Chapter 1 – Cash and Cash Equivalents

Problem 1 - 1

Check of P100,000 dated January 31, 2020 in payment of accounts payable was recorded and mailed
December 31, 2019.

:“Dated January 31, 2020” - postdated check

: postdated check of another company, wala talagang nilabas na cash yung nagbigay na company,
kailangang i-restore yung amount nung cash sa bank account nung payor.

Adjusting Entry:

Cash in bank 100,000

Accounts payable 100,000

Problem 1 – 2

Petty cash fund = 50,000

Expenses = 10,000
Receivable from employee = 5,000
Cash Balance = 35,000

Added to “cash and cash equivalents”.

Problem 1 – 3

Petty cash fund = 50,000

Petty cash fund balance (2,000 + 33,000) = 35,000

Adjusting entry:

Advances to employee (receivable) 10,000

Cash shortage 5,000

Petty cash fund 15,000

Currency in envelope marked collections for Christmas party – ignored

Problem 1 – 4
Petty cash fund = 20,000
Cash balance = 5,000

Adjusting entry:

Receivable from officer 2,000

Expenses 12,000

Cash shortage 1,000

Petty cash 15,000

To record the bank overdraft (adjusting entry):

City Bank current (normal side: credit) 100,000

Bank overdraft (current liability) 100,000

Problem 1-5

“Increase by”

Problem 1 – 9

*Replenish the entire expenses, may add or subtract the expenses (in adjusting entry) to the next
reporting period. May add if the amount of the related expenses on the next reporting period is
lower. May subtract if the amount of the related expenses is higher, the amount is consist of expenses
of previous year.

“Encashed the employee’s check. The Proceeds were retained in the fund.”

Problem 1 – 16

• Money market funds are mutual funds designed to be low-risk, liquid, and short-term investments.

• A market can be described as a money market if it is composed of highly liquid, short-term assets.

• Money market funds typically invest in government securities, certificates of deposit, commercial
paper of companies, and other highly liquid, low-risk securities.

Hence, money market is cash equivalent.

https://www.investopedia.com/ask/answers/071615/what-are-some-examples-money-market-
funds.asp

Problem 1 – 18

“Check drawn payable to the order of Ann Cruz, petty cash custodian, representing her salary”

The check payable to the order of the petty cash custodian representing her salary is actually an
accommodation check, part of cash.

https://www.coursehero.com/file/p26rm96/The-problem-is-silent-on-the-term-of-the-time-deposit-It-
is-assumed-that-the/

“An accommodation check is a check written by a thrift institution on its account with a bank. An
accommodation check is payable to a third party named by a customer withdrawing funds to cover the
check from his/ her account at the thrift institution.”

https://definitions.uslegal.com › accommodation-check

“The check salary of the custodian is to be drawn from the petty cash rather than from the bank. (you
draw it from an account held at that bank)”

https://www.pinoyexchange.com/discussion/398196/narito-ang-katanungang-pagtutuos/p77

https://forum.wordreference.com/threads/cheque-drawn-on-a-bank.566200/

Risk:
• The date of Post dated check and Undelivered check

• Point of view of the company pertaining to accounts receivable and accounts payable

• Petty cash fund balance

• Deposit in bank closed by BSP: Not included as part of cash. Kasi at the moment na magclose yung
bank. You will lose any claim from your deposit. But at the same time, you will set up a receivable from
PDIC.

https://www.facebook.com/groups/139623559523477/permalink/1954057791413369/

*PCF

Total cash accounted (or per count)

Total accountabilities (can you put inside)

Total accountabilities vs. Per count

Total accountabilities > Per count = Shortage

Total accountabilities < Per count = Overage

- Right amount is Total accountabilities

From the term “accountability”

Accountability is literally the ability and/or duty to report (or give account of) on events, tasks, and
experiences

*Expense Vouchers - because of usage of cash set aside