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CASH AND CASH EQUIVALENTS Summary of Generally Accepted Accounting Principles for Cash

cash items

*unrestricted and immediately available for use in the current operation

for use other than for current operations

"Cash" in the current asset section

other non current

*for payment of operating expense, current liabilities and current assets Definition of Cash Cash includes money and other negotiable instrument that is payable in money and acceptable by the bank for deposit and immediate credit. It includes cash on hand, demand deposits and other items that are unrestricted for use in the current operations. a.

Cash on hand 1. undeposited dated cutomer’s checks or customer’s checks awaiting deposit 2. Traveler’s check 3. Cashier’s/ Treasurer’s and Manager’s checks 4. Postal money orders (a demand credit instrument issued and payable by a post office) 5. Undeposited cash collections (currencies such as bills and coins) 6. Bank overdrafts ( a written order addressed to the bank to pay an amount of money to the order of the maker)

b.

Cash in bank 1. Demand deposit/commercial deposit/current account/checking account * generally non-interest bearing * withdrawable by checks against bank 2.

c.

Savings deposit (Savings Account-SA) * Generally non-interest bearing * Depositor is issued an ATM card or passbook * Withdrawable in ATM station or within the bank.

Cash fund (current operations) 1. Change fund 2. Payroll fund Purchasing fund (for purchasing of inventories) 3. Revolving fund (fund that is used for limited or specific purpose set by management)

4. 5. 6. 7. 8.

Interest fund Petty cash fund (for small and miscellaneous disbursements) Dividend fund Travel fund Tax fund

Fund For Non Current Operations 1. Pension fund – if related liability is current, then pension fund is current, thus part of cash. 2. Preferred redemption fund - non current investment (unless the preferred share capital has a mandatory redemption and the redemption is already within one year from the reporting period in which case this fund is already part of ash equivalent) 3. Acquisition of Property, plant and equipment – always noncurrent even if expected to be disbursed next year. 4. Contingent fund – non current investment 5. Insurance fund – Non current investment 6. Sinking fund – if the related bonds payable is current, then sinking fund is current, thus part of cash. Classification of cash fund as current or non current should parallel the classification applied to the related liability. Thus, an entity should classify such non current asset if the related liability becomes current. Cash Equivalents are short-term and highly liquid investments that are readily convertible into cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Examples: 1. 2. 3. 4. 



Time deposit - acquired within three months from maturity date Money market instrument and commercial paper Treasury bills Redeemable preference shares with mandatory redemption period and acquired three months before maturity.

If an item cannot be included as cash equivalent because it did not qualify the cut-off time period ( ie three months), it will always be classified as investments (short term or long term) depending on the period up to maturity. If the problem is silent with regard to: 1. Treasury note – assumed investment 2. Cash in money market account – cash and cash equivalent 3. Time deposit – cash and cash equivalent

Measurement Issues in Cash and Cash Equivalents 1.

Cash

-

measured at face value

2.

Cash in foreign currency

-

translated to Philippine Peso

3.

Deposit in foreign bank

-

unrestricted (included as cash) Restricted (if material, classified separately among noncurrent assets as receivables

4.

Cash in closed bank/banks In bankruptcy -

non current asset (estimated realizable value)

5.

Bank overdraft

-

Different banks (current liabilities) Same bank (netted against the account with positive balance but cannot be offset against restricted account.

6.

Compensating balance

-

is the minimum checking or demand deposit account balance that must be maintained in connection with a borrowing agreement with a bank not legally restricted – part of cash legally restricted a. short term- presented as “cash held as compensating balance”, current (Receivable) b. long term- presented as “cash held as compensating balance” , non current (Receivable) *If the problem is silent with regard to compensating balance, it is not legally restricted.

assumed 7.

Undelivered/unreleased check

-

Reverted back to cash

8.

Stale checks/Checks outstanding for more than six months from the date of check -

Reverted back to cash

9.

Postdated checks

-

checks dated after reporting period Company’s check – reverted back to cash Customer’s check – not yet cash (A/R)

10.

IOUs (I owe you)

-

Part of receivable

11.

Equity securities

-

cannot be classified as cash equivalents because shares do not have maturity a date (except redeemable shares)

-

specified redemption date and acquired three months before maturity classified as cash

preference 12.

Redeemable preference shares

date are equivalents 13.

