Cash and Cash Equivalents

SAMPLE PROBLEM 1
On December 31, 2023, Cashya at Kinaya Company’s “cash and cash equivalents” account balance per ledger of
P5,700,000 includes the following:

Manager’s check P 70,000

Traveler’s check 100,000
Treasury notes 50,000
Treasury shares, purchased on December 1, 2023, to be reissued on March 1, 2024 150,000
Escrow deposit 200,000
Bank drafts 20,000
Postal money orders 20,000
Demand deposit 100,000
Treasury bills, purchased December 16, 2023, due on March 15, 2024 50,000
160-day treasury bills 30,000
Time deposit – MBTC, one-year, due March 31, 2024 180,000
Time deposit – PNB, 90 days 170,000
Time deposit – BPI 45,000
Money market instrument, due on February 28, 2024 40,000
Money market instrument, due on June 1, 2024 70,000
Cash in bank – MBTC #1 1,050,000
Cash in bank – MBTC #2 (100,000)
Cash in bank – Maybank 450,000
Cash in bank – Walangbank (60,000)
Cash in bank – East West Bank 150,000
Cash in bank – BDO 250,000
Petty cash fund, which includes an unreplenished voucher totaled P4,000 10,000
Payroll fund 100,000
Travel fund 20,000
Interest fund 40,000
Tax fund 30,000
Sinking fund 420,000
Preference shares redemption fund 100,000
Contingent fund 200,000
Insurance fund 500,000
Fund for acquisition of an equipment expected to be disbursed in 2024 800,000
IOU from officers 20,000
Customer’s postdated checks 70,000
Customer’s checks returned by bank, marked “NSF” 20,000
Redeemable preference shares, acquired 3 months before maturity date 15,000
Unused credit line 200,000
Revolving fund 100,000
VISA Card – credit limit 20,000
Total cash and cash equivalents P 5,700,000

Additional information:
➢ Cash in bank – MBTC #1 includes a compensating balance of P50,000 for short-term borrowing arrangement. The
compensating balance is legally restricted as to withdrawal.
➢ Cash in bank – Maybank includes a compensating balance of P50,000 for long-term borrowing arrangement. The
compensating balance is legally restricted as to withdrawal.
➢ Cash in bank – East West Bank includes a compensating balance of P40,000 for short-term borrowing arrangement.
The compensating balance is legally restricted as to withdrawal.

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 Cash and Cash Equivalents

➢ Cash in bank – BDO includes a compensating balance of P40,000 for short-term borrowing arrangement. The
compensating balance is not legally restricted as to withdrawal.

Compute the correct balance of cash and cash equivalents as of December 31, 2023.

SAMPLE PROBLEM 2
On December 31, 2023, Cashing! Company’s balance of cash and cash equivalents per ledger of P4,000,000 includes the
following items:

Demand deposit P 2,200,000

Undeposited collection 300,000
Time deposit – 30 days 500,000
NSF check from customer 20,000
35-day money market placement, due on January 28, 2024 300,000
45-day commercial papers, due on February 4, 2024 80,000
Savings deposit in a closed bank 50,000
IOU from an employee 150,000
Preference shares redemption fund 400,000
Total P 4,000,000

Additional information:
➢ Included in the demand deposit was a customer’s check amounting to P50,000 dated January 5, 2024.
➢ Also included in the demand deposit is a customer’s check amounting to P90,000 dated December 31, 2022.
Cashing! neglected to encash the check. On December 31, 2023, the customer was informed about it and he was
willing to replace this with a new one. New check is yet to be received from the customer.
➢ Check of P60,000 dated January 31, 2024 in payment of accounts payable was recorded and mailed December
31, 2023.
➢ Check of P70,000 in payment of accounts payable was recorded on December 31, 2023 but mailed to creditors on
January 15, 2024.
➢ Cashing! uses the calendar year. The cash receipts journal was held open until January 15, 2024, during which
time P80,000 was collected and recorded on December 31, 2023.

Required:
1) Compute the correct balance of cash and cash equivalents as of December 31, 2023.
2) Prepare adjusting entries to correct the cash account.

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