E 12 -2 — Items reported as cash and cash equivalents (page 12-18)

An entity has the following items as of Dec. 31, 2021:

Current account at Metrobank P2,000,000

Current account at BPI (100,000)
Payroll account 500,000
Foreign bank account – restricted (in equivalent pesos) 1,000,000
Postage stamps 1,000
Employee’s postdated check 4,000
IOU from controller’s sister 10,000
Credit memo from a vendor for a purchase return 20,000
Traveler’s check 50,000
Not-sufficient-funds check 15,000
Money order 30,000
Petty cash fund (P4,000 in currency and expense receipts for P6,000) 10,000
Treasury bills, due 3/30/22 (purchased 12/29/21) 200,000
Treasury bills, due 1/31/22 (purchased 2/1/21) 300,000

Required: Compute for the cash and cash equivalents that will be reported on the Dec.
31, 2021 statement of financial position.

ANSWER:
Current account at Metrobank P2,000,000
Payroll account 500,000
Traveler’s check 50,000
Money order 30,000
Petty cash fund (P4,000 in currency) 4,000
Treasury bills, due 3/31/07 (purchased 12/31/06) 200,000
Total P2,784,000
E 12 -3 — Items reported as cash and cash equivalents (page 12-19)

Entity’s controller is attempting to determine the amount of cash to be reported on its

December 31, 2021 balance sheet. The following information is provided:

1. Commercial savings account of P1,200,000 and a commercial checking account

balance of P1,800,000 are held at PS Bank.
2. Travel advances of P360,000 for executive travel for the first quarter of the next year
(employee to reimburse through salary deduction).
3. A separate cash fund in the amount of P3,000,000 is restricted for the retirement of a
long term debt.
4. Petty cash fund of P10,000.
5. An I.O.U. from a company officer in the amount of P40,000.
6. A bank overdraft of P250,000 has occurred at one of the banks the company uses to
deposit its cash receipts. At the present time, the company has no deposits at this
bank.
7. The company has two certificates of deposit, each totaling P1,000,000. These
certificates of deposit have maturity of 120 days.
8. The entity has received a check dated January 2, 2022 in the amount of P150,000.
9. The entity has agreed to maintain a cash balance of P200,000 at all times at PS
Bank to ensure future credit availability.
10. Currency and coin on hand amounted to P15,000.
11. Crypto currencies valued as P100,000

Required:
Compute for the cash and cash equivalents that will be reported on the Dec. 31, 2021
statement of financial position.

ANSWER:

Savings account at PS Bank P 1,200,000

Checking account at PS Bank 1,800,000
Petty cash fund 10,000
Currency and coin 15,000
Total P3,025,000
E 12 - 4 — Computations of adjusted cash balances. (Page 12-20)

An entity has the following items as of Dec. 31, 2021:

Cash on hand P 500,000

Petty cash fund 10,000
BPI current account 1,000,000
Security Bank current account No. 01 1,080,000
Security Bank current account No . 02 (80,000)
PNB savings account 1,200,000
PNB time deposit 500,000

Cash on hand includes the following items:

a. Customer’s check for P40,000 returned by bank on December 26, 2021 due to
insufficient fund but subsequently redeposited and cleared by the bank on January 8,
2022.
b. Customer’s check for P20,000 dated January 2, 2022, received on December
29, 2021.
c. Postal money orders received from customers, P30,000.

The petty cash fund consisted of the following items as of December 31, 2021.
Bills and coins P 2,000
Employees’ vales 1,600
Currency in an envelope marked “collections 1,200
for charity” with names attached
Unreplenished petty cash vouchers 1,300
Check drawn by Mandaluyong Corporation, 4,000
payable to the petty cashier
P10,100

Included among the checks drawn by Mandaluyong Corporation against the BPI current
account and recorded in December 2021 are the following:

a. Check written and dated December 29, 2021 and delivered to payee on
January 2, 2007, P80,000.
b. Check written on December 27, 2021, dated January 2, 2022, delivered to
payee on December 29, 2021, P40,000.