Callable preference shares

-

shareholder’s equity

14.

NSF/DAUD/DAIF

-

Reverted back as part of receivables. NSF – no sufficient funds DAUD – drawn against uncleared deposits DAIF – drawn against insufficient funds

15.

Expenses advances

-

Receivable or prepaid expenses

16.

Temporary investments in shares of stock

-

either FVTPL or FVTOCI

17.

Unused credit line

-

Disclosed in the notes

18.

Treasury warrants

-

a warrant for the payment of money into or from public treasury. (included part of cash)

Escrow deposit

-

restricted amount held in trust for another party, ie deposit required court of law for a pending case. (other current or noncurrent)

as 19. by 20.

Unrecorded cash disbursements -

increase recording of disbursements

21.

Unrecorded cash collections

-

increase recording of receipts

22.

Certificate of deposits

-

Invested 3 months before maturity – cash equivalents Invested for more than three months – investment (short or long

Postage stamps on hand

-

office supplies

term) 23.

Problem 1 The following pertains to Pau Company on December 31, 2016: Postage stamps Php 5,000 Credit memo from a vendor for a purchase Return 100,000 Current account Kapamilya bank ( 500,000) Current account at Kapuso bank 10,000,000 Employees postdated check 20,000 Foreign bank account-restricted (in equivalent peso) 5,000,000 IOU from Finance Manager’s brother in law 50,000 Trading securities 75,000 Payroll account 2,500,000 Petty cash fund (Php20,000 in currency and expenses receipts for Php30,000) 50,000 Postal money order 150,000 Traveler’s check 250,000 Treasury bills, due 1/31/17 (purchased 1/31/16) 1,500,000 Treasury bills, due 3/31/17 (purchased 12/31/16) 1,000,000 Treasury warrants 1,500,000 Additional information: a. Check of Php1,000,000 in payment of accounts payable was recorded on December 31, 2016 but mailed to suppliers on January 5, 2017. b. Check of Php500,000 dated January 15, 2017 in payment of accounts payable was recorded and mailed on December 31, 2016. c. Check of Php250,000 dated January 15, 2016 in payment of accounts payable was recorded and mailed on January 15, 2016. As of the reporting period, the same has not been encashed by the payee and still outstanding. 1.

How much cash and cash equivalents should Pau Company report on the December 31, 2016 statement of financial position? a. Php15,650,000 c. Php17,170,000 b. Php17,000,000 d. Php18,650,000

10,000,000+2,500,000+20,000+150,000+250,000+1,000,000+1,500,000+1,000,000 +500,000 + 250,000 = 17,170,000 Problem 2 Total cash and cash equivalent of Php63,250,000 reported by Mari Company on December 31, 2017 include the following information: a. Two certificates of deposits, each totaling Php5,000,000, having a maturity of 120 days. b. A check is dated January 12, 2018 in the amount of Php1,250,000. c. A commercial paper of Php21,000,000 which due in 90 days. d. Currency and coins on hand amounted to Php770,000. Mari Company has agreed to maintain a cash balance of Php5,000,000 in one of its banks at all times to ensure future credit availability (this amount is legally restricted as to withdrawal and was included in the above balance) 2.

How much is the correct amount of cash and cash equivalents that Mari Company should report in its December 31, 2017 statement of financial position? a. Php57,000,000 c. Php47,000,000 b. Php31,000,000 d. Php62,000,000 63,250,000-10,000,000-1,250,000- 5,000,000 = 52,000,000

Problem 3 The cash account of Pau Company on December 31, 2016 has a balance of Php4,620,000 and it consists of the following: Balance in savings account with a bank closed by the BSP Php 720,000 Bills and coins on hand 1,055,600 Checking account balance in Kapuso bank 440,000 Credit memo from supplier’s for purchase returns 130,000 Customer’s check dated January 15, 2016 160,000 Customer’s check dated January 16, 2017 600,000 Customer’s check returned on 12/31/16 for lack of sufficient fund 1,000,000 IOU of an employee 8,000 Money order 16,000 Petty cash including paid cash vouchers of Php16,500 40,000 Postage stamps 2,400 Traveler’s checks 448,000 ---------------------Total Php 4,620,000 ============ 3.

