PROBLEMS 1-1
On December 31,2020, Albania Company provided the following data:
Cash in Bank
3,000,000
Time deposit-30 days
1,000,000
Money market placement due on June 30,2021
2,000,000
Saving deposit in closed bank
100,000
Sinking fund for bond payable due on June 30,2022
Petty cash fund
1,500,000
20,000
*The cash in bank included customer check of P200,000 outstanding for 18 months (stale check)
*Check of P250,000 in payment of accounts payable was dated and recorded on December 31,2020
but mailed to creditors on January 15,2021 (undelivered check)
*Check of P 100,000 dated January 31,2021 in payment of accounts payable was recorded and mailed
December 31,2020 (post-dated creditor check)
*The reporting period is the calendar year
*The cash receipts journal was held open until January 15,2021 during which time an amount of
P450,000 was collected and recorded on December 31,2020.
REQUIRED:
1. Prepare the adjusting entries on December 31,2020
2. Compute the total amount of cash and cash equivalents that should be reported on December
31,2020.
3. Explain the presentation o the items included from cash and cash equivalent.
Answers:
1. Adjusting Entries
a. Accounts Receivable
Cash in Bank
200,000
200,000
b. Cash in Bank
Accounts Payable
250,000
250,000
c. Cash in Bank
100,000
Accounts Payable
100,000
d. Accounts Receivable
Cash in Bank
2.
450,000
450,000
Total amount of cash and cash equivalent on December 31, 2019.
Cash in Bank
Stale Customer Check
Undelivered creditor’s check
Post-dated creditor’s check
2020 collection recorded in 2019
Total
Time Deposit- 30 days
Petty Cash Fund
Cash and Cash Equivalent
₱ 3,000,000
(200,000)
250,000
100,000
(450,000)
₱ 2,700,000
1,000,000
20,000
₱ 3,720,000
3. Presentation of items excluded
EXCLUDED ITEMS
CLASSIFICATION
Money market placement
due on June 30, 2020
Short term investments
Saving deposit in closed bank
Other Non-Current Asset
Sinking fund for bond payable
due June 30,2021
Long term investment