Republic of the Philippines

E A S T E R N V I S AYA S S T A T E U N I V E R S I T Y
Tacloban City
College of Business and Entrepreneurship, Accountancy Department

INTERMEDIATE ACCOUNTING 1
SEATWORK_CASH AND CASH EQUIVALENTS Reena Linn Campos-Daguinod, CPA, MSA

INSTRUCTIONS: Answer the following problems. Make your solutions or answer presentations clean and organized.

All from Valix, Peralta, Valix

MULTIPLE CHOICE QUESTIONS

1. Tranvia Company revealed the following information on December 31, 2020:

Cash in checking account 350,000

Cash in money market account 750,000
Treasury bills, purchased November 1, 2020, maturing January 31, 2021 3,500,000
Time deposit purchased December 1,2020 maturing Mar 31, 2021 4,000,000

What amount should be reported as cash and cash equivalents on December 31, 2020?
a. 1,100,000
b. 3,850,000
c. 4,600,000
d. 8,600,000

2. Affable Company provided the following information at year-end compromising the cash account:

Cash in bank – demand deposit 5,000,000

Cash on Hand 400,000
Postage stamps unused 5,000
Certificate of time deposit 1,500,000
Money order 50,000
Manager check 100,000
Traveler check 1,000,000
Postdated customer check 500,000

What total amount should be reported as cash at year-end?

a. 8,050,000
b. 7,050,000
c. 6,550,000
d. 6,450,000

3. Thor Company provided the following data on December 31, 2020:

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, 2020 but nor mailed until Jan 31, 2021 500,000
Cash in sinking fund 2,000,000

On December 31, 2020, 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
 Republic of the Philippines
E A S T E R N V I S AYA S S T A T E U N I V E R S I T Y
Tacloban City
College of Business and Entrepreneurship, Accountancy Department

4. Joana Company had the following account balances on December 31, 2020:

Petty cash fund 50,000

Cash on hand 500,000
Cash in bank-current account 4,000,000
Cash in bank – payroll account 1,000,000
Time deposit 2,000,000
Cash in bank – restricted account for plant addition, expected to be disbursed
In early 2021 500,000
Cash in sinking fund set aside for bond payable due June 30, 2021 1,500,000

The petty cash fund included unreplenished December 2020 petty cash expense vouchers of P5,000 and employee
IOU of P5,000.

The cash on hand included a P100,000 check payable to the entity dated January 31, 2021.

What total amount should be reported as cash and cash equivalents on December 31, 2020?
a. 6,940,000
b. 8,940,000
c. 7,940,000
d. 7,440,000

5. On December 31, 2020 Lamentable Company had the following cash balances:

Cash in bank – current account 6,000,000

Petty cash fund-all funds were reimbursed at year-end 50,000
Time deposit – three months, due January 15, 2021 2,500,000
Saving deposit 1,000,000

Cash in bank included P400,000 of compensating balance against short-term borrowing arrangement.
The compensating balance is legally restricted as to withdrawal

What amount should be reported as cash and cash equivalents?

a. 9,500,000
b. 9,150,000
c. 9,100,000
d. 6,950,000

6. Yasmin Company provided the following on December 31, 2020:

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

• A check for P100,000 was drawn against First Bank current account dated and recorded December 29, 2020 bur
delivered to payee on January 15, 2021.
• The Fourth Bank time deposit is set aside for land acquisition in early January 2021.

What total amount should be reported as cash and cash equivalents on December 31, 2020?
a. 5,050,000
b. 5,150,000
c. 4,900,000
d. 4,150,000
 Republic of the Philippines
E A S T E R N V I S AYA S S T A T E U N I V E R S I T Y
Tacloban City
College of Business and Entrepreneurship, Accountancy Department

7. On December 31, 2020, Roma Company reported cash balance of P9,950,000.

Undeposited collections 600,000

Cash in bank – BDO checking account 4,000,000
Undeposited NSF check received from customer, dated December 1, 2020 150,000
Undeposited check from a customer, dated January 15, 2021 250,000
Cash in bank – BDO fund for payroll 1,000,000
Cash in Bank – BDO time deposit, 90 days 2,000,000
Cash in foreign bank restricted 1,500,000
Cash in bank – BDO value added tax account 450,000
TOTAL 9,950,000

On December 31, 2020, what total amount should be reported as cash and cash equivalents?
a. 7,600,000
b. 8,200,000
c. 6,050,000
d. 8,050,000

