PROBLEM SOLVING – CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS

1. On December 31, 2019, Albania Company provided the following data:

Cash in bank P3,000,000

Time deposit – 30 days 1,000,000
Money market placement due on June 30, 2020 2,000,000
Saving deposit in closed bank 100,000
Sinking fund for bond payable due June 30, 2021 1,500,000
Petty cash fund 20,000

a) The cash in bank included customer check of P200,000 outstanding for 18 months.
b) Check of P250,000 in payment of accounts payable was dated and recorded on December 31, 2019 but mailed to
creditors on January 15, 2020.
c) Check of P100,000 dated January 31, 2020 in payment of accounts payable was recorded and mailed December
31, 2019.
d) The reporting period is the calendar year. The cash receipts was held open until January 15, 2020 during which
time an amount of P450,000 was collected and recorded December 31, 2019.

Required:
a. Prepare Adjusting entries on December 31, 2019.
b. Compute the total amount of cash and cash equivalents that should be reported on December 31, 2019.
c. Explain the presentation of the items excluded from cash and cash equivalents.

2. Argentina Company reported the following accounts on December 31, 2019:

Cash on hand P1,000,000

Petty cash fund 50,000
Security Bank current account 2,000,000
PNB current account 1,500,000
BDO current account (overdraft) (200,000)
BSP Treasury bill – 120 days 3,000,000
BPI time deposit – 90 days 2,000,000
Bond sinking fund 2,500,000

a) The cash on hand included a customer postdated check of P150,000 and postal money order of P50,000.
b) The petty cash fund included unreplenished petty cash vouchers for P10,000 and an employee check for P5,000
dated January 31, 2020.
c) The BPI time deposit is set aside for acquisition of land to be made in early January 2020.
d) The bond sinking fund is set aside for payment of bond payable due on December 31, 2020.

Required:
a. Prepare adjusting entries on December 31, 2019.
b. Compute the total amount of cash and cash equivalents.
c. Explain the presentation of the items excluded from cash and cash equivalents.

3. Zealous Company established a petty cash fund.

a. Established a petty cash fund of P10,000 on January 2.
b. Petty cash expenses – January 2-31 are:
Postage 1,500
Supplies 5,500
Transportation 1,200
Miscellaneous expense 800
c. The fund replenished on February 1 and increased by P5,000.

Required:
Prepare journal entries to record the transactions under the fluctuating fund system and imprest fund system.
PROBLEM SOLVING – CASH AND CASH EQUIVALENTS

4. Zenith Company provided the following chronological transactions in relation to petty cash:
a. The entity established a petty cash fund of P10,000.
b. Petty cash disbursements were:
Postage 1,500
Supplies 3,000
c. Petty cash disbursements were:
Transportation 1,000
Accounts payable 3,500
d. Issued check for an amount to replenish the fund and bring the balance of the petty cash to P20,000.

Required:
Prepare journal entries to record the transactions under fluctuating fund system and imprest fund system.
5. Laborious Company closed the accounts on June 30. The entity provided the following transactions:

May 2 The entity established an imprest fund of P10,000.

May 29 The fund is replenished. The petty cash items included:
Currency and coin 2,000
Postage 1,000
Supplies 3,000
Transportation 2,500
Miscellaneous expense 1,500
June 30 The fund was not replenished. The fund is composed of the following:
Currency and coin 6,000
Supplies 2,000
Postage 1,000
Transportation 1,000
July 15 The fund is replenished and increase to P15,000.
Currency and coin 3,000
Supplies 3,500
Postage 1,500
Transportation 1,500
Miscellaneous expense 500

Required:
Prepare journal entries to record the transactions under imprest fund system and fluctuating fund system.