CASH AND CASH EQUIVALENTS

PROBLEM 1

Company X reported the following accounts on December 31, 2023:

Cash on hand 1,000,000

Petty cash fund 50,000

Metrobank current account 2,000,000

BDO current account 1,500,000

BPI current account (overdraft) (200,000)

BSP treasury bill – 120 days 3,000,000

Landbank 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, 2024.

c. The Landbank time deposit is set aside for acquisition of land to be made in early January

2024.

d. The bond sinking fund is set aside for payment of bond payable due December 31, 2025.

Required:

Compute the total amount of cash and cash equivalents.

PROBLEM 2

Company X reported the following information on December 31, 2023:

Cash on hand 1,000,000

Petty cash fund 50,000

Cash in bank 4,000,000

Saving deposit 2,000,000

7,050,000

a. Cash on hand included the following:

i. Customer check of P100,000 returned by bank December 26, 2023 due to insufficient fund

but subsequently redeposited and cleared by bank January 5, 2024.

ii. Customer check for P150,000 dated January 15, 2024 received December 22, 2023.

iii. Postal money orders received from customers, P200,000.

b. The petty cash fund consisted of the following items:

Currency and coins 2,0000

Employees IOUs 10,000

Currency in envelope marked “collections for Christmas party” 5,000

Check drawn by Company X payable to petty cashier 33,000

Total 50,000

c. The cash in bank balance excludes the following items:

i. Check written and dated December 22, 2023 and delivered to payee on January 5, 2024,

P200,000.

ii. Check written December 26, 2023 and dated January 31, 2024 delivered to payee on

December 26, 2023, P300,000.

Required:

Compute the total cash on December 31, 2023.

Page | 3

PROBLEM 3

Company X closed the accounts on June 30. The entity provided the following transactions:

May 2 The entity established a petty cash fund of P10,000.

29 The fund is replenished. The petty cash items include:

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 increased to P15,000.

Currency and coin 3,000

Supplies 3,500

Postage 1,500

Transportation 1,500

Miscellaneous expense 500

Required:

Prepare the journal entries to record the transactions above.

Page | 4

PROBLEM 4

Company X provided the following information at year-end comprising the cash account:

Cash in bank – demand deposit 5,000,000

Cash on hand 400,000

Postage stamps unused 5,000

Certificate of time deposit 1,500,000

Money order 50,000

Manager’s check 100,000

Traveler’s check 1,000,000

Postdated customer check 500,000

What total amount should be reported as cash at year-end?

a. P8,050,000

b. P7,050,000

c. P6,550,000

d. P6,450,000

PROBLEM 5

Company X had the following account balances on December 31, 2023:

Petty cash fund 50,000

Cash on hand 500,000

Cash in bank – current account 4,000,000

Cash in bank – payroll account 1,000,000

Time deposit 2,000,000

Cash in bank – restricted account for plant addition,

expected to be disbursed in early 2024 500,000

Cash in sinking fund set aside for bond payable due

June 30, 2024 1,500,000

The petty cash fund included unreplenished December 2023 petty cash expense vouchers of P5,000

and employee IOU of P5,000.

The cash on hand included a P100,000 check payable to the entity dated January 31, 2024.

What total amount should be reported as cash and cash equivalents on December 31, 2023?

a. P6,940,000

b. P8,940,000

c. P7,940,000

d. P7,440,000

Page | 5

PROBLEM 6

Company X had the following account balances on December 31, 2023:

Cash in bank 2,250,000

Cash on hand 125,000

Cash restricted for addition to plant in 2024 1,600,000

Cash in bank included P600,000 of compensating balance against short-term borrowing arrangement.

The compensating balance is not legally restricted as to withdrawal.

What total amount should be reported as cash on December 31, 2023?

a. P1,775,000

b. P2,250,000

c. P2,375,000

d. P3,975,000

PROBLEM 7

Company X had a checkbook balance on December 31, 2023 of P8,000,000 and held the following
item in the safe:

Check payable to Company X, dated January 5, 2024,

included in December 31, checkbook balance 2,000,000

Check payable to Company X, deposited December 20,

and included in December 31 checkbook balance,

but returned by bank on December 30, stamped

“NSF”. The check was redeposited January 2, 2024,

and cleared January 3, 2024 500,000

Check drawn on Company X’s account and payable to a vendor,

dated and recorded December 31 but not mailed until

January 15, 2024 1,500,000

Cash on hand – undeposited collections 400,000

Change fund 40,000

Time deposit for plant expansion 1,000,000

Treasury bill 2,500,000

Money market placement 3,000,000

Postage stamps unused 10,000

1. What total amount should be reported as cash on December 31, 2023?

a. P7,400,000

b. P7,440,000

c. P8,440,000

d. P7,450,000

2. What total amount should be reported as cash equivalents on December 31, 2023?

a. P6,500,000

b. P3,000,000

c. P5,500,000

d. P2,500,000

Page | 6

PROBLEM 8

Company X reported the following information at the end of the current year.
a. Investment securities of P1,000,000. These securities are share investments in entities that are

traded in the Philippine Stock Exchange. As a result, the shares are very actively traded in the

market.