The correct cash and cash equivalents balance on December 31, 2016 is _________. a. Php1,959,600 c. Php1,966,400 b. Php1,966,600 d. Php1,983,100. 1,055,600 + 440,000+16,000+23,500+448,000 = 1,983,100

Problem 4 In connection with your audit of Camil Company for the year ended December 31, 2016, you gathered the following: Savings account at Kapatid Bank Php 4,000,000 Current account at Kapuso Bank ( 200,000) Demand deposit, Kapamilya bank 2,000,000 Cash collection not yet deposited 700,000 Payroll account 1,000,000 Travel advances of Php720,000 for executive travel for the first quarter of the next year (employee to reimburse through salary deduction) 720,000 A separate cash fund in the amount of P6,000,000 is restricted for the retirement of a long term debt 6,000,000 Camil Company has received a check dated January 2, 2017 300,000 Camil Company has agreed to maintain a cash balance at all times at Kapuso bank to ensure future credit availability 400,000 A customer’s check returned by the bank for insufficient fund 300,000 A check drawn by the Vice-President of the Corporation dated January 15, 2017 140,000 A check dated May 31, 2016 drawn by the Corporation

against the kapuso Bank in payment of custom duties. Since the importation did not materialize , the check was returned by the customs broker. This was an outstanding check in the reconciliation of the Kapuso Bank account Foreign bank account- restricted (in equivalent pesos) Credit memo from a vendor for a purchase return Traveler’s check Money order Petty cash fund (Php8,000 in currency and expense receipts for Php11,900) Treasury bills, due 2/28/17 (purchased 12/15/2016)

820,000 2,000,000 40,000 100,000 60,000 20,000 400,000

Additional information related to Demand deposit at Kapamilya Bank: a. Check of Php200,000 in payment of accounts payable was recorded on December 31, 2016 but mailed to suppliers on January 5, 2017. b. Check of Php100,000 dated January 5, 2017 in payment of accounts payable was recorded and mailed on December 31, 2016. c. The company uses the calendar year. The cash receipts journal was held open until January 15, 2017, during which time Php400,000 was collected and recorded on December 31, 2016. Based on the above information and the result of your audit. Compute for the cash and cash equivalents that will be reported on the December 31, 2016 statement of financial position, ______________. Current account at Kapatid bank Undeposited collection Payroll account Traveler’s check Petty cash fund Treasury bills, due 2/28/17 Demand deposit account as adjusted: Demand deposit account per books Undelivered check Postdated check issued Window dressing of collection

Php

Php2,000,000 200,000 100,000 ( 400,000) --------------------

4,000,000 700,000 1,000,000 100,000 8,000 400,000

1,900,000 --------------------8,108,000 ============

Problem 5 The cash account in the ledger of Pau Company had a balance of Php1,689,600 at December 31, 2016. An examination of the account, however, disclosed the following: a. The sales book was left open up to January 5, 2017, and cash sales totaling Php240,000 were considered as sales in December. b. Checks of Php148,800 in payment of liabilities were prepared before December 31, 2016, recorded in the books , but not mailed or delivered to payees. c. Post-dated checks totaling Php124,800 are being held by the cashier as part of cash. The company’s experience shows that post-dated checks are eventually realized. d. Customer’s check for Php24,000 deposited with but returned by bank, “NSF” on December 27, 2016. e. The cash account includes Php640,000 earmarked for the purchase of personal computers which will be soon delivered. The cash balance to be shown on the statement of financial position at December 31, 2016 should be ____________.

