UNIVERSITY OF SANTO TOMAS
AMV-College of Accountancy
CA5105: INTERMEDIATE ACCOUNTING I
Prof. G. Macariola
CASH AND CASH EQUIVALENTS
PROBLEM SOLVING
On December 31, 2016, the cash account of HUMBLE Company shows the following composition:
Petty Cash Fund (incl. expense receipts for P2,000)
5,000
Savings Account*
200,000
Traveler’s check
10,000
Manager’s check
23,000
Postage stamps
1,000
IOUs from the officers
3,000
Bank draft in a checking account with Allied Bank
70,000
Checking account in Metro Bank ,per book (outstanding
checks as of year end totaled P10,000)
90,000
Postal Money order
20,000
Deposits segregated to pay dividends
100,000
Securities:
Date Acquired
BSP T. Bills (1yr.)
1/30/16
BSP T. Bills (6mos.) 11/01/16
MM Funds (9mos.)
12/01/16
Maturity Date
01/30/17
04/01/17
02/28/17
Amount
40,000
30,000
50,000
*Cash in Savings account includes P100,000 of compensating balances. It was noted
that 40% of that amount are legally restricted as to withdrawal.
1. How much is the amount of Cash and Cash Equivalents to be presented in the
balance sheet?
a. 456,000
c. 446,000
b. 516,000
d. 526,000
The trading ledger showed a balance on its cash account at December 31, 2016 of P363,000 which
was determined to consist of the following:
Petty Cash Fund*
Payroll Account – LOVE bank
Restricted foreign bank account
Treasury bill, due 3/30/17 (purchased 12/31/16)
Treasury bill, due 1/31/17 (purchased 5/1/16)
Demand deposit – TRUST bank (overdraft)
Cash in Bank – WISE Bank**
Cash set aside for the acquisition of equipment to
be disbursed 4 months after BS date
Bond Sinking Fund
DAUD/DAIF check
Cash Surrender Value
5,000
60,000
25,000
70,000
40,000
(20,000)
90,000
30,000
45,000
10,000
8,000
* Including expense receipts of 1,000, IOUs of 500 and Employee’s PDC of P200
** Net of undelivered check payable to creditors of P30,000.
2. How much is the amount of Cash and Cash Equivalents at December 31, 2016?
a. 253,300
c. 283,300
b. 183,300
d. 223,300
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HONESTY Corporation's checkbook balance on December 31, 2016, was P8,000. In addition,
HONESTY held the following items in its safe on December 31:
v Check payable to HONESTY Corporation, dated January 2,
2017, not included in December 31 checkbook balance
v Check payable to HONESTY Corporation, 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, 2017, and cleared Jan. 7
v Check payable to HONESTY Corporation, undeposited, dated
May 1, 2016, included in December 31 checkbook balance
v Check drawn on HONESTY Corporation's account, payable to
a vendor, dated and recorded December 31, but not mailed
until January 15, 2017
v Check drawn on HONESTY Corporation's account, payable to
a supplier, dated January 3, 2017, was delivered and
recorded on December 30, 2016
2,000
500
950
1,000
850
3. The proper amount to be shown as cash on HONESTY's balance sheet at December
31, 2016 is
a. 6,400
c. 8,400
b. 9,350
d. 7,350
The Petty Cash Fund of CHARITY Company has an imprest balance of P20,000. The following items
are found in its drawer on December 31, 2021:
Currencies and coins
Vouchers for expenses during the year:
Office supplies
1,500
Postage stamps
500
Transportation
100
IOU notes of several employees all dated December 2021
Unused postage stamps
Replenishment check drawn by the Co., payable
to the order of petty cash custodian
Check received from customers representing sales for the month
of December
Check received from Polite, an officer, dated December 30,2021
Envelope containing contributions from employees
for field trip in Star City
4,700
2,100
2,500
100
1,500
1,700
2,000
5,000
4. How much is the correct amount of petty cash fund on Dec. 31, 2021?
a. 4,700
c. 8,200
b. 6,200
d. 20,000
5. What is the amount of shortage/overage?
a. 400 short
c. 7,200 short
b. 400 over
d. 7,200 over
The Petty Cash Fund of AMV Company has an imprest balance of P10,000. The following items are
found in its drawer on December 31, 2021:
Currencies and coins
10 pcs. @ P 100
?
