Cash

1. The records of SML Co. on December 31, 20x1 show the following:
Checks drawn but not yet issued to payees P120,000
Customers’ checks dated January 15, 20x2 35,000
Customers’ checks dated December 31, 20x1 40,000
SML’s check dated January 15, 20x2 already mailed to payee 16,000
Cash on hand 130,000
Employees’ checks representing unclaimed salaries, held by the treasurer 14,000
Petty cash fund (full replenished) 20,000

Requirement: How much is included as cash on December 31, 20x1?

Cash Equivalents
2. Behringer Co. holds the following securities on December 31, 20x1:
Treasury bill acquired on November 1, 20x1, maturing on January 31, 20x2 P300,000
Money market placements to RCBC trust, made on December 15, 20x1, maturing 800,000
on August 31, 20x2
Redeemable preference shares acquired on December 31, 20x1 and redeemable on 1,600,000
March 31, 20x2
Three-month time deposit with UCPB 950,000
Investment in shares of stock acquired on December 31, 20x1 to be sold in January 450,000
20x2

Requirement: How much is presented as cash equivalents?

FS presentation, Measurement and Deposit in foreign bank

3. Smile Co. has the following items on December 31, 20x1:
Cash on hand (peso) P1,800,000
Cash on hand (USD, translated at P50:$1) 2,900,000
Revolving fund 200,000
Contingency fund 80,000
Cash in bank – BPI 6,000,000
Cash in bank – Swiss Savings Account (translated P51:CHF1) 1,400,000
Treasury Bill acquired September 28, 20x1, maturing January 28, 20x2 600,000

Additional information:
 The current exchange rates on December 31, 20x1 are as follows: (P52:$1 and P49:CHF1).
 The Swiss Savings Account is restricted as to withdrawals.

Requirement: How much is presented as cash and cash equivalents in Smile Co.’s December 31, 20x1
statement of financial position?

Compensating balance and Bank Overdraft

4. Cloudy Co.’s cash in bank consists of the following:
Piggy Bank savings account P480,000
Piggy Bank checking account (20,000)
Oink Bank checking account 360,000
Porky Bank savings account #123456789 200,000
Porky Bank checking account #987654321 (70,000)
Unused credit line – Bombay Bank 250,000

Additional information:
 The Piggy Bank savings account includes P40,000 compensating balance that is not legally restricted.
 The Oink Bank checking account includes P100,000 compensating balance that is legally restricted.
 The Porky Bank savings account #123456789 represents a cash bond that is mandated by a law court
to be held pending the final settlement of an on-going litigation.

Requirement: What amount of cash in bank is presented in the financial statements?

Accounting for PCF

5. An entity established a petty cash fund (PCF) of P30,000 on October 1, 20x1. During the month, P24,260 have
been disbursed from the PCF, and by the end of the month, the PCF box contains coins and currencies amounting
to P5,625.
 Requirement: Provide the journal entries including the replenishment of the fund at month-end. Use a
suspense account to record any discrepancy.

6. Use the information in #5 above but assume the PCF is not replenished and financial statements are prepared
at month end. Assume further that all discrepancies in the PCF are chargeable for the petty cash custodian.

Requirement: Provide the adjusting entry and determine the amount of PCF that will be reported in the
financial statements.