Unadjusted cash balance Php 1,689,600 Add(Deduct) Adjustments: January receipts recorded as December receipts ( 240,000) Undelivered check 148,800 Post dated checks received ( 124,800) NSF check ( 24,000) Cash earmarked for personal computers ( 640,000) ------------------------Adjusted cash balance Php 404,800 ============== Problem 6 You were able to gather the following from the December 31, 2016 trial balance of Mari Corporation in connection with your audit of the company: Cash on hand Php 1,000,000 Petty cash fund 20,000 Kapuso bank current account 2,000,000 Kapatid bank current account No. 1 2,160,000 Kapatid bank current account No. 2 ( 160,000) Kapamilya savings account 2,400,000 Kapamilya time deposit 1,000,000 Cash on hand includes the following items: a. Customer’s check for Php80,000 returned by bank on December 26, 2016 due to insufficient fund but subsequently redeposited and cleared by the bank on January 8, 2017. b. Customer’s check for Php40,000 dated January 2, 2017, received on December 29, 2016. c. Postal money orders received from customers, Php60,000. The petty cash fund considered of the following items as of December 31, 2016. Currency and coins Php 4,000 Employees’ vales 3,200 Currency in an envelope marked “collections for charity” with names attached 2,400 Unreplenished petty cash vouchers 2,600 Check drawn by Mari Corporation, payable to the petty cashier 8,000 ------------------20,200 =========== Included among the checks drawn by Mari Corporation against the Kapuso bank current account and recorded in December 2016 are the following:  Check written and dated December 29, 2016 and delivered to payee on January 2, 2017, Php160,000.  Check written on December 27, 2016, dated January 2, 2017, delivered to payee on December 29, 2016, Php80,000. The credit balance in the Kapatid bank current account no. 2 represents checks drawn in excess of the deposit balance. These checks were still outstanding at December 31, 2016. The savings account deposit in Kapamilya Bank has been set aside by the board of directors for acquisition of new equipment. This account is expected to be disbursed in the next 3 months after the end of the reporting period.

Based on the above and the result of your audit, determine the adjusted balances of the following: 1. Cash on hand a. Php820,000 c. Php940,000 b. Php1,060,000 d. Php880,000 e. answer not given 2.

3.

4.

1.

2.

Petty cash fund a. Php12,000 b. Php14,400 Kapuso bank current account a. Php2,000,000 b. Php2,240,000 Cash and cash equivalents a. Php5,834,400 b. Php6,149,800

Unadjusted cash on hand NSF check Post dated check received

Currency and coins Checks drawn by Mari Corporation, payable to the petty cashier

Or Total Petty Cash per counts Employees’ vales Currency in an envelope marked “collections for charity” with names attached Unreplenished PC vouchers

c. d. e.

Php4,000 Php9,800 answer not given

c. d. e.

Php2,160,000 Php2,080,000 answer not given

c. d. e.

Php6,104,000 Php6,132,000 answer not given

Php ( (

1,000,000 80,000) 20,000) -----------------------880,000 ============== Php

4,000

8,000 ------------------Php 12,000 =========== Php (

20,200 3,200)

( 2,400) ( 2,600) -------------------Php 12,000 ============

3.

Kapauso bank Unreleased check Post dated check

Php

2,000,000 160,000 80,000 ----------------------Php 2,240,000 =============

4.

Cash on hand (No.1) Petty cash fund (No.2) Kapuso bank ( No. 3) Kapatid bank (net of overdraft of Php160,000) Kapamilya Time deposit

Php

880,000 12,000 2,240,000

2,000,000 1,000,000 -----------------------

Php 6,132,000 ============= Problem 7 Shown below is the bank reconciliation for Mari Company for May 2016: Balance per bank, May 31, 2016 Php 300,000 Add: Deposits in transit 48,000 ---------------------Total Php 348,000 Less: Outstanding checks Php 56,000 Bank credit recorded in error 20,000 -------------------76,000 ---------------------Cash balance per books, May 31, 2016 Php 272,000 ============ The bank statement for June 2016 contains the following data: Total deposits Total charges, including an NSF check of Php16,000 and a service charge of Php800

Php

220,000 192,000

All outstanding checks on May 31, 2016, including the bank credit, were cleared in the bank in June 30, 2016. There were outstanding checks of Php60,000 and deposits in transit of Php76,000 on June 30, 2016. Based on the above and the result of your audit, answer the following: 1.

How much is the cash balance per bank on June 30, 2016? a. Php308,000 c. Php328,000 b. Php300,000 d. Php344,800 e. answer not given

2.

How much is the June receipts per books? a. Php248,000 c. Php220,000 b. Php192,000 d. Php296,000 e. answer not given

3.

How much is the June disbursements per books? a. Php192,000 c. Php179,200 b. Php159,200 d. Php196,000 e. answer not given

4.

How much is the cash balance per books on June 30, 2016? a. Php300,000 c. Php360,800 b. Php340,800 d. Php324,000 e. answer not given

5.

The adjusted cash in bank balance as of June 30, 2016 is a. Php283,200 c. Php344,000 b. Php324,000 d. Php392,000 e. answer not given

1.

Balance per bank statement, May 31 Add: Total deposits per bank statement Total Less Total charges per bank statement Balance per bank statement, June 30

2.

