INTERMEDIATE ACCOUNTING 1
Problem 1-1 (IAA)
On December 31, 2021, Albania Company provided the following data:
Cash in bank
Time deposit – 30 days
Money market placement due on June 30, 2022
Saving deposit in closed bank
Sinking fund for bond payable due June 30, 2023
Petty cash fund




3,000,000
1,000,000
2,000,000
100,000
1,500,000
20,000
The cash in bank included customer check of P200,000 outstanding for 18 months.
Check of P250,000 in payment of accounts payable was dated and recorded on December 31,
2021 but mailed to creditors on January 15, 2022
Check of P100,000 dated January 31, 2022 in payment of accounts payable was recorded and
mailed December 31, 2021.
The reporting period is the calendar year.
The cash receipts journal was held open until January 15, 2022 during which time an amount of
P450,000 was collected and recorded on December 31, 2021.
Required:
1. Prepare adjusting entries on December 31, 2021.
2. Compute the total amount of cash and cash equivalents that should be reported on December 31,
2021.
Solution:
Requirement 1 (OE = Original Entry, AE = Adjusting Entry)
a. OE: Cash in bank
Accounts receivable
200,000
200,000
AE: Accounts receivable
Cash in bank
200,000
b. OE: Accounts receivable
Cash in bank
250,000
AE: Cash in bank
Accounts payable
200,000
250,000
250,000
250,000
c. OE: Accounts payable
Cash in bank
100,000
100,000
AE: Cash in bank
Accounts payable
d. OE: Cash in bank
Sales/Accounts receivable
AE: Sales/Accounts receivable
Cash in bank
Requirement 2
Cash in bank, per book
Outstanding check
Undelivered check
Postdated check
Jan. 2022 collection recorded on
December 31, 2021
Adjusted cash in bank
Time deposit (30 days)
Petty cash fund
Total cash and cash equivalents
3,000,000
(200,000)
250,000
100,000
(450,000)
2,700,000
1,000,000
20,000
3,720,000
100,000
100,000
450,000
450,000
450,000
450,000