The credit balance in the Security Bank current account No. 2 represents checks drawn
in excess of the deposit balance. These checks were still outstanding at December 31,
2021.

The savings account deposit in PNB has been set aside by the board of directors for
acquisition of new equipment. This account is expected to be disbursed in the next 3
months after the end of the reporting period.
Required:
Compute the adjusted balances of following as of Dec. 31, 2021:
1. Cash on hand
2. Petty cash fund
3. BPI Current account
4. Cash and cash equivalents

Question No. 1
Unadjusted cash on hand P500,000
NSF check (40,000)
Post dated check received (20,000)
Adjusted cash on hand P440,000

Question No. 2
Petty cash fund per total P10,100
Employees' vales (IOU) (1,600)
Currency in envelope marked "collections for charity" (1,200)
Unreplenished petty cash vouchers (1,300)
Petty cash fund, as adjusted P6,000

Alternative computation:
Currency and coins P 2,000
Replenishment check 4,000
Petty cash fund, as adjusted P 6,000

Question No. 3
Unadjusted BPI current account P1,000,000
Unreleased check 80,000
Post dated check delivered 40,000
Adjusted BPI current account P1,120,000

Question No. 4
Cash on hand (see no. 1) P 440,000
Petty cash fund (see no. 2) 6,000
BPI current account (see no. 3) 1,120,000
Security Bank current account (net of
overdraft of P80,000) 1,000,000
PNB time deposit 500,000
Cash and cash equivalents, as adjusted P3,066,000
E 12 – 5 — Inflows and outflows of cash (Page 12-21)

The following information pertains to an entity’s cash account:

Cash balance, beginning P 880,000
Cash receipts from the sale of goods 8,000,000
Cash receipts from dividends and interest 80,000
Cash payments for interest 250,000
Cash payments to suppliers of goods 6,000,000
Cash payments to employees 800,000
Cash payments to acquire property, plant and equipment 1,200,000
Cash receipts from sales of property, plant and equipment 280,000
Cash payments to acquire equity or debt instruments of other entities 520,000
Cash receipts from sales equity or debt instruments of other entities 430,000
Cash proceeds from issuing shares 1,600,000
Cash payments to owners to redeem the entity’s shares 340,000
Cash proceeds from borrowings 2,100,000
Cash repayments of amounts borrowed 1,700,000
E 12 – 6 — Bank reconciliation (Page 12-22)

The Cash in Bank account of Dollar Corp disclosed a balance of P203,000 as of

December 31, . The bank statement as of December 31, showed a balance of
P106,000. Upon comparing the bank statement with cash records, the following facts
were developed:

a. The company’s account was charged on December 26 for a customer’s uncollectible

check amounting to P30,000.

b. A two-month, 17% P60,000 customer’s note dated October 25, discounted on

November 25, was dishonored on December 25, and the bank charged the company
P62,000, which included a protest fee of P2,000.

c. A customer’s check for P15,400 was entered as P14,500 by both the depositor and
the bank but was later corrected by the bank.

d. Check no. 142 for P12,425 was entered in the cash disbursements journal at
P12,245 and check no. 156 for P3,290 was entered as P32,900.

e. Bank service charges of P1,830 for December were not yet recorded on the books.

f. A bank memo stated that a customer’s note for P25,000 and interest of P1,000 had
been collected on December 28; and the bank charged P500. (No entry was made on
the books when the note was sent to the bank for collection).

g. Receipts on December 31 for P24,000 were deposited on January 2.

h. The following checks were outstanding on December 31:

No. 123 P3,000 No. 154 P4,000
143 * 2,000 157 6,000
144 7,000 159 7,000
147 3,000 169 5,000
* Certified by the bank in December

i. A deposit of P20,000 was recorded by the bank on December 5, but it should have
been recorded for Dolor Company rather than Dollar Corp.

j. Petty cash of P10,000 was included in the Cash in Bank balance.

k. Proceeds from cash sales of P60,000 for December 18 were stolen. The company
expects to recover this amount from the insurance company. The cash receipts were
recorded in the books, but no entry was made for the loss.

l. The December 21 deposit included a check for P20,000 that had been returned on
December 15 marked NSF. Dollar Corp had made no entry upon return of the check.
The redeposit of the check on December 21 was recorded in the cash receipts journal
of Dollar Company as a collection on account.