Total deposits per bank statement Less: Deposits in transit, May 31 June Receipts cleared through the bank Add: Deposits in transit, June 30 December receipts per books

3.

Total charges per bank statement

4.

Balance per books, May 31 Add: June receipts per books

300,000 220,000 --------------------520,000 192,000 ---------------------Php 328,000 ============ Php

220,000 48,000 ---------------------172,000 76,000 ---------------------Php 248,000 ============

Php 192,000 --------------------Less: Outstanding checks, May 31 56,000 Correction of erroneous bank credit 20,000 June NSF Check 16,000 June bank service charge 800 --------------------92,800 --------------------June Disbursements cleared through the bank 99,200 Add: Outstanding checks, June 30 60,000 ---------------------December disbursements per books Php 159,200 ============

Total Less: June disbursements per books Balance per books, June 30, 2016 5.

Php

Balance per bank statement, 06/30/16 Deposits in transit Outstanding checks Adjusted bank balance, 06/30/16 Balance per books, 06/30/16 NSF check Bank service charge Adjusted book balance, 06/30/16

Php

272,000 248,000 ---------------------520,000 159,200 --------------------Php 360,800 ============ Php

328,000 76,000 ( 60,000) --------------------Php 344,000 ============ Php 360,800 ( 16,000) ( 800) ---------------------Php 344,000 ============

Problem 8 In the audit of Pau Company’s cash account, you obtained the following information: The company’s bookkeeper prepared the following bank reconciliation as of August 31, 2016: Bank balance, Aug 31, 2016 Undeposited collections Bank charges Bank collection of customer’s note Outstanding checks: Number Amount 2059 Php 6,000 2067 10,000 2915 4,000 -------------------Book Balance-August 31, 2016 Additional data are given as follows: 1. Company recordings for September: Total collections from customers Total checks drawn 2.

Bank statement totals for september: Charges Credits

Php (

(

181,600 10,000 200 16,000)

20,000) ---------------------Php 155,800 ============ Php

330,000 196,000 247,600 338,000

3.

Check2059 dated August 25, 2016, was entered as Php6,000 in payment of a voucher for Php60,000. Upon examination of the checks returned by the bank, the actual amount of the check was Php60,000. 4.

Check No. 3010 dated September 22, 2016 was issued to replace a mutilated check (No.2067), which was returned by the payee. Both checks were recorded in the amount drawn, Php10,000 but no entry was made to cancel check No. 2067. 5.

The September bank statement included a check drawn by Mike Company for Php3,000.

6.

Undeposited collections on June 30, 2016 – Php16,000.

7.

The service charge for September was Php300 which was charged by the bank to another client.

8.

The bank collected a note receivable of Php14,000 on September 27, 2016, but the collection was not received on time to be recorded Company.

by Pau 9.

The outstanding checks on September 30, 2016 were: Check No. Amount Check No. Amount 2067 Php 10,000 3015 Php 4,600 3056 2,600 3043 8,200

Based on the above and the result of your audit, determine the following: 1.

Unadjusted cash balance per books as of September 30, 2016 a. Php305,600 c. Php289,800

b.

Php305,500

d. e.

Php331,400 answer not given

2.

Adjusted cash balance as of August 31, 2016 a. Php171,600 c. Php127,600 b. Php117,600 d. Php181,600 e. answer not given

3.

Adjusted book receipts for September 2016 a. Php341,000 c. b. Php364,000 d. e.

Php344,000 Php346,000 answer not given

4.

Adjusted bank disbursement for September 2016 a. Php240,300 c. Php250,300 b. Php152,300 d. Php196,300 e. answer not given

5.

Adjusted cash balance as of September 30, 2016 a. Php265,300 c. Php275,600 b. Php275,300 d. Php269,300