8. Aruba Company had a checkbook balance on December 31, 2020 of P8,000,000 and held the following items in
the safe:

Check payable to Aruba, dated January 5, 2021, included in

December 31 checkbook balance 2,000,000
Check payable to Aruba, deposited December 20, and included in
December 31 checkbook balance, but returned by bank on
December 30, stamped “NSF”. The check was redeposited January 2, 2021,
And cleared January 3, 2021 500,000
Check drawn on Aruba’s account and payable to a vendor, dated and recorded
December 31 but not mailed until January 15, 2021 1,500,000

Cash on hand – undeposited collections 400,000

Change fund 40,000
Time deposit for plant expansion 1,000,000
Treasury Bill 2,500,000
Money market placement 3,000,000
Postage stamps unused 10,000

8.1 What total amount should be reported as cash on December 31, 2020?
a. 7,400,000
b. 7,440,000
c. 8,440,000
d. 7,450,000
8.2 What total amount should be reported as cash equivalents on December 31, 2020?
a. 6,500,000
b. 3,000,000
c. 5,500,000
d. 2,500,000

9. Ecstasy Company reported the following information at the end of the current year.

• Share investments of P1,000,000 that are actively traded in the Philippine Stock Exchange.
• Government treasury bills of P2,000,000
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
 Republic of the Philippines
E A S T E R N V I S AYA S S T A T E U N I V E R S I T Y
Tacloban City
College of Business and Entrepreneurship, Accountancy Department

• Cash of P3,400,000 in the form of coin, currency, saving account and checking account.
• Commercial papers of P1,500,000
The term of the commercial papers is nine months and the instruments were purchased on December 31 at which
time they had three months to go until they mature.

9.1 What total amount should be reported as cash at the end of the current year?
a. 3,400,000
b. 5,400,000
c. 4,900,000
d. 6,900,000

9.2 What total amount should be reported as cash equivalents at the end of the current year?
a. 3,500,000
b. 4,500,000
c. 1,500,000
d. 2,500,000

10. Marjorie Company established a petty cash fund of P50,000 with the following information:

Coins and currency 22,000

Petty cash vouchers:
Gasoline 3,000
Medical supplies 1,000
Repairs 1,500
IOU from an employee 3,500
Check drawn payable to the order of Ann Crusz, petty cash custodian,
Representing her salary 15,000
Check of an employee returned by bank marked “NSF” 3,000
A sheet of paper with the names of several employees together
With a contribution for a birthday party and attached to the sheet
Of paper is a currency of 5,000

What amount of petty cash fund should be reported?

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

11. Admirable company had a petty cash fund which included the following details:

Currency and coins 2,000

Paid vouchers
Transportation 600
Gasoline 400
Office supplies 500
Postage stamps 300
Due from employees 1,200 3,000
Employee’s check returned by bank marked “NSF” 1,000
Chek drawn to the order of petty cash custodian 4,000

What amount of petty cash should be reported?

a. 2,000
b. 7,000
c. 6,000
 Republic of the Philippines
E A S T E R N V I S AYA S S T A T E U N I V E R S I T Y
Tacloban City
College of Business and Entrepreneurship, Accountancy Department

d. 9,000

12. Love Company reported the following information in relation to cash on December 31, 2020:

• Checkbook balance, P4,000,000

• Undeposited collections, P400,000
• A customer check amounting to P200,000 dated January 2, 2021 was included in the December 31, 2020
checkbook balance.
• Another customer check for P500,000 deposited on December 22, 2020 was included in the checkbook balance
but returned by the bank for insufficiency of fund.
This check was redeposited on December 26, 2020 and cleared two days later.
• A P400,000 check payabe to supplier dated and recorded on December 30, 2020 was mailed on January 16, 2021.
• A petty cash fund of P50,000 comprised the following on December 31, 2020:

Currency and coins 5,000

Petty cash vouchers 40,000
Refundable deposit for returnable containers 5,000
50,000

• A check of P40,000 was drawn on December 31, 2020 payable to Petty Cash.

