CASH AND CASH EQUIVALENT

Problem4-1: Cash Items

Lipton Company shows the following account balances in their financial records as of December
31,2014

Checking Account at Morgan Bank (P20,000)

Checking Account at Land Bank 500,000
Payroll Account-National Bank 100,000
Foreign Bank Account: Restricted 750,000
Postage Stamps 22,000
Employees' postdated checks 30,000
I.O.U from president's brother 75,000
Traveler's check 50,000
No-Sufficient funds check 18,000
Petty Cash fund (P 16,000 in currency & 100,000
Expenses receipts for P 84,000)
Cashier's Checks 36,000

Question 1:
What is the correct cash balance to be reported in the statement of financial position of Lipton
Company on December 31, 2014?
A. P 582,000 C. P 702,000
B. P 686,000 D. P 704,000

Question 2:
What is the correct cash balance to be reported in the statement of financial position of Lipton
Company on December 31, 2014, assuming the bank overdraft is repayable on demand and it's
integral to the entity cash management?

Problem4-2: Cash Items

The cash account in the current asset section of the balance sheet for Heater Company showed
a balance of P 555,000. It was found to include the following items:

Petty Cash Fund P 5, 000

( P 1,000 is in the form of paid vouchers)
Checking Account balance, per bank statement
(A P25, 000) check is still outstanding) 255, 000
Undeposited receipts,
including a post dated check for P 5,000 120, 000
Currencies and Coins awaiting deposit 55, 000
Bond Sinking Fund-Cash 100, 000
Check drawn by manager, 20, 000
returned by bank marked NSF
What is the correct cash balance for Heater Company's statement of financial position?

Problem4-3: Cash Items

On December 31, 2014 Agenda Company has the following information concerning its cash and
cash equivalents and some other items:
Coins and Currency P50,000
Checks received from customers 600,000
Certificate of deposit, term:12 months 800,000
Petty Cash Fund 4,000
Postage Stamps 500
Bank A, Checking account balance 2,100,000
Post-Dated Check, Customer 10,000
Money Order from customer 15,000
Cash In Savings Account 100,000
Bank Draft from Customer 40,000
Utility deposit to gas company, refundable 5,000
Cash advance received from customer 2,000
NSF check, C company 20,000
Cash Advance to company executive
collectible upon demand 200,000
Bank B checking account, overdraft 20,000
IOU's from employees 12,000

What amount of cash and cash equivalents should Agenda Company report in its December 31,
2014 statement of financial position?

Problem4-4: Cash Items

Delta Corporation has supplied you with the following list of its bank accounts and cash at
December 31, 2014:
Checking account P15, 000
(Compensating balance with no restriction) P48, 000
Savings Account, 2% 30, 000
Certificate of Deposit
-6 months, 10% due April 20, 2015 60, 000
Money Market
-(30 Day certificate) Current rate, 9.75% 40, 000
Payroll Account 20, 000
Certificate of Deposit,
3 months, 10% due February 15, 2015 75, 000
Petty Cash 1,500
Total P274, 500

Problem4-5: Cash Items

Angelic Corporation had the following account balances at December 31, 2014:
Cash on hand and in banks P975, 000
Cash restricted for additions to plant 600, 000
(expected to be disbursed in 2016)
Bank Certificates of deposit
(due January 16, 2015) 250, 000
In the Current assets sections of Angelic's December 31, 2014 statement of financial position
what is the total amount that should be reported under the caption "cash and cash equivalents"?

Problem4-6: Cash Items

The cash account in the current asset section of the December 31, 2014 balance sheet of King
Company Consist of:
Cash in bank P2,250,000
Cash Restricted for additions to plan 3,000,000
-expected to be disbursed in 2016
Petty cash funds 30,000
-all funds were replenished on December 31, 2014
Included in the cash in banks is a compensating balance of P750,000 against short-term
borrowing arrangement at December 31, 2014. The compensating balance is not legally limited
as to withdrawal by King Company. What is the correct cash balance of King Company at
December 31, 2014?

Problem4-7: Cash Items

Following were the account balances of Born Company at December 31, 2014:
Cash on Hand P187,500
Cash in current & savings account 3,375,000
Cash set aside for plant expansion 2,400,000
-expected for payment in 2015
Cash in current & savings accounts includes P900,000 as holdout against short-term loan
arrangements. What is the total cash that should be reported in the current asset section of
Born's December 31, 2014 statement of financial position?

Problem4-8: Cash Items

On December 31, 2014, First Company had the following cash balances:
Cash in banks P1,800,000
Petty cash funds 50,000
-all funds were reimbursed on 12/31/14)
Cash in banks included P600,000 in a separate bank where in the company is requied to
maintain a minimum average of P800,000 of 10 working on a rolling basis
In the current assets section of First December 31, 2014 statement of financial position what
total amount should be shown as cash?