Unadjusted book balance, Aug 31, 2016 Php 155,800 Add: Unadjusted book receipts: Collection from customers Php 330,000 Note collected by bank in Aug presumed recorded in Sept 16,000 ---------------------346,000 --------------------Total 501,800 Less: Unadjusted book disbursements: Checks drawn Php 196,000 BSC for Aug presumed Recorded in September 200 --------------------196,200 --------------------Unadjusted book balance, Sept 30, 2016 Php 305,600 ============ Aug 31 Receipts Disbursements Sept 30 Balance per bank 181,600 338,000 247,600 272,000 Deposits in transit Aug 31 10,000 ( 10,000) Sept 30 16,000 16,000 Outstanding checks Aug 31 ( 64,000) ( 64,000) Sept 30 15,400 ( 15,400) Bank errors-Sept Check of Mike Co. ( 3,000) 3,000 BSC charged to another client 300 ( 300) ---------------------------------------------------------------------------127,600 344,000 196,300 275,300 =========================================== Balance per books 155,800 346,000 196,200 305,600 Customer’s note collected by bank: August 31 16,000 ( 16,000) Sept 30 14,000 14,000 BSC August 31 ( 200) ( 200) Sept 30 300 ( 300)

Book errors: Check No. 2059 (60,000-6,000) ( 54,000) ( 54,000) Check No. 2067 (Mutilated check) 10,000 10,000 ---------------------------------------------------------------------------Adjusted Book Bal 127,600 344,000 196,300 275,300 ============================================ Problem 9 You obtained the following information on the current account of Pau Company during your examination of its financial statements for the year ended December 31, 2017. The bank statement on November 30, 2017 showed a balance of Php306,000. Among the bank credits in November was customer’s note for Php100,000 collected for the account of the company which the company recognized in December among its receipts. Included in the bank debits were cost of checkbooks amounting to Php1,200 and a Php40,000 check which was charged by the bank in error against Pau Company account. Also in November you ascertained that there were deposits in transit amounting to Php80,000 and outstanding checks totaling Php170,000. The bank statement for the month of December showed total credits of Php416,000 and total charges of Php204,000. The company’s books for December showed total debits of Php735,600, total credits of Php407,200, and a balance of Php485,600. Bank debit memos for December were: No. 008 for service charges and No. 009 on a customer’s returned checks marked “ no sufficient fund” for Php24,000. On December 31, 2017, the company placed with the bank a customer’s promissory note with a face value of Php120,000 for collection. The company treated this note as part of its receipts although the bank was able to collect on the note only in February 2018. A check for Php3,960 was recorded in the company cash payments books in December as Php39,600. Based on the application of the necessary audit procedures and appreciation of the above data, you are to provide the answer to the following: 1. How much is the undeposited collections as of December 31, 2017? a. Php339,600 c. Php219,600 b. Php179,600 d. Php139,600 e. answer not given 2. How much is the outstanding checks as of December 31, 2017? a. Php191,600 c. Php361,960 b. Php397,600 d. Php363,160 e. answer not given 3. How much is the adjusted cash balance as f November 30, 2017? a. Php216,000 c. Php176,000 b. Php256,000 d. Php157,200 e. answer not given 4. How much is the adjusted bank receipts for December? a. Php635,600 c. Php475,600 b. Php515,600 d. Php435,600 e. answer not given

5. How much is the adjusted book disbursements for December? a. Php395,600 c. Php225,960 b. Php431,600 d. Php397,160 e. answer not given 6. How much is the adjusted cash balance as of December 31, 2017? a. Php625,640 c. Php220,000 b. Php195,640 d. Php375,640 e. answer not give Nov 30 Receipts Disbursements December 31 Balance per bank 306,000 416,000 294,000 518,000 Deposits in transit Nov 80,000 ( 80,000) Dec 219,600 219,600 Outstanding checks Nov ( 170,000) ( 170,000) Dec 361,960 (361,960) Erroneous bank Debit-Nov 40,000 ( 40,000) ---------------------------------------------------------------------------Adjusted bank Balance 256,000 515,600 395,960 375,640 =========================================== Balance per books 157,200 735,600 407,200 485,600 Customer’s note Collected by Bank-Nov 100,000 ( 100,000) Bank Service Charge Nov ( 1,200) ( 1,200) Dec 1,600 ( 1,600) NSF Check Dec 24,000 ( 24,000) Book errors December Uncollected Customer’s note ( 120,000) ( 120,000) Error in recording a check (should be Php3,960, recorded as Php39,600) ( 35,640) 35,640 --------------------------------------------------------------------------256,000 515,600 395,960 375,640 =========================================== Problem 10 You were able to obtain the following information in connections with your audit of the cash account of the Pau Company as of December 31, 2017: Balances per bank Balances per books Undeposited collections Outstanding checks  

