Midterm Quiz 1 – Cash and Cash Equivalent

Problem 1
The records of Mondragon Co. show the following balances on December 31, 2021:
Cash on hand ₱ 400,000
Cash in Bank – current account 1,200,000
Cash in Bank – peso savings deposit 5,000,000
Cash in Bank – dollar deposit (unrestricted) $ 100,000
Cash in Bank – dollar deposit (restricted) 250,000
Cash in 3-month money-market account ₱ 500,000
3-month unrestricted time deposit $ 20,000
Treasury bill, purchased 11/1/2021, maturing 2/14/2022 ₱1,600,000
Treasury bond, purchased 3/1/2021, maturing 2/28/2022 1,000,000
Treasury note, purchased 12/1/2021, maturing 2/28/2022 400,000
Unused Credit Line 4,000,000
Redeemable preference shares, purchased 12/1/2021, due on 3/1/2022 740,000
Treasury shares, purchased 12/1/2021, to be reissued on 1/5/2022 200,000
Sinking fund 400,000
Additional information:
• Cash on hand includes a ₱40,000 check payable to Mondragon Co. dated December 29, 2021.
• During December 2020, check amounting to ₱30,000 was drawn against the Cash in bank - current account in
payment of accounts payable. The check remains outstanding as of December 31, 2021.
• The Cash in Bank – peso savings deposit includes ₱800,000 security bond on a pending labor case, in favor of a
previous employee. The establishment of the bond is mandated by a court of law.
• The Cash in Bank – peso savings deposit also includes a compensating balance amounting to ₱500,000 which is
not legally restricted.
• The Cash in Bank – dollar deposit (unrestricted) account includes interest of $4,000, net of tax, directly credited
to Mondragon Co.’s account. The exchange rate at year-end is $1 is to ₱45.
Required (10 points):
How much is the cash and cash equivalents to be reported in the 2021 financial statements?

Problem 2
In preparing its bank reconciliation on December 31, 2021, Thanos Co. has made available the following data:
Balance per bank statement, 12/31/21 38,075
Deposit in transit, 12/31/21 5,200
Outstanding checks, 12/31/21 6,750
Amount erroneously credited by the bank to Thanos's account, 12/28/21 400
Bank service charges for December 75
Required (5 points)
Thanos's adjusted cash in bank balance on December 31, 2021

Problem 3
In preparing its August 31, 2023 bank reconciliation, Sunshine Co. has made available the following
information:
Balance per bank statement, 8/31/23 18,050
Deposit in transit, 8/31/23 3,250
Return of customer’s check for insufficient funds, 8/31/23 600
Outstanding checks, 8/31/23 2,750
Bank service charges for August 100
Required (5 points):
What is the correct cash balance of Sunshine on August 31, 2023?
1. Solution:
Cash on hand 400,000
Cash in Bank – current account (1.2M + 30K stale check) 1,230,000
Cash in Bank – peso savings deposit (5M – 800K bond) 4,200,000
Cash in Bank – dollar (unrestricted) ($100K x ₱45) 4,500,000
Cash in money-market account 500,000
3-month unrestricted time deposit ($20K x ₱45) 900,000
Treasury note, purchased 12/1/20x1, maturing 2/28/20x2 400,000
Redeemable P/S, purchased 12/1/20x1, due on 3/1/20x2 740,000
Cash and cash equivalents - adjusted balance 12,870,000

2. Solution:
Balance per bank statement, 12/31/21 38,075
Deposit in transit, 12/31/21 5,200
Outstanding checks, 12/31/21 (6,750)
Amount erroneously credited by bank to ABC's account, 12/28/21 (400)
Adjusted balance 36,125

3. Solution:
18,050 + 3,250 – 2,750 = 18,550