REQUIRED:
1. Prepare a bank reconciliation using:
a. Bank to book method;
b. Book to bank method; and
c. Adjusted balance method
2. Prepare adjusting entries as of December 31

a. Bank to book method;

Balance per bank, 12/31 106,000
a. DM – Customer’s Uncoll. Check 30,000
b. DM – Dishonored Disc. NR. 62,000
c. Error – Understated Collections (900)
d. Error – Overstated Payments (29,430)
e. DM – Service Charge 1,830
f. CM – Note Collected, net (25,500)
g. Deposits in Transit 24,000
h. Outstanding Checks (35,000)
i. Erroneous Bank Credit (20,000)
j. Petty Cash Fund 10,000
k. Stolen Receipts 60,000
l. Double Counted Deposit 20,000
Balance per books, 12/31 203,000

d. Check No. 142 P180 under

Check No. 156 29, 610 over
Net overstatement of payments P29,430 over

b. Book to bank method

Balance per books 203,000
Add (deduct):
a) Customer's uncollectible check (NSF) (30,000)
b) Dishonored note receivable
(including P2,000 protest fee) (62,000)
c) Book error in recording collection (P15,400 - P14,500) 900
d) Book errors in recording disbursements
Check no. 142 (P12,425 - P12,245) - under (180)
Check no. 156 (P3,290 - P32,900) - over 29,610
e) December bank service charges (1,830)
f) Note collected by bank (including interest income
of P1,000 and net of service charge of P500) 25,500
g) Deposits in transit (24,000)
h) Outstanding checks 35,000
 I) Bank error in recording deposit 20,000
j) Petty cash fund (10,000)
k) Stolen cash sales to be recovered from insurance co. (60,000)
l) Double counted deposit - NSF (20,000)
Balance per bank 106,000

c. Adjusted balance method

Bank Book
Unadjusted Balances, 12/31 106,000 203,000
a. DM – Customer’s Uncoll. (30,000)
Check
b. DM – Dishonored Disc. NR. (62,000)
c. Error – Understated 900
Collections
d. Error – Overstated 29,430
Payments
e. DM – Service Charge (1,830)
f. CM – Note Collected, net 25,500
g. Deposits in Transit 24,000
h. Outstanding Checks (35,000)
i. Erroneous Bank Credit (20,000)
j. Petty Cash Fund (10,000)
k. Stolen Receipts (60,000)
l. Double Counted Deposit (20,000)
Adjusted Balances, 12/31 75,000 75,000

Adjusting Journal Entries

a. Accounts receivable P30,000
Cash in bank P30,000
b. NR – Dishonored P62,000
Cash in bank P62,000
NR – Discounted P60,000
Notes receivable P60,000
c. Cash in bank P900
Accounts receivable P900
d. Cash in bank P29,430
Accounts payable P29,430
Check No. 142 P180 under
Check No. 156 29,610 over
Net overstatement of payments P29,430 over
e. Bank service charge P1,830
Cash in bank P1,830
f. Cash in bank P25,500
Bank service charge 500
Notes receivable P25,000
 Interest Income 1,000
j. Petty cash fund P10,000
Cash in bank P10,000
k. Receivable from insurance co. P60,000
Cash in bank P60,000

l.
Collection
Cash in bank P20,000
Accounts receivable P20,000
Return (NSF)
AR 20,000
Cash in Bank 20,000
Redeposit
Cash in bank P20,000
Accounts receivable P20,000
MCP 12 -1 Items reported as cash and cash equivalents. (Page12-24)