November 30 Php 480,000 504,000 244,000 150,000

December 31 Php 420,000 539,000 300,000 120,000

The bank statement for the month of December showed a total credits of Php240,000 while the debits per books totaled Php735,000. NSF Checks are recorde

Problem 4 The cashier misplaced all the bank statements for the past year. You reviewed the accounting records and discovered that the following journal entry was made to reconcile the June 30, 2016 bank records and accounting records: Accounts receivable Miscellaneous expense Notes receivable Interest revenue Cash

152,024 1,250 20,000 1,000 132,274

Pre adjustment cash balance in the accounting records was Php768,370, outstanding checks were Php20,750 and no other adjustments were required. 4.

What is the bank statement balance at June 30, 2016? a. Php615,346 c. Php656,846 b. Php636,096 d. Php768,370 768,370 – 132,274 + 20,750 = 656,846

Problem 5 Assume the following data of Pau Company of its cash and short-term, highly liquid investments for December 31, 2017: Cash on hand Checking account No. 421, Kapuso bank Checking account No. 724, Kapuso bank Securities 120-day certificate of deposit BSP-Treasury bills (No. 1) BSP-Treasury bills (No. 2) 180 days commercial paper Money market funds 5.

Php

Date Maturity Acquired Date 12/10/17 1/31/18 11/30/17 4/30/18 10/31/17 1/20/18 12/1/17 6/20/18 11/21/17 2/10/18

800,000 2,000,000 ( 300,000) Amount Php 6,000,000 50,000,000 10,000,000 14,000,000 20,000,000

The correct cash and cash equivalents balance on December 31, 2017 is a. Php38,500,000 c. Php52,500,000

b.

Php38,800,000

d.

Php52,800,000

800,000+2,000,000-300,000+6,000,000+10,000,000+20,000,000 = 38,500,000 Problem 6 The December 31, 2016 trial balance of Mari Company includes the following accounts: Petty cash fund Php 700,000 Current account-Kapuso bank 40,000,000 Current account-Kapamilya bank (overdraft) ( 2,500,000) 120-day money market placement-K bank 10,000,000 Time deposit-KB bank 20,000,000 Additional information: a. The petty cash fund includes unreplenished December 2016 petty cash expense vouchers for Php150,000 and an employee check for Php50,000 dated January 31, 2017. b. A check for Php1,000,000 was drawn against Kapuso bank current account dated and recorded December 27, 2106 but delivered to payee on January 10, 2017. c. The KB bank time deposit is set aside for land acquisition in early January 2017. 6.

What should be reported as “cash and cash equivalents” on December 31, 2016? a. Php51,300,000 c. Php41,500,000 b. Php51,500,000 d. Php48,800,000

(700,000-150,000-50,000=500,000) + (40,000,000+1,000,000=41,000,000) =41,500,000 Problem 7 Camil Company’s ledger showed a balance in its cash account at December 31, 2016 of Php1,364,500, which was determined to consist of the following: Petty cash fund Php 7,200 Checking account in Kapamilya bank ( check of Php12,000 is still outstanding) 673,500 Notes receivable in the possession of a collecting agency 50,000

Undeposited receipts, including a postdated check for Php10,500 and traveller’s check for Php10,000 Bond sinking fund cash IOUs signed by employees Paid vouchers, not yet recorded Total 7.

356,000 255,000 9,900 12,900 --------------------Php 1,364,500 ============

At what amount should “cash on hand and in bank” be reported on Camil Company’s statement of financial position? a. Php1,003,700 c. Php1,258,700 b. Php1,014,200 d. Php1,324,500 7,200 + (673,500 – 12,000) + (356,000-10,500) = 1,014,200

Problem 8

The petty cash fund of Pau Company at the end of the fiscal year ended June 30, 2016, is composed of the following: Currencies Php 7,600 Coins 2,400 Paid vouchers: Office supplies 3,500 Postage stamps 4,000 Loans to employees 12,000 Check drawn by the manager, returned by bank marked “NSF”. 5,500 Check drawn by the company, payable to the order of the petty cash custodian , representing her salary 25,000 8.

