Determine Cash Balance

For each individual situation, determine the amount that should be reported as cash. If the item(s) is not reported as
cash, explain the rationale.

a. Checking account balance ₱462,500; certificate of deposit ₱700,000; cash advance to subsidiary of ₱490,000;
utility deposit paid to gas company ₱180.
b. Checking account balance ₱250,000; an overdraft in special checking account at the same bank as normal
checking account of ₱8,500; cash held in a bond sinking fund ₱100,000; petty cash fund ₱150; coins and currency
on hand ₱675.
c. Checking account balance ₱295,000; postdated check from customer ₱5,500; cash restricted due to maintaining
compensating balance requirement of ₱50,000; certified check from customer ₱4,900; postage stamps on hand
₱310.
d. Checking account balance at bank ₱21,000; money market balance at mutual fund (has checking privileges)
₱24,000; NSF check received from customer ₱400.
e. Checking account balance ₱350,000; cash restricted for future plant expansion ₱250,000; short-term Treasury
bills ₱90,000; cash advance received from customer ₱450 (not included in checking account balance); cash
advance of ₱3,500 to company executive, payable on demand; refundable deposit of ₱13,000 paid to the
government to guarantee performance on construction contract.

Determine Proper Cash Balance

Indigo Inc. closes its books regularly on December 31, but at the end of 2017 it held its cash book open so that a more
favorable statement of financial position could be prepared for credit purposes. Cash receipts and disbursements for
the first 10 days of January were recorded as December transactions. The information is given below.

a. January cash receipts recorded in the December cash book totaled ₱50,204, of which ₱30,800 represents cash
sales, and ₱19,404 represents collections on account for which cash discounts of ₱396 were given.
b. January cash disbursements recorded in the December check register liquidated accounts payable of ₱24,695 on
which discounts of ₱275 were taken.
c. The ledger has not been closed for 2017.
d. The amount shown as inventory was determined by physical count on December 31, 2017.

The company uses the periodic method of inventory.

Requirements:

Prepare any entries you consider necessary to correct Indigo’s accounts at December 31.
To what extent was Indigo Inc. able to show a more favorable statement of financial position at December 31 by
holding its cash book open? (Compute working capital and the current ratio.) Assume that the statement of financial
position that was prepared by the company showed the following amounts:

Debit Credit
Cash ₱42,900
Accounts receivable 46,200
Inventory 73,700
Accounts payable ₱49,500
Other current liabilities 15,620
Proof of Cash

The following data are applicable to Uptown Ltd:

September October
Bank statement balance – at month end ₱2,412 ₱2,782
Cash account balance – at month end 1,975 2,296
Bank charges for NSF check returned (normally written
off in month following return) 38 80
Outstanding checks – at month end 600 865
Deposit in transit – at month end 300 470
Bank service charges (normally recorded in month
following bank charge) 25 29
Drafts collected by bank (not recorded by company until
month following collection) 200 150
Total credits to cash account 14,853 17,979
Total deposits on bank statement ? 18,080

Check No. 224 was erroneously recorded in the company checkbook and journal as ₱486; the correct amount is ₱436.
(This check was not outstanding on October 30.) All disbursements were made by check.

Requirements:

1. Prepare a four-column reconciliation as of October 30.

2. Prepare all the necessary entries to adjust the cash account of Uptown Ltd.