Name: Mark Jerold L. Fucio
Subject: Accounting 3A
Date: September 1, 2021
Problem 1: On December 31, 2021, W Company’s cash and cash equivalents account balance per ledger
of 5,700,000 includes:
Green Items – Cash and Cash Equivalents
Red Items – Noncash and Noncash Equivalents
Manager’s check
70,000
Traveler’s check
100,000
Treasury notes
50,000
Treasury shares, purchased 12/1/21, to be reissued
150,000
on 3/1/22
Escrow deposit
200,0000
Bank drafts
20,000
Postal money orders
20,000
Demand deposit
100,000
Treasury bills, purchased 12/16/21 due 3/15/22
50,000
160-day treasury bill
30,000
Time deposit- PCIB, 1-year, due 3/31/22
180,000
Time deposit, PNB 90-days
170,000
Time deposit, BPI 120-days
45,000
Money market instrument, due 2/28/22
40,000
Money market instrument- due 6/1/22
70,000
Cash in bank- Metrobank, which includes a
compensating balance of 50,000 for short-term
1,050,000
borrowing arrangement. The compensating
balance is not legally restricted as to withdrawal
Cash in bank- Metrobank
(100,000)
Cash in bank- First bank, which includes a
450,000compensating balance of 50,000 for long-term
400,000 =
borrowing arrangement, the compensating balance
50,000
is legally restricted as to withdrawal
Cash in bank- Second Bank
(60,000)
Cash in bank- Seat Bank, which includes a
150,000compensating balance of 40,000 for short-term
110,000=
borrowing arrangement. The compensating
40,000
balance is legally restricted as to withdrawal
Cash in bank- Sea Bank, which includes a
compensating balance of 40,000 for short-term
250,000
borrowing arrangement
Petty cash fund, which includes an unreplenished
10,000
voucher for 4,000.
Payroll fund
100,000
Travel fund
20,000
Interest fund
40,000
Tax fund
30,000
Sinking fund
420,000
Preferred redemption fund
100,000
Contingent fund
200,000
Insurance fund
500,000
Fund for acquisition of PPE expected to be
800,000
disbursed in 2022
IOU from officers
20,000
Customer’s post-dated checks
70,000
Customer’s check returned by bank marked NSF
20,000
Redeemable preference shares acquired 3 months
15,000
before maturity date
Unused credit line
200,000
Visa card credit limit
20,000
Total
5,700,000
a. Compute the amount of cash and cash equivalents that should be presented to the statement of
financial position (3 points) 2,491,000
b. Indicate the proper classification of each item that are not part of the cash and cash equivalents
(0.50 point each) 20 items are not cash and cash equivalents
Problem 2: On December 31, 2021, G Company’s cash and cash equivalents account balance per ledger of
4,000,000 includes:
Demand deposit
2,200,000
Undeposited collection
300,000
Time deposit- 30 days
500,000
NSF check of customer
(20,000)
35-day money market placement due 1/28/22
300,000
45-day commercial papers due 2/4/22
80,000
Savings deposit in closed bank
(50,000)
IOU from an employee – trade and other
(150,000)
receivables
Preferred redemption fund
(400,000)
Total
4,000,000
Additional information:
a. Included in the demand deposit of 2,200,000 was a customer check amounting to 50,000 dated
January 25, 2022. G Company is the payee/ post-dated check
b. Also included in the demand deposit is a customer check amounting to 90,000 dated December
31, 2020. G company neglected to in-cash the check. On December 31, 2021, the customer was
informed and he was willing this replace this with a new one. New check is yet to be received from
the customer. G Company is the payee/ stale check
c. Check of 60,000 dated January 31, 2022, in payment of accounts payable was recorded and mailed
December 31, 2021. G Company is the payor/ post-dated check
d. Check of 70,000 in payment of accounts payable was recorded on December 31, 2021 but mailed
to creditors on January 15, 2022. G Company is the payor/ undelivered check
e. The company uses the calendar year. The cash receipts journal was held open until January 15,
2022, during which time 80,000 was collected and recorded on December 31, 2021. Window
Dressing/ Kiting/Lapping – Fraudulent Process of Cash
Requirements:
a. Prepare the adjusting entries to correct the cash account.