8 pcs. @ P 50
?
30 pcs. @ P20
?
Unreplenished paid vouchers for expenses and loans dated Dec. 16-31, 2021:
Supplies
1,200
Loan to office director
1,800
Unused supplies
200
Check drawn by office manager dated 12/30/21
2,500
Check drawn by employee dated 1/18/22
1,500
Check drawn by customer dated 12/25/21
1,000
Envelope containing cash donations for the departed parent
of one employee, (no currencies attached)
500
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6. How much is the correct amount of petty cash fund on Dec. 31, 2021?
a. 4,000
c. 1,500
b. 2,000
d. 4,500
7. What is the amount of shortage/overage?
a. 1,000 short
c. 1,500 short
b. 1,000 over
d. 1,500 over
As of December 31, 2020, the petty cash fund of KAPITPA Company with general ledger balance of
P20,000 comprises the following: Coins and currencies – P3,400; Petty cash voucher (Gasoline for
delivery equipment) – P4,000; Petty cash voucher (Medical supplies for employees) – P2,720; IOUs
(Advances to employees) – P2,960; A sheet of paper with names of several employees together with
contribution to bereaved employees attached is a currency of P3,200; Check – Check drawn to the
order of the petty cash custodian – P4,000; The petty cash custodian admits to have taken money
from the fund and forgot to replace it.
8. How much is the shortage or overage?
a. 2,920
b. 6,120
c. 6,920
d. -0-
9. How much is the net adjustment to Petty cash fund on December 31, 2020?
a. 9,680
b. 12,600
c. 12,880
d. 13,680
The information that follows is available from the general ledger and the bank statement of Mickey
Company
• Cash in bank, October 31, P939,000
• Deposit in transit, October 31, 35,000; Outstanding checks, October 31, 68,000
• Credit memo, October -60,000; Debit memo, October -20,000
• Included in the October bank receipts was a deposit of Mickey Company for P25,000,
erroneously recorded by the bank to Mc Key Company’s account
• Included in the October bank disbursements was a check issued by Meekly Company for
P10,000, erroneously recorded by the bank in Mickey Company’s account
• Included in the book receipts was a deposit for P45,000 which was recorded as P54,000. No
correction was made yet by Mickey Company
• Included in the book disbursements was a check issued by Mickey Company for P42,000 was
recorded as P24,000
10.The correct cash balance as of October 31, 2021 is
a. 970,000
b. 927,000
c. 952,000
d. 945,000
e.
In preparing its August 31, 2021 bank reconciliation, Christian Company has available the following
information:
Balance per bank statement, August 31, 2021 – P180, 500; Deposit in transit – P32, 500;
Return of customer’s check for insufficient funds – P6,000; Outstanding checks – P27,500;
Bank service charges – P1,000.
11.What is the unadjusted cash balance per books at August 31, 2021?
a. 192,500
b. 185,500
c. 180,000
d. 173,500
Esprit Company keeps all its cash in checking account, an examination of the company’s accounting
records and bank statement for the month ended December 31, 2021 revealed the following
information: Cash balance per bank statement – P846, 900; Cash balance per ledger – P852, 400.
A deposit of P95, 000 placed in bank’s night depository on December 29, 2021 does not
appear on the bank statement. The bank statement shows that on December 26, 2021, the
bank collected a note for Esprit and credited the proceeds of P93,500 to the company’s
account. The proceeds included P3,500 interest, all of which Esprit earned during the current
accounting period. Esprit has not yet recorded the collection.
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Checks outstanding on Dec. 31, 2021 were: No. 032752 – P15, 000; No. 032758 – P4,800;
No. 032767 – P7, 200.
Esprit discovered that check no. 032759 written in December 2021 for P18, 300 in payment
of an account had been recorded in the company’s records as P13, 800. Included with the
December 31, 2021 bank statement was an NSF check for P25, 000 that Esprit had received
from Pitt Company on account on December 20, 2021. Esprit has not yet recorded the
returned check. The bank statement shows a P1,500 service charge for December.
12.The journal entry to adjust the cash balance as of December 31, 2021 is
a. debit to cash of P93, 500.
b. credit to cash of P31, 000.
c. net debit to cash of P62, 500.
d. net credit to cash of P62, 500.