12.1 What is the adjusted cash in bank on December 31, 2020?

a. 4,600,000
b. 4,200,000
c. 4,400,000
d. 3,700,000

12.2 What total amount should be reported as cash on December 31, 2020?
a. 4,645,000
b. 4,845,000
c. 4,600,000
d. 4,650,000

LONG PROBLEMS

Problem 1. On December 31, 2020, Albania Company provided the following data:

Cash in Bank 3,000,000

Time Deposit – 30 days 1,000,000
Money Market placement due on June 30, 2021 2,000,000
Saving deposit in closed bank 100,000
Sinking fund for bond payable due June 30, 2022 1,500,000
Petty cash fund 20,000

• The cash in bank included customer check of P200,000 outstanding for 18 months
• Check of P250,000 in payment of accounts payable was dated and recorded on December 31, 2020 but mailed to
creditors on January 15, 2021.
• Check of P100,000 dated January 31, 2021 in payment of accounts payable was recorded and mailed December
31, 2020.
• The reporting period is the calendar year
• The cash receipts journal was held open until January 15, 2021 during which time an amount of P450,000 was
collected and recorded on December 31, 2020.
 Republic of the Philippines
E A S T E R N V I S AYA S S T A T E U N I V E R S I T Y
Tacloban City
College of Business and Entrepreneurship, Accountancy Department

Required:
1. Prepare adjusting entries on December 31, 2020
2. Compute the total amount of cash and cash equivalents that should be reported on December 31, 2020
3. Explain the presentation of the items excluded from cash and cash equivalents.

Problem 2. Argentina Company reported the following accounts on December 31, 2020:

Cash on hand 1,000,000

Petty Cash fund 50,000
Security Bank current account 2,000,000
PNB current account 1,500,000
BDO current account (overdraft) (200,000)
BSP treasury bill – 120 days 3,000,000
BPI time deposit – 90 days 2,000,000
Bond sinking fund 2,500,000

• The cash on hand included a customer postdated check of P150,000 and postal money order of P50,000
• The petty cash fund included unreplenished petty cash vouchers for P10,000 and an employee check for P5,000
dated January 31, 2021.
• The BPI time deposit is set aside for acquisition of land to be made in early January 2021.
• The bond sinking fund is set aside for payment of bond payable due December 31, 2021.

Required:

1. Prepare adjusting journal entries on December 31, 2020

2. Compute the total amount of cash and cash equivalents
3. Explain the presentation of the items excluded from cash and cash equivalents.

Problem 3. Armenia Company reported the following information on December 31, 2020:

Cash on hand 1,000,000

Petty cash fund 50,000
Cash in Bank 4,000,000
Saving deposit 2,000,000
7,050,000

• Cash on hand included the following:

o Customer check of P100,000 returned by bank December 26, 2020 due to insufficient fund but
subsequently redeposited and cleared by bank January 5, 2021.
o Customer check for P150,000 dated January 15, 2021 received December 22, 2020
o Postal money orders received from customers, P200,000
• The petty cash fund consisted of the following items:
o Currency and coins 2,000
o Employee’s IOUs 10,000
o Currency in envelope marked collections for
Christmas Party 5,000
o Check drawn by Armenia payable to petty cashier 33,000
50,000
• Check written and dated December 22, 2020 and delivered to payee on January 5, 2021, P200,000.
• Check written December 26, 2020 and dated January 31, 2021 delivered to payee on December 26, 2020, P300,000
 Republic of the Philippines
E A S T E R N V I S AYA S S T A T E U N I V E R S I T Y
Tacloban City
College of Business and Entrepreneurship, Accountancy Department

Required:
1. Prepare adjusting entries on December 31, 2020
2. Compute the total cash on December 31, 2020
3. Explain the presentation of the items excluded from cash and cash equivalents

Problem 4. Callous Company reported the following accounts on December 31, 2020:

Cash on hand 200,000

Petty cash fund 20,000
Philippine Bank current account 5,000,000
City Bank current account No. 1 4,000,000
City Bank current account No. 2 (overdraft) (100,000)
Asia Bank saving account 250,000
Asia Bank time deposit, 90 days 2,000,000

• Cash on hand included the following items:

o Customer check for P35,000 returned by bank December 26, 2020 due to insufficient fund but
subsequently redeposited and cleared by the bank on January 10, 2021.
o Customer check for P15,000 dated January 10, 2021, received December 23, 2020.
• The petty cash fund consisted of the following items:
o Currency and coins 5,000
o IOUs from officers 2,000
o Unreplenished petty cash vouchers 12,000
19,000
• Included among the checks drawn by Callous Company against the Philippine Bank current account and recorded
in December 2020 were the following:
o Check written and dated December 23, 2020 and delivered to payee on January 31, 2020, P25,000
o Check written December 26, 2020, dated January 30, 2021, delivered to payee on December 28, 2020,
P45,000

Required:
1. Compute the total cash and cash equivalents
2. Prepare the adjusting entries on December 31, 2020.
3. Explain the presentation of the items excluded from cash and cash equivalents

Problem 5. Zealous Company established a petty cash fund.