Entity A had the following items listed in its trial balance at 12/31/21:
Currency & Coins P 650
Balance in checking account 2,600
Customer checks waiting to be deposited 1,200
Treasury bills, purchased on 11/1/11,
mature on 4/30/12 3,000
Marketable equity securities 10,200
Commercial paper, purchased on 11/1/11,
mature on 1/30/12 5,000
What amount will Cashmere Soap include in its year-end balance sheet as cash and
cash equivalents?(D)
A. P9,450 C. P7,450
B. P12,450 D. P19,650
MCP 12 -2 Items reported as cash and cash equivalents. (Page12-24)

The following data pertain to Entity B on December 31, 2021:

Current account at Bangko Dito 1,800,000

Current account at Bangko Doon (100,000)
Payroll Account at Bangko Dyan 500,000
Foreign Bank Account (in equivalent peso) 800,000
Savings deposit in a closed bank 150,000
Postage Stamps 1,000
Employee’s post dated check 4,000
IOU from employees 10,000
Credit memo from a vendor for purchase return 20,000
Traveler’s check 50,000
Money Order 30,000
Sinking Fund 2,000,000
DAIF check of customer 15,000
Customer’s check dated 1/1/21 80,000
Time Deposit – 30 days 200,000
Money market placement (due 6/30/22) 500,000
Treasury bills, due 3/31/21 (purchased 12/31/22) 200,000
Treasury bills, due 1/31/21 (purchased 1/1/21) 300,000

The total amount to be reported as cash and cash equivalents as of Dec. 31, 2021 is
a. P2,780,000
b. P3,080,000
c. P3,580,000
d. P3,780,000

Current account Metro Bank 1,800,000

Payroll Account 500,000
Foreign Bank Account 800,000
Traveler’s check 50,000
Money Order 30,000
Time Deposit – Cash equivalents 200,000
T-bills, due 3/31/16 200,000
Cash and cash equivalent P3,580,000

Items not included:

Current account at Bangko Doon (100,000) Short term borrowing
Savings deposit in a closed bank 150,000 Other noncurrent assets
Postage stamps 1,000 Unused supplies (Other CA)
Employee's post dated check 4,000 Trade and other receivables
IOU from employees 10,000 Trade and other receivables
Credit memo from a vendor 20,000 Deduction from accounts return
for a purchase return payable
Petty cash fund - expense receipts 6,000 Expenses
Pension fund 2,000,000 Noncurrent asset
DAIF check of customer 15,000 Trade and other receivables
Customer's check dated 1/1/22 80,000 Trade and other receivables
Money market placement (due 6/30/22) 500,000 Short term investment
Treasury bills, due 1/31/22 Short term investment
(purchased 2/1/21) 300,000
MCP 12 – 3 Items reported as cash and cash equivalents. (Page12-25)

On December 31, 2011, the cash account of Emerson Company has a debit balance of
P3,500,000.An analysis of the cash account shows the following details:

Undeposited collections P 60,000

Cash in bank-PCIB checking account 500,000
Cash in bank-PNB (overdraft) (50,000)
Undeposited NSF check received from a
customer, dated December 1, 2011 15,000
Undeposited check from a customer,
dated January 15, 2012 25,000
Cash in bank-PCIB (fund for payroll) 150,000
Cash in bank-PCIB (savings deposit) 100,000
Cash in bank-PCIB (money market instrument, 90 days) 2,000,000
Cash in foreign bank (restricted)100,000IOUs from officers 30,000
Sinking fund cash 450,000
Listed stock held as temporary investment 120,000
P3,500,000

Cash and cash equivalents on Emerson’s December 31, 2011 balance sheet
should be

a. P2,760,000 b. P2,810,000

c. P2,885,000 d. P2,935,000
MCP 12 -4 Items reported as cash

The following items were included as cash in the books of Gotch Co.:

Checking account at Security Bank (P1,200)

Checking account at BPI 5,335
Checking account at Citytrust used for payment of salaries 5,500
Postage stamps 107
Employee’s post-dated check 2,300
I.O.U. from an employee 200
A check marked ‚DAIF‛ 1,250
Postal money order 500
Petty cash fund (P324 in expense receipts) 500
Certificate of time deposit with BPI 5,000
A gold ring surrendered as security by a customer
who lost his wallet (at market value) 1,500

The correct amount that should be reported as cash is

a. P11,835 b. P11,011 c. P16,511 d. P11,511
Checking account in BPI 5,335.00
Add: Checking account in Citytrust used for payment of salaries 5,500.00
Add: Postal Money Order 500.00
Add: Petty Cash Fund (500-324) 176.00
Total Cash 11,511.00
MCP 12 -5 Items reported as cash
MCP 12 -6 Items reported as cash

Entity F’s ledger showed a balance in its cash account at December 31, 2021 of
P341,125 which was determined to consist of the following:

Petty cash fund P 1,800

Cash per bank statement with a check for P3,000 still outstanding 168,375
Notes receivable in the possession of a collecting agency 12,500
Undeposited receipts, including postdated check for P5,250
and traveler’s check for P5,000 89,000
Bond sinking fund – cash 63,750
IOUs signed by employees 2,475
Paid vouchers not yet recorded 3,225
Total P341,125

At what amount should ‚Cash on hand and in bank‛ be reported on Ingersoll’s balance
sheet?
a. P267,375 b. P250,925 c. P331,125 d. P314,675
MCP 12 -7 Items reported as cash

Cash at Hand = Balance in Bank - Overdraft + amount for stamps

= P 925,000 - P17,000 + P600

= P918000+ P600

= P918,600

The correct answer is B. 918,600

MCP 12 -8 Computation of ending cash balance

Entity H had the following transactions in its first year of operations:

Sales (90% collected in the first year) P 750,000
Disbursements for costs and expenses 600,000
Purchases of equipment for cash 200,000
Proceeds from issuance of ordinary shares 250,000
Payments on short-term borrowings 25,000
Proceeds from short-term borrowings 50,000
Depreciation on equipment 40,000
Disbursements for income taxes 45,000
Bad debt write-offs 30,000
What is the cash balance at December 31 of the first year?
a. P 75,000 c. P 85,000
b. P105,000 d. P140,000
MCP 12 -9 Computation of ending cash balance

Entity I, operating on a calendaryear basis, has the following data in its accounting
records:
01/01 12/31
Cash 47,000
Inventory 101,000 93,000
Accounts Receivable 82,000 116,000
Accounts Payable 68,000 63,000
Sales 1,150,000
Cost of Goods Sold 900,000
Operating Expenses 200,000

What is the cash balance for December 31?

ANSWER: 66,000
MCP 12 -10 Petty cash fund
The petty cash fund of Entity J on December 31 is composed of the following:
Coins and Currencies 14,000
Petty Cash Vouchers:
Gasoline Payments 3,000
Supplies 1,000
Cash advances to employees 2,000
Employee’s check returned by bank marked NSF ` 5,000
Check drawn by the company payable to the order Of
the petty cash custodian, representing her salary 20,000
A sheet of paper with the names of employees
together with contribution for a birthday gift of
a co-employee in the amount of 8,000
53,000

The petty cash ledger account has an imprest balance of 50,000

1. What is the correct amount of petty cash on December 31?

ANSWER: 34,000
Coins and currencies P14,000
Accommodated check 20,000
Adjusted PCF P34,000

2. The adjusting entry at Dec. 31 would include a

ANSWER: Credit to Petty Cash Fund of 16,000
Adjusting journal entry:
Expenses P4,000
Advances to O&E 7,000
Cash short/over 5,000
Petty cash fund P16,000
MCP 12 -11 Bank reconciliation; bank to book method

