Assignment 1 – Cash and Cash Equivalent, Bank Reconciliation Statement and Proof of Cash
Questions 1 – 3:
The following were the account balances of Ermes Company at December 31, 2021:
Cash on Hand
600,000
Cash in current and savings accounts
6,895,000
Cash set aside for payment of Loans Payable
2,565,000
Cash set aside for plant expansion in 2022
1,540,000
Cash set aside for plant expansion in 2023
2,340,000
The Loan Payable is due on 2022. The bank required Ermes Company to maintain an average daily balance of
P1,000,000 as holdout against loan arrangement. The holdout is withdrawable and should Ermes Company failed to
maintain the requirement amount, he will be paying penalties monthly until the average daily balance for the month
returns to P1,000,000. The holdout will be lifted on December 31, 2024.
1. What is the total cash that should be reported in the current assets section of Born’s December 31, 2021
Statement of Financial Position? 7,495,000
2. Based on the given information, what amount shall be classified as current asset? 10,060,000
3. Based on the given information, what amount shall be classified as noncurrent asset? 3,880,000
Question 4 – 5:
Firefly Company provided the following information about the composition of its cash on December 31, 2021:
 Commercial savings account of P600,000 and a commercial checking account balance of P900,000 are
held at BPI.
 Money market fund account held by Citibank that permits Firefly to write checks in this balance, P5,000,000.
 Travel advances of P180,000 for executive travel for the first quarter of next year (employee to pay through
salary deduction.)
 A separate cash fund in the amount of P1,500,000 is restricted for the retirement of long-term debt.
 Petty cash fund, P10,000.
4. What amount should be classified as cash equivalent? 5,000,000
5. What is the correct amount of cash and cash equivalents Firefly Company should report in its December 31, 2021
Statement of Financial Position? 6,510,000
6. The three-month rule for cash equivalents shall be counted from ____________________ until its maturity date.
a. The original date of issuance of the related security.
b. The relevant reporting date.
c. The date of purchase of the related security.
d. The latest of the above dates.
7. Given the below statements, determine which of them is/are considered as debit memo:
I. Proceeds from the bank loan.
II. Direct deduction of maturing bank loan.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
8. The following are considered as credit memos, except
a. Collections from account customers directly received by the entity.
b. Collections from account customers who paid to the entity’s partner bank.
c. Proceeds from the bank loan.
d. Net proceeds from the long outstanding customer note that was collected by the bank on behalf of the entity.
Question 9 and 10
JORDAN Company reported the following information as of December 31, 2023:
Balance per general ledger
Utilities of the Company directly paid by the bank
Notes receivable of the Company collected by the bank
Deposits in transit
Outstanding checks
P2,800,000
150,000
300,000
420,000
280,000
In addition, a check for P120,000 was recorded by the Company as P12,000.
9. Adjusted cash in bank balance shall be determined as 2,842,000
10. Unadjusted cash in bank per bank statement shall be determined as follows: 2,702,000
Question 11 - 13
The valuation of Cash and Cash equivalent as 12/31/21 was P28,750.50. The breakdown follows:
Cash in bank
25,420.50
Cash on hand
1,280.45
PCF, including IOUs of P245 and supplies of P5
500.00
Sinking fund
1,250.00
Time deposit
300.00
Additional Information:
 Checks dated 12/30/21 of P1,000 was issued and recorded but was lost by the payee. Memo received on January
1, 2022.
 Checks deposited in December 29, of P1,500 were returned by the bank on January due to insufficiency of funds.
 The cash on hand includes P500 that were deposited by the customer for delivery in January 2022.
 The PCF included a payment for expenses as follows:
Dec 27 Supplies
P 15.00
Dec 29 Repairs
26.50
Dec 30 Transpo
2.50
Jan 2 Utilities
125.00
 P500 of the sinking fund was set aside for the payment of bonds which will mature on November 30, 2022. This
amount was given to a trustee who assures of 10% return on November 30, 2020.
11. How much was the PCF balance as of December 31, 2021? 206
12. How much was the total of the cash on hand and in bank on December 31, 2021? 26,200.95
13. How much was the total cash and cash equivalent to be reported on December 31, 2021? 27,316.99
Question 14 - 18
The following data were compiled from the cash books and bank statement of YO Company:
 Balance per bank statement April 30 – P128,200
 Total Bank Credits – P1,040,000
 Total Bank charges – P920,000
 Cash balance per cash book May 31 – P252,000
 Included among the bank credit during May is the loan granted by the bank on May 15, – P100,000
 Included among the bank charges during May is the bank service charge for the month of May, – P200
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Included among the book credits during May is the bank service charge for the month of April – P400
Included among book debits during May is a customer note collected by the bank in April – P10,000
Included in the book debit is the maturity value of a P20,000, 2-month, 12% promissory note forwarded to the
bank for collection on June 3.
 Undeposited collections, April 30 – P24,000
 Outstanding Checks May 31 – P230,800
 Excess of collections over disbursement per cash book – P140,400
Compute the following:
14. Adjusted cash balance for April 30 121,200
15. Adjusted cash balance for May 31. 331,400
16. Deposit in transit May 31. 314,000
17. Outstanding Check April 30. 31,000
18. Unadjusted Total Book Debits. 1,260,400
In connection with your audit of Cream Corporation for the year ended December 31, 2021, you gathered the following:
Postage stamps
Payroll account
Current account at PNB
Current account at BPI
Employee’s postdated check
IOU from controller’s sister
Foreign bank account – restricted (in equivalent pesos)
Not-sufficient-funds check
Money order
Credit memo from a vendor for a purchase return
Traveler’s check
Petty cash fund (P4,000 in currency and expense receipts for P6,000)
P
1,000
500,000
2,000,000
( 100,000)
4,000
10,000
1,000,000
15,000
30,000
20,000
50,000
10,000
Treasury bills, due 3/31/22 (purchased 12/31/21)
200,000
Treasury bills, due 1/31/22 (purchased 1/1/21)
300,000
19. Compute for the cash and cash equivalents that will be reported on the December 31, 2021 balance sheet.
2,784,000
The Cash account in the ledger of Brown Company had a balance of P844,800 at December 31, 2021. An examination
of the account, however, disclosed the following:
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20.
The sales book was left open up to January 5, 2022 and cash sales totaling P120,000 were considered as sales
in December.
Checks of P74,400 in payment of liabilities were prepared before December 31, 2021, recorded in the books, but
not mailed or delivered to payees.
Post-dated checks totaling P62,400 are being held by the Cashier as part of Cash. The company’s experience
shows that post-dated checks are eventually realized.
Customer’s check for P12,000 deposited with but returned by Bank, “NSF” on December 27, 2021.
The Cash account includes P320,000 earmarked for the purchase of personal computers which will soon be
delivered.
What is the cash balance to be shown on the balance sheet on December 31, 2021? 404,800