 31, 2013 statement of
financial position, what total amount should be reported as cash and cash
equivalents?

a. 1,850,000
b. 1,250,000
c. 2,100,000
d. 1,500,000

PP1-7 (AICPA Adapted)

Campbell Company had the following account balances on December 31, 2013.

Petty cash fund 50,000

Cash in bank – current account 4,000,000
Cash in bank – sinking fund 2,000,000
Cash on hand 500,000
Cash in bank – restricted account for plant addition,
expected to be disbursed in 2014 1,500,000
Treasury bills 1,000,000
The petty cash fund included unreplenished December 2013 petty cash expense
vouchers of P10,000 and employee IOU of P5,000. The cash on hand included a
P100,000 check payable to Campbell dated January 15, 2014. In exchange for a
guaranteed line of credit, the entity has agreed to maintain a minimum balance of
P200,000 in its unrestricted current bank account. The sinking fund is set aside to
settle a bond payable that is due on June 30, 2014. What total amount should be
reported as “cash and cash equivalents” on December 31, 2013?

a. 7,435,000
b. 5,435,000
c. 4,435,000
d. 5,535,000

PP1-8 (PHILCPA Adapted)

ABC Company reported that the cash account per ledger had a balance a
December 31, 2013 of P4,415,000 which consisted of the following:

Petty cash fund 24,000

Undeposited receipts, including a postdated customer
check for P70,000 1,220,000
Cash in Allied Bank, per bank statement, with
a check for P40,000 still outstanding 2,245,000
Bond sinking fund 245,000
Vouchers paid out of collections, not yet recorded 43,000
IOUs signed by employees, taken from collections 33,000
4,415,000

What amount should be reported as cash in the December 31, 2013 statement of
financial position?

a. 3,379,000
b. 3,419,000
c. 3,489,000
d. 3,449,000

PP1-9 (PHILCPA Adapted)

The cash account in the statement of financial position of Tawiran Company

consisted of the following:

Bond sinking fund 1,500,000

Checking account in FEBTC (A P320,000 check is
still outstanding per bank statement) 3,155,000
Currency and coins awaiting deposit 1,135,000
Deposit in a bank closed by BSP 500,000
Petty cash fund (of which P10,000 in is the form
of paid vouchers) 50,000
Receivables from officers and employees 175,000
6,515,000

What total amount of cash should be reported under current assets?

a. 4,440,000
b. 4,330,000
c. 4,830,000
d. 5,830,000

PP1-10 (PHILCPA Adapted)

Islander Company provided the following information with respect to the cash
and cash equivalents on December 31, 2013.

Checking account at First Bank ( 200,000 )

Checking account at Second Bank 3,500,000
Treasury bonds 1,000,000
Payroll account 500,000
Value added tax account 400,000
Foreign bank account – restricted (in equivalent pesos) 2,000,000
Postage stamps 50,000
Employee’s postdated check 300,000
IOU from president’s brother 750,000
Credit memo from a vendor for a purchase return 80,000
Traveler’s check 300,000
Not sufficient-fund check 150,000
Petty cash fund (P20,000 in currency and expense
receipts for P30,000) 50,000
Money order 180,000

What amount should be reported as unrestricted cash on December 31, 2013?

a. 5,900,000
b. 4,600,000
c. 4,900,000
d. 6,900,000

PP1-11 (AICPA Adapted)

Ral Company reported that the checkbook balance on December 31, 2013 was
P5,000,000. In addition, the entity held the following items in its safe on that
date:

Check payable to Ral, dated January 2, 2014 in

payment of a sale made in December 2013, not
included in December 31 checkbook balance 2,000,000
Check payable to Ral, deposited December 15
and included in December 31 checkbook
balance, but returned by bank on December 30
stamped “NSF”. The check was redeposited on
January 2, 2014 and cleared on January 9, 2014 500,000
Check drawn on Ral’s account, payable to a vendor, dated
and recorded in Ral’s books on December 31, 2013
but not mailed until January 10, 2014 300,000

What is the amount to be reported as “cash” on December 31, 2013?

a. 4,800,000
b. 5,300,000
c. 6,500,000
d. 6,800,000

PP1-12 (ACP)

The checkbook balance of Dove Company on December 31, 2013 was P4,000,000.
Data about certain cash items follow:

 A customer check amounting to P200,000 dated January 2, 2014 was

included in the December 31, 2013 checkbook balance.
 Another customer check for P500,000 deposited on December 22, 2013
was included in its checkbook balance but returned by December 26, 2013
and cleared two days later.
 A P400,000 check payable to supplier dated and recorded on December 30,
2013 was mailed on January 16, 2014.
 A petty cash fund of P50,000 with the following summary on December 31,
2013:

Coins and currencies 5,000

Petty cash vouchers 43,000
Return value of 20 cases of soft drinks 2,000
50,000

 A check of P43,000 was drawn on December 31, 2013 payable to Petty

Cash.
What total amount should be reported as “cash” on December 31, 2013?

a. 4,248,000
b. 4,200,000
c. 4,205,000
d. 3,748,000

PP1-13 (PHILCPA Adapted)

Account of the petty cash fund of Timex Company showed its composition as
follows:
Coins and currency 3,300
Paid vouchers:
Transportation 600
Gasoline 400
Office supplies 500
Postage stamps 300
Due from employees 1,200 3,000

Manager’s check returned by bank marked “NSF” 1,000

Check drawn by the entity to the order
of petty cash custodian 2,700

What is the correct amount of petty cash fund for statement presentation
purposes?

a. 10,000
b. 7,000
c. 6,000
d. 9,000

PP1-14 (PHILCPA Adapted)

The petty cash fund of Liwanag Company on December 31, 2013 is composed of
the following:

Currencies 20,000
Coins 2,000
Petty cash vouchers:
Gasoline payments for delivery equipment 3,000
Medical supplies for employees 1,000
Repairs of office equipment 1,500
Loans to employees 3,500
A check drawn by the entity payable to the
order of Grace de la Cruz, petty cash
custodian, representing her salary 15,000
An employee’s check returned by the bank
for insufficiency of funds 3,000
A sheet of paper with names of several
employees together with contribution
for a birthday gift of a co-employee.
Attached to the sheet of paper is a currency of 5,000

The petty cash general ledger account has an imprest balance of P50,000. What is
the amount of petty cash fund that should be reported in the statement of
financial position on December 31, 2013?

a. 42,000
b. 27,000
c. 37,000
d. 22,000

PP1-15 (ACP)

Yasmin Company provided the following information on December 31, 2013:

Petty cash fund 50,000

Current account – First Bank 4,000,000
Current account – Second Bank (overdraft) ( 250,000 )
Money market placement – Third Bank 1,000,000
Time deposit – Fourth Bank 2,000,000

 The petty cash fund included unreplenished December 2013 petty cash
expense vouchers for P15,000 and an employee check for P5,000 dated
January 31, 2014.

 The Fourth Bank time deposit is set aside for land acquisition in early
January 2014.

What total amount should be reported as “cash and cash equivalents” on

December 31, 2013?

a. 5,130,000
b. 5,150,000
c. 4,130,000
d. 4,880,000