Intermediate Accounting 103 – Cash and Cash Equivalents / Bank Reconciliation Exercises

1. Violet Company had the following cash balances at December 31, 2017:
Cash in banks P375,000-
Petty cash funds (all funds were reimbursed on December 31, 2017) 125,000 =
Cash restricted for additions to plant (expected to be disbursed in 2018) 250,000
5,000
500,000
Cash in banks includes P125, 000 of compensating balances against short-term borrowing
arrangements at December 31, 2017. The compensating balances are legally restricted to withdrawal
by Violet. In the current asset section of Violet’s December 31, 2017, balance sheet, what total
amount should be reported as Cash?

255,000

2. Rose Corporation’s checkbook balance on December 31, 2017, was P8,000. In addition, Rose held
the following items in safe on December 31:
Check payable to Rose Corporation, dated January 2, 2018 not

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included in December 31 checkbook balance P2,000

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Check payable to Rose Corporation, dated December 20, and

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included in December 31 checkbook balance, but returned by

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the bank December 30, stamped “NSF”. The check was
redeposited January 2, 2018, and cleared January 7 8,000 - 400 =

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Postage stamps received from mail-order customers 7,600
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Check drawn on Rose Corporation’s account, payable to vendor, 150
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dated and recorded December 31, but not mailed until January
15, 2018
1,000
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The proper amount to be shown as cash on Rose’s balance sheet at December 31, 2017 is - 8,600
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3. Brown Co. established a P3,000 petty cash fund. You found the following items in the fund:
Cash and currency...................................................... P 1. 683.80
Expense vouchers........................................................ 829.80
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Advances to salesman.................................................. 200.00

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IOU from employee...................................................... 300.00

In the entry to replenish the fund, what amount should be debited to Cash short or over? 0
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4. Yellow Co. had the following account balances at December 31, 2017:
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Cash in banks 2,250,000

Cash on hand 125,000
Cash legally restricted for additions to plant
(Expected to be disbursed in 2018) 1,600,000
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Cash in banks includes P600,000 of compensating balances against the short-term borrowing
arrangements. The compensating balances are not legally restricted as to withdrawal by Yellow. In
the current assets section of Yellow’s December 31, 2017 balance sheet, total cash to be reported at –

2,375,000

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 5. Red Co. had the following balances at December 31, 2017:
Cash in checking account P 35,000
Cash in money market account 75,000
Treasury bill, purchased 11/1/2017, maturing 1/31/2018 350,000
Treasury bill, purchased 12/1/2017, maturing 3/31/2018 400,000 way
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Red’s policy is to treat as cash equivalents all highly liquid investments with a maturity of
three months or less when purchased. What amount should Red report as cash and cash
equivalents in its December 31, 2017 balance sheet?

460,000

6. The cash account in a company’s ledger showed a balance at December 31, 2017 of P44,150 which
was determined to consist of:
Petty cash fund P 240
Undeposited receipts, including a postdated check
For P700 12,200-700 = 11,500
Cash in Allied Bank, per bank statement, with a check

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For P400 still outstanding 22,450
Bond in sinking fund- cash 8,500

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Vouchers paid out collections, not yet recorded 430

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IOU’s signed by employees, taken from collections 330
P44,150

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At what amount should cash on hand and in bank be reported on the company’s balance sheet?
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34,190
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7. The following pertains to Solid Co. at December 31, 2017:

Checkbook balance P 60,000
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Bank statement balance 80,000

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Check drawn on Solid’s account, payable to

a vendor, dated and recorded 12/31/14
but not mailed until 1/10/15 9,000
On Solid’s December 31, 2017 balance sheet, what amount should be reported as cash?
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140,000

8. Liquid Corporation has supplied you with the following lists of its bank accounts and cash at
December 31, 2017:
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Checking account (compensating balance of

P15,000 with no restriction) P 48,000
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Savings account, 3. 25% 30,000

Certificate of deposit, 6 months, 10% due April 20,2018 60,000
Money market (30- day certificate), current rate 9.75% 40,000
Payroll account 20,000
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Certificate of deposit, 2 years, 12% due February 15, 2018 75,000

Petty cash 1,500
P274,000

The amount reported as Cash and cash equivalents as of December 31, 2017 should be -
139,500

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 9. The following items were included in the cash accounts of Regal Co. at December 31, 2017:
Checking account at Security Bank (P12,000)
Checking account at BPI 53,350
Checking account at City Bank (for payment of salaries) 55,000
Postage stamps 150
Employee’s post-dated check 1,000
IOU’s from employees 2,500
Customer’s check marked “NSF” 1,200
Postal money order 860
Petty cash fund (P 1,340 in expense receipts) 2,000-1340=660
150-day certificate of deposit, 10.75% due 1/31/15 80,000

What is the amount of cash that should be shown in Regal’s balances sheet at December 31, 2017?

109,870

10. Blue Company had the following cash balances at December 31, 2017:
Undeposited currency and coins P 35,000
Unrestricted demand deposits 1,450,000 1.3M

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Company checks written (and deducted from the
Demand deposits amount) but not scheduled

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to be delivered until January 6, 2018 180,000

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Time deposits restricted for use (expected use in 2018) 3,000,000

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In exchange for a guaranteed line of credit, Blue has agreed to maintain a minimum balance of
P150,000 in its unrestricted demand deposit account. How much should Blue report as cash on its
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December 31, 2017 balance?

1,515,000
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11. In preparing its bank reconciliation for the month of February. Orange Company has available the
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following information:
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Balance per bank statement, February 28 P18,025

Add: Deposit in transit, February 2 3,125
Less: Outstanding checks, February 28 2,875
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Add: Checks erroneously deducted by bank from Orange’ account, Feb. 10 125
Bank service charges for February 25
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What is the correct cash balance at February 28? 18,400

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12. The In preparing the bank reconciliation of Royal Company for the month of July, the following
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information is available:
Balance per bank statement, 7/31 P 54,075
Add: Deposits in transit, 7/31 9,375
Less: Outstanding checks, 7/31 8,625
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Less: Deposit erroneously recorded by bank to Royal account 375

Bank service charge for July 75

What is the correct cash balance at July 31? 54,450

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 13. Monarch Company had the following bank reconciliation at March 31.

Balance per bank statement, 3/31 P 93,000

Add: Deposit in transit 20,600
113,600
Less: Outstanding checks (25,200)
Balance per books, 3/31 P 88,400

Data per bank statement for the month of April follow:

Deposits P116,000
Disbursements 99,400

All reconciliation items at March 31 cleared through the bank in April. Outstanding checks at April 30
totaled P15,000. What is the amount of cash disbursements per books in April?

14. In preparing its August 31, 2017 bank reconciliation, Energy Corp. has made available the following

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information:

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Balance per bank statement, August 31 54,150

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Add: Deposit in transit 9,750
Less: Return of customer’s check for insufficient funds 1,800

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Less: Outstanding checks 8,250
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Bank service charges for August 300
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At August 31, 2017 , Energy’s correct cash balance is - 53,850
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15. An organization is reconciling its bank statement with its internal records. The cash balance per bank
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statement is P 12,000 while the cash balance per company books is P 10,800. There are P1,200 of
bank charges that are not yet recorded, 1,800 of outstanding checks, P 3,000 of deposits in transit,
and P 3,600 of bank credits and collections not yet recorded in the company’s books. If there are no
bank or book errors, what is the correct cash balance? 13,200
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