b. Investment securities of P2,000,000. These securities are government treasury bills. The

treasury bills have a 10-year term and purchased on December 31 at which time they had two

months to go until they mature.

c. Cash of P3,400,000 in the form of coin, currency, savings account and checking account.

d. Investment securities of P1,500,000. These securities are commercial papers or money market

placements. The term of the commercial papers is nine months, and the instruments were

purchased on December 31, at which time they had three months to go until they mature.

1. What total amounts should be reported as cash at the end of the current year?

2. What total amount should be reported as cash equivalents at the end of the current year?

PROBLEM 9

Company X had a petty cash fund which included the following details:

Coins and currency 2,000

Paid vouchers

Transportation 600

Gasoline 400

Office supplies 500

Postage stamps 300

Due from employees 1,200 3,000

Employee’s check returned by bank marked “NSF” 1,000

Check drawn to the order of petty cash custodian 4,000

What amount of petty cash should be reported?

a. P2,000

b. P7,000

c. P6,000

d. P9,000

Page | 7

PROBLEM 10
Company X reported the following information in relation to cash on December 31, 2023:

a. Checkbook balance, P4,000,000.

b. Undeposited collections, P400,000.

c. A customer check amounting to P200,000 dated January 2, 2024 was included in the December

31, 2023 checkbook balance.

d. Another customer check for P500,000 deposited on December 22, 2023 was included in the

checkbook balance but returned by the bank for insufficiency of fund. This check was redeposited

on December 26, 2023 and cleared two days later.

e. A P400,000 check payable to supplier dated and recorded on December 31, 2023 was mailed on

January 16, 2024.

f. A petty cash fund of P50,000 comprised the following on December 31, 2023:

Coins and currencies 5,000

Petty cash vouchers 40,000

Refundable deposit for returnable containers 5,000

g. A check of P40,000 was drawn on December 31, 2023 payable to Petty Cash.

1. What is the adjusted cash in bank on December 31, 2023?

a. P4,600,000

b. P4,200,000

c. P4,400,000

d. P3,700,000

2. What total amount should be reported as cash on December 31, 2023?

a. P4,645,000

b. P4,845,000

c. P4,600,000

d. P4,650,00

BANK RECON

Page | 12

PROBLEM 4

Company X revealed the following facts on August 31:

Balance of cash in bank account 1,300,000

Balance of bank statement 1,200,000

Outstanding checks, August 31:

Number 555 10,000

761 55,000

762 40,000

763 25,000

764 65,000

765 70,000

Receipts on August 31, deposited September 1 275,000

The bank statement showed the following charges:

a. Service charge for August 5,000

b. NSF check received from a customer 85,000

• The cashier-bookkeeper had misappropriated P30,000 collections from customer and an

additional P10,000 by charging sales discounts and crediting accounts receivable.

• The stub for check number 765 and the invoice relating thereto show that it was for P50,000. The

check was recorded incorrectly in the cash disbursements journal as P70,000. The check was

drawn in payment of an account payable.

• Payment has been stopped on check number 555 which was drawn in payment of an accounts

payable. The payee cannot be located.

Required:

a. Prepare a bank reconciliation on August 31 using the adjusted balance method.

b. Prepare adjusting entries to correct the cash in bank account on August 31.

PROBLEM 5

Company X received the bank statement for the month of April which included the following

information:

Bank services charge for April 15,000

Check deposited by Company X during April was not collectible

and has been marked “NSF” by the bank and returned 40,000
Deposits made but not yet recorded by bank 130,000

Checks written and mailed but not yet recorded by bank 100,000

The entity found a customer check for P35,000 payable to the entity that had not yet been deposited

and had not been recorded.

The general ledger showed a bank account balance of P920,000.

What amount should be reported as adjusted cash in bank on April 30?

a. P900,000

b. P865,000

c. P930,000

d. P965,000

PROBLEM 6

Company X provided the following information for the month of December:

Balance per bank statement December 31 2,800,000

Bank service charge for December 12,000

Interest paid by bank to Company X for December 10,000

Deposits made but not yet recorded by the bank 350,000

Checks written but not yet recorded by the bank 650,000

The entity discovered that it had drawn and erroneously recorded a check for P46,000 that should

have been recorded for P64,000.

What is the cash balance per ledger on December 31?

a. P2,500,000

b. P2,520,000

c. P2,540,000

d. P2,800,000