The amount of petty cash fund that would be shown on the statement of financial position at June 30, 2016 of Pau Company is __________. a. Php10,000 c. Php40,500 b. Php35,000 d. Php60,000 7,600 + 2,400 + 25,000 = 35,000

Problem 9 Upon examination of the petty cash fund of Kapuso Company on June 3, 2017, the following items were found: Total bills and coins Php 18,250 Certified check of general manager dated December 15, 2016 15,000 Petty cash vouchers (PCVs) not yet replenished: PCV No.0021 Postage stamps 2,800 PCV No.0022 Supplies 6,500 PCV No.0023 IOU employee 5,000 Company check representing replenishment of petty cash fund 51,500 Unused stamps 1,200 An envelope containing contributions of employees for the death of a fellow employee (contents intact) 30,000

The petty cash fund was established for an amount of Php100,000. 9.

What is the correct amount of petty cash fund at December, 2016? a. Php99,050 c Php69,750 b. Php84,750 d. Php18,250. 18,250 + 15,000 + 51,500 = 84,750

10.

What is the amount of cash shortage or overage? a. Php950 shortage c. Php2,150 shortage b. Php250 overage d. canot be determined 100,000 – (18,250+15,000+2,800+6,500+5,000 +51,500 = 99,050) = 950

Problem 10 The following account balances are shown in the accounting records of Camil Company:

Cash Accounts receivable Merchandise inventory Accounts payable

January 1, 2016 Php 124,000 134,000 172,000 106,000

December 31, 2016 Php

182,000 156,000 96,000

Sales for 2016 amounted to Php1,596,000 while cost of goods sold was Php1,166,000. Cash operating expenses amounted to Php214,000. All sales and purchases were made on credit. 11.

Assuming that there were no other relevant transactions , what is the cash balance at December 31, 2016? a. Php216,000 c. Php512,000 b. Php298,000 d. Php610,000 Collections = 134,000 + 1,596,000 – 182,000 = Php 1,548,000 Purchases = 1,166,000 + 156,000 – 172,000 = 1,150,000 Payment = 1,150,000 + 106,000 – 96,000 = 1,160,000 Cash balance end = 124,000 + 1,548,000 – 1,160,000 – 214,000 = 298,000

Problem 11 Camila Company is making a four column bank reconciliation at December 31 from the following data. The amounts per bank statement were: Balance November 30, Php650,000; December Receipts, Php1,300,000; December Disbursements, Php1,100,000. The amounts per books were: Balance November 30, Php763,500; December Receipts, Php1,154,800; December Disbursements, Php 1,123,500; Balance, December 30, Php794,800. November 30 Deposits in transit ? Outstanding checks ? The bank overlooked a check for Php7,500 when recording a deposit on Dec 10 Note collected by bank, recorded after receiving the bank statement Service charge, recorded after receiving the bank statement 4,500

NSF checks, recorded after receiving the bank statement Camila recorded a Php37,400 check received from a customer in December as Php34,700.

December 31 Php 150,000 84,000

56,000

12.

The corrected cash balance on December 31 is _____________. a. Php908,500 c. Php923,500 b. Php916,000 d. Php1,007,500.

13.

The corrected December receipts is a. Php1,157,500 b. Php1,330,000

c. d.

Php1,334,800 Php1,337,500

14.

The corrected amount of December disbursements is a. Php1,083,000 c. Php1,125,000 d. Php1,117,000 d. Php1,130,000

15.

Deposits in transit, November 30 a. Php120,000 c.

Php127,500

180,000 6,000

48,000

b. 16.

‘

Php240,000

d.

answer not given

Outstanding checks , November 30 a. Php67,000 c. b. Php70,000 d.

Php120,000 answer not given

November 650,000

Receipts 1,300,000

Disbursements 1,100,000

763,500

1,154,800

1,123,500

December 850,000

Bank Deposits in transit Nov 120,000 ( 120,000) December 150,000 150,000 Outstanding checks Nov ( 67,000) ( 67,000) Dec 84,000 ( 84,000) Check overlooked 7,500 7,500 -----------------------------------------------------------------------------Adjusted Balances 703,000 1,337,500 1,117,000 923.500 ============================================ Book Note collected Dec Service charge Nov Dec NSF checks Nov Dec Book error

180,000 ( (

4,500) 56,000)

794,800 180,000

( (

4,500) 6,000 56,000) 48,000

(

6,000)

( 48,000) 2,700 2,700 --------------------------------------------------------------------------------Adjusted Balances 703,000 1,337,500 1,117,000 923,500 ===========================================