PSU Company had the following bank reconciliation at October 31, 2021:
Balance per bank, Oct. 31
Add: Deposit in Transit
Erroneous bank debit*
Bank service charge
Total
Less: Outstanding checks
Credit memo
Balance per book, Oct. 31
P80,000
15,000
5,000
P 70,000
50,000
P420,000
100,000
P520,000
120,000
P400,000
* Corrected in November
All reconciling items at October 31, 2021 cleared through the bank in November. Items for
November are the following: Deposits in transit and Outstanding checks were P 40,000 and P60,000,
respectively. Proceeds from bank loan-P 20,000 and Debit memo- P8,000 are not yet recorded on
depositor’s books. Total Bank receipts-P300,000; Total Bank disbursements- P250,000.
13.What is the amount of Adjusted Cash Receipts in November?
a. 260,000
c. 290,000
b. 275,000
d. 245,000
14.What is the amount of Adjusted Cash Disbursements in November?
a. 240,000
c. 237,000
b. 225,000
d. 222,000
15.How much is the Adjusted Cash in Bank?
a. 480,000
c. 445,000
b. 450,000
d. 400,000
THEORIES
1. What is the major purpose of an imprest petty cash fund?
a. To effectively plan cash inflows and outflows.
b. To ease the payment of cash to vendors.
c. To determine the honesty of the petty cashier.
d. To effectively control cash disbursements.
2. What happens when a petty cash is in use?
a. Expenses paid with petty cash are recorded when the fund is replenished.
b. Most small amounts are paid from cash receipts before they are deposited.
c. Petty cash is debited when the fund is replenished.
d. Petty cash is credited when the fund is replenished.
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3. If the cash balance shown in the company’s cash records is less than the correct cash balance
and neither the company nor the bank has made any errors, there must be
a. outstanding checks.
b. a no-sufficient fund check returned by the bank.
c. bank charges not yet recorded by the depositor.
d. an interest credited by the bank in the depositor’s account.
4. A bank reconciliation is
a. A formal financial statement that lists all of the bank account balances of an entity.
b. A merger of two banks that previously were competitors.
c. A statement sent by the bank to depositor on a monthly basis.
d. A schedule that accounts for the difference between an entity’s cash balance as shown
in the bank statement and the cash balance shown in the general ledger.
5. Which of the following items must be added to the cash balance per ledger in preparing a
bank reconciliation which ends with adjusted cash balance?
a. Note receivable collected by bank in favor of the depositor and credited to the account
of the depositor.
b. NSF customer check.
c. Service charge.
d. Erroneous bank debit.
6. Bank reconciliation are normally prepared on a monthly basis to identify adjustments needed
in the depositor’s records and to identify bank errors. Adjustments on the part of the
depositor should be recorded for
a. All items except bank errors, outstanding checks and deposits in transit.
b. Bank errors, outstanding checks and deposits in transit.
c. Book errors, bank errors, deposits in transit and outstanding checks.
d. Outstanding checks and deposits in transit.
7. Following are reconciling items in an enterprise’s bank reconciliation statement.
1. Deposits in transit
II. Company check for P32,500 recorded in the books for P23,500
Ill. Note collected by bank in behalf of the company
IV. Deposit of another company erroneously credited by bank to the company’s account
V. No sufficient fund check charged back by bank
VI. Company deposit for P32,500 recorded in the books for P23,500
Which of these adjustments would be shown as addition to the cash balance per books in
order to arrive at the correct cash balance?
a. II, III, and VI
b. II and III
c. II, V and VI
d. III and VI
8. Bank statements provide information about all of the following, except
a. bank changes for the period.
b. errors made by the company.
c. checks cleared during the period.
d. no sufficient fund checks.
9. In preparing a bank reconciliation, interest paid by the bank on the depositor’s account is
a. added to the bank balance.
b. added to the book balance.
c. subtracted from the bank balance.
d. subtracted from the book balance.
10. Debit memos refer to items not representing checks paid by the bank which are charged or
debited by the bank to the account of the depositor but not yet recorded by the depositor as
cash disbursements. The following are examples of debit memos, except
a. NSF or DAUD checks.
b. bank service charges.
c. note collected by bank in favor of the depositor.
d. automatic charge for interest on loan of the depositor.
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