The information below is from the books of the Seminole Corporation on June30:
Balance per bank statement P11,164
Receipts recorded but not yet deposited in the bank 1,340
Bank charges not recorded 16
Note collected by bank and not recorded on books 1,120
Outstanding checks 1,100
NSF checks - not recorded on books nor redeposited 160

Assuming no errors were made, compute the cash balance per books on June
30 before any reconciliation adjustments.

a. P11,404 b. P12,348 c. 10,460 d. P10,220

Balance per bank statement, June 30............................................. 11,164

Add: Receipts not yet deposited............................................ 1,340
Bank charges.............................................................. 16
NSF checks................................................................ 160
12,680
Deduct: Note collected by bank............................................... 1,120
Outstanding checks.................................................... 1,100
Balance per books before reconciliation adjustments..................... 10,460

To solve this question here is the solution,

Balance per Bank Statement 11,164

Add: Receipt not yet deposited 1,340

Add: Bank Charges 16

Add: NSF checks - not recorded on books nor redeposited 160

Less: Notes Collected by Bank (1,120)

Less: Outstanding Check (1,100)

Balance per Book Statement 10,460

MCP 12 -12 Bank reconciliation; bank to book method

The August 31 bank statement of Kelvin Inc. showed a balance of P113,000. Deducted
in arriving at this amount was a customer's NSF check for P2,400 that had been
returned. Kelvin had received no prior notice concerning this check. In addition to the
bank statement, other records showed there were deposits in transit totaling P17,200
and that outstanding checks totaled P10,800.

What is the cash balance per books at August 31 (prior to adjustments)?

a.P121,800
b.P119,400
c.P117,000
d.P115,400
MCP 12 -13 Bank reconciliation; bank to book method
MCP 12 -14 Bank reconciliation; book to bank method
MCP 12 -15 Bank reconciliation; adjusted balance method

As of June 30, 2010, the bank statement of Entity O had an ending balance of
P373,612. The following data were assembled in the course of reconciling the bank
balance:
 The bank erroneously credited Entity O for P2,150 on June 22.
 During the month, the bank charged back NSF checks amounting to P2,340 of
which P800 had been redeposited by the 25th of June.
 Collection for June 30 totaling P10,330 was deposited the following month.
 Checks outstanding as of June 30 were P30,205
 Notes collected by the bank for Entity O were P8,150 and the corresponding
bank charges were P50.

Adjusted bank balance on June 30= Bank statement of Entity O had an ending balance-
Bank error + Deposit in transit- Outstanding Check
Adjusted bank balance on June 30= 373,612-2150+10,330
Adjusted bank balance on June 30= P351,587
Therefore the adjusted bank balance on June= P351,587
MCP 12 -16 Bank reconciliation; adjusted balance method

The following data pertaining to the cash transactions and bank account of Entity P for
the month of May are available to you:
Cash balance, per records, May 31 17,194
Cash balance, per bank statement, 5/31 31,948
Bank service charge for May 109
Debit memo for the cost of printed checks
delivered by the bank 125
Outstanding checks, May 31 6,728
Deposit of May 30 not recorded by bank
until June 1 4,880
Proceeds of a bank loan of May 30, net of
interest of P300 5,700
Proceeds from a customer's promissory
note, including interest of P100 8,100
Check No. 2772 issued to a supplier entered
in the accounting records at P2,100 but
deducted in the bank statement at an
erroneous amount of 1,200
Stolen check lacking an authorized signature,
deducted from Mandirigma's account by the
bank in error 800
Customer's check returned by the bank marked
NSF; no entry has been made in the accounting
records to record the returned check 760

What is the correct cash balance at May 31?

a. P29,200 b. P30,300 c. P30,000 d. P30,900

Unadjusted bank balance 31,948

Outstanding checks (6,728)
Deposit in transit 4,880
Bank error (2,100-1200) (900)
Stolen check 800
Adjusted bank balance 30,000