b. Compute the cash and cash equivalents to be shown on December 31, 2021 statement of financial
position (3 points)
Payor - the entity who is liable to pay
Payee - the entity who is the rightful receiver of the payment
Quiz #1 - Answers
Problem 1 (13 points)
c. Compute the amount of cash and cash equivalents that should be presented to the statement
of financial position (3 points)
Answer: 2,491,000
Green Items – Cash and Cash Equivalents
Red Items – Noncash and Noncash Equivalents
Manager’s check
Traveler’s check
Bank drafts
Postal money orders
Demand deposit
Treasury bills, purchased 12/16/21 due 3/15/22
Time deposit, PNB 90-days
Money market instrument, due 2/28/22
Cash in bank- Metrobank, which includes a
compensating balance of 50,000 for short-term
borrowing arrangement. The compensating balance is
not legally restricted as to withdrawal
Cash in bank- Metrobank
Cash in bank- First bank, which includes a
compensating balance of 50,000 for long-term
borrowing arrangement, the compensating balance is
legally restricted as to withdrawal
Cash in bank- Seat Bank, which includes a
compensating balance of 40,000 for short-term
borrowing arrangement. The compensating balance is
legally restricted as to withdrawal
Cash in bank- Sea Bank, which includes a
compensating balance of 40,000 for short-term
borrowing arrangement
Petty cash fund, which includes an unreplenished
voucher for 4,000.
Payroll fund
Travel fund
Interest fund
Tax fund
Redeemable preference shares acquired 3 months
before maturity date
Total of Cash and Cash Equivalents
70,000
100,000
20,000
20,000
100,000
50,000
170,000
40,000
1,050,000
Bank Overdraft:
1,050,000 – 100,000
= 950,000
(100,000)
450,000- 400,000
= 50,000
150,000 - 110,000
= 40,000
250,000
10,000
100,000
20,000
40,000
30,000
15,000
2,491,000
d. Indicate the proper classification of each item that is not part of the cash and cash equivalents
(0.50 point each) (0.50 x 20 = 10 points)
Answers:
Item
Amount
1. 160-day treasury bill
30,000
2. Time deposit, BPI 120-days
45,000
3. Money market instrument- due 6/1/22
70,000
4. Time deposit- PCIB, 1-year, due 3/31/22
5. Treasury notes
180,000
50,000
6. Treasury shares, purchased 12/1/21, to
be reissued on 3/1/22
150,000
7. Escrow deposit
8. Cash in bank- First bank, which includes a
compensating balance of 50,000 for longterm borrowing arrangement, the
compensating balance is legally restricted
as to withdrawal
9. Cash in bank- Seat Bank, which includes a
compensating balance of 40,000 for
short-term borrowing arrangement. The
compensating balance is legally restricted
as to withdrawal
10. Cash in bank- Second Bank
11. Sinking fund
12. Preferred redemption fund
13. Contingent fund
14. Insurance fund
15. Fund for acquisition of PPE expected to
be disbursed in 2022
16. IOU from officers
17. Customer’s post-dated checks
18. Customer’s check returned by bank
marked NSF
200,0000
Classification
Short-term financial assets or
temporary investments
Short-term financial assets or
temporary investments
Short-term financial assets or
temporary investments
Noncurrent investment
Noncurrent investment
Deduction to Shareholder’s Equity
(unspecified or extra stock or
shares)
Other current/noncurrent assets
and liabilities
450,000400,000=
50,000
Noncurrent investment
150,000110,000=
40,000
Cash held as compensating balance
(60,000)
420,000
100,000
200,000
500,000
Current liability
Long term investment
800,000
20,000
70,000
Trade and other receivables
Trade and other receivables
20,000
Debit memo
19. Unused credit line
200,000
20. Visa card credit limit
20,000
Problem 2:
Requirements:
c. Prepare the adjusting entries to correct the cash account
Off Balance Sheet item/ Disclosure
to Financial Statement
Current liability
a.
Accounts Receivable
Cash or Cash in Bank
50,000
Accounts Receivable
Cash or Cash in Bank
90,000
Cash or Cash in Bank
Accounts Payable
60,000
Cash or Cash in Bank
Accounts Payable
70,000
Accounts Receivable
Cash or Cash in Bank
80,000
50,000
b.
c.
d.
e.
90,000
60,000
70,000
80,000
d. Compute the cash and cash equivalents to be shown on December 31, 2021, statement of
financial position (3 points)
Answer: 3,290,000