Problem4-9: Cash Items

PCU corporation's checkbook balance on December 31, 2014, was P150,000. On the same
date, PCU held the following items in its safe:
A P5,000 check payable to PCU dated January 2015, was not included in the December 31,
checkbook balances
A P3,500 check payable to PCU which was deposited December 19 and included in the
December 31 checkbook balance was returned by the bank on December 30 marked NSF. The
check was re-deposited on January 2, 2015 and cleared on January 9.
A P25,000 check payable to a supplier and drawn on PCu's account was dated and recorded on
December 31, but not mailed until January 19, 2015
In its December 31, 2014 statement of financial position, how much should PCU report as cash?

Problem4-10: Cash Items

Volume Company had the following cash balance at December 31, 2014:
Undeposited Coins and currency P35,000
Unrestricted demand deposits 1,450,000
Company Checks written
-and deducted from the demand deposits amount) 270,000
but not scheduled to be mailed until Janury 2
Time deposits restricted for use 3,000,000
-expected use in 2015
In exchange for a guaranteed line of credit Volume has agreed to maintain a minimum balance
of P150,000 in its unrestricted demand deposits account. How much Volume report as cash in
its December 31,2014 statement of financial position

Problem4-11: Cash Items

Western Company reported a total cash and cash equivalent of P6, 325,000 on December 31,
2014, which includes the following information:
A. 2 certificates of deposits each totaling P500,000. These certificates of deposit have
maturity of 120 days
B. A check that is date January 12, 2015 in the amount of P125, 000
C. A commercial paper of P2,100,000 which is due in 120 days
D. currency and coins on hand amounted to P7,700
Western Company has agreed to maintain a cash of P500,000 in one of its banks at all times,
and it is not available for withdrawal and to ensure future credit availability ( this amount was
included in the above balance). How much is the correct amount of cash and cash equivalents
that Western Company should report in its December 31, 2014 statement of financial position?

Problem4-12: Cash Items

Eastern Co. provided the following information about the composition of its cash on December
31, 2014:
● Commercial savings account of P600,000 and a commercial checking account balance
of P900,000 are held at BPI
● Money market fund account held by Citibank that permits Eastern to write checks in this
balance, P5,000,000
● Travel Advances of P180,000 for executive travel for the first quarter of next year
 (employee to pay through salary deduction)
● A Separate cash fund in the amount of P1,500,000 is restricted for the retirement of long
term assets
● Petty cash fund of P10,000

What is the correct amount of cash and cash equivalents Eastern Company should report in its
December 31, 2014 statement of financial position?

Problem4-13: Cash Items

Real Company had the following transactions all throughout the year 2014 which is its first year
of operations:
Sales (90% collected in first year) P1,500,000
Bad debt written-off 60,000
Disbursements for cost and expenses 1,200,000
Disbursements for income taxes 90,000
Purchases of fixed assets 400,000
Depreciation on fixed assets 80,000
Proceeds from issuance of ordinary share 500,000
Proceeds from short-term borrowings 100,000
Payments on short-term borrowings 50,000
What is the Cash balance at December 31, 2014?

Problem4-14: Cash Items

The following information is shown in the accounting records of Container Company:

January1 December 31
Cash P186,000 -
Accounts Receivable P201,000 P273,000
Merchandise Inventory P258,000 P234,000
Accounts Payable P159,000 P144,000

Total sales and cost of goods sold for 2014 were P2,394,000 and P1749,000respectively. All
sales and purchase were made on credit. Various operating expenses of P321,000 were paid in
cash Assume that there were no other pertinent transactions
What is the Cash balance on December 31 2014 of Container Company?
Problem4-15: Bank Recollection
In preparing its bank reconciliation at December 31, 2014, Smiley Company has the following
available data:
Balance per bank statement, December 31, 2014 P38,075
Deposit in Transit, December 31, 2014 5,200
Outstanding Checks,December 31, 2014 6750
Amount erroneously credited by bank to Smiley's Account,
December 28, 2014 400
Bank Service charges for December 75

Problem4-16: Bank Reconciliation

While Checking the cash of Ruler Company on December 31, 2014 you find the following
information:
Balance per books P67,760
Balance in checking account
-outstanding checks per books of P9,876 55,323
Deposited in bank closed by BSF 16,000
Deposit in transit 23,345
Currency and Coins counted 9,500
Petty cash fund
-of which P450 is in the form of paid vouchers 1000
Bank Charges not yet taken up in books 58
Receivables from employees 700
Book error in recording a check, the correct
amount as paid by the bank is P890 instead of
P980 as recorded in the books or a difference of 90

Question 1
What is the correct cash in bank balance for Ruler Company on December 31, 2014?

Question 2
What is the correct cash on hand balance for Ruler Company on December 31, 2014?