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 June 30, 2022
1,500,000
Petty cash fund
20,000
* The cash in bank included customer check of 200,000 pesos outstanding for 18 months.
*Check of 250,000 pesos in payment of accounts payable was dated and recorded on
december 31 2020 but mail to creditors on january 15 2021.
*Track of 100,000 dated january 31 2021 in payment of accounts payable was recorded and
maled december 31 2020.
* The reporting period is the calendar year
The cash receipt journal was held how open until January 15 2020 during which time an amount
of 450,000 was collected and recorded on December 31 2020.
Problem 1-1
Required:
1. Prepare adjusting entries on December 31,2020
ADJUSTING ENTRIES
Cash in bank:
Customer check outstanding for 18 months
A.) Accounts Receivable 200,000
Cash in bank 200,000
Undelivered check
B.) Cash in bank 250,000
Accounts Payable 250,000
Postdated check delivered
C.) Cash in bank 100,000
Accounts Payable 100,000
Collection on January 2020 which is recorded in December 31, 2019
D.) Account Receivable 450,000
Cash 450,000
2. Compute the total amount of cash and cash equivalents that should be
reported on December 31,2020
Cash in bank
Customer check outstanding