1. Established a petty cash fund of P10,000 on January 2

2. Petty cash expenses – January 2-31 are:
Postage 1,500
Supplies 5,500
Transportation 1,200
Miscellaneous Expense 800
3. The fund is replenished on February 1 and increased by P5,000

Required:

Prepare the journal entries to record the transactions under the Imprest fund system and fluctuating fund system
 Republic of the Philippines
E A S T E R N V I S AYA S S T A T E U N I V E R S I T Y
Tacloban City
College of Business and Entrepreneurship, Accountancy Department

Problem 6. Zenith Company provided the following chronological transactions in relation to petty cash:

1. The entity established a petty cash fund of P10,000

2. Petty cash disbursements were:
Postage 1,500
Supplies 3,000
3. Petty cash disbursements were:
Transportation 1,000
Accounts Payable 3,500
4. Issued check for an amount to replenish the fund and bring the balance of the petty cash to P20,000.

Required:

Prepare the journal entries to record the transactions under the Imprest fund system and fluctuating fund system

Problem 7. Laborious Company closed the accounts on June 30. The entity provided the following transactions:

May 2 The entity established an imprest fund of P10,000

29 The fund is replenished. The petty cash items include:

Currency and coins 2,000

Postage 1,000
Supplies 3,000
Transportation 2,500
Miscellaneous Expenses 1,500
Jun 30 The fund was not replenished. The fund is composed of the following:
Currency and Coins 6,000
Supplies 2,000
Postage 1,000
Transportation 1,000
July 15 The fund is replenished and increased to P15,000.

Currency and coin 3,000

Supplies 3,500
Postage 1,500
Transportation 1,500
Miscellaneous Expenses 500

Required:

Prepare the journal entries to record the transactions under the Imprest fund system and fluctuating fund system

Problem 8. Tacit Company provided the following transactions:

2020
Nov 2 The entity established an imprest petty cash fund of P10,000
30 An examination of the cash disclosed:
Currency and coin 3,000
Memoranda showing expenditures for:
Postage 2,000
Supplies 5,000

A check was drawn to replenish the fund and to increase its amount to P20,000.
 Republic of the Philippines
E A S T E R N V I S AYA S S T A T E U N I V E R S I T Y
Tacloban City
College of Business and Entrepreneurship, Accountancy Department

Dec 31 The fund was NOT replenished.

Currency and coin 11,000
Memoranda showing expenditures for:
Postage 3,000
Supplies 4,000
Deposit for 20 cases of softdrinks 2,000

2021
Jan 2 The deposit for the 20 cases of softdrinks is collected
31 A check was drawn to replenish the fund.
Currency and coin 1,000
Postage stamps 500
Memoranda showing expenditures since
November 30, 2020 for:
Postage 5,000
Supplies 6,000
Payment of account 7,000

Required:
Prepare the journal entries to record the transactions under the Imprest fund system and fluctuating fund system

Problem 9. On December 1, 2020, Wacky Company established an imprest petty cash fund.

2020
Dec 2 Established an imprest petty cash fund of P10,000 by writing a check on National Bank
20 Replenished the petty cash fund by writing a check on National Bank. The fund contained:

Currency and coins 1,000

Vouchers for selling expenses 5,000
Vouchers for Miscellaneous expenses 2,000
Vouchers for equipment 2,000

Dec 31 The petty cash fund was NOT replenished. The fund contained:

Currency and coins 6,000

Postdated employee’s check 2,000
Vouchers for selling expenses 1,500
Vouchers for transportation 500

Jan 15 Encashed the employee’s check. The proceeds were retained in the fund.
31 Replenished the petty cash fund by writing a check on National Bank. The petty cash vouchers for January
expenditures are:

Selling expenses 500

Administrative expenses 2,000
Transportation 1,000
Payment for supplier’s invoice 1,200

Required:
1. Prepare the journal entries to record the transactions under the Imprest fund system and fluctuating fund system
2. How much is the petty cash on January 31, 2021 before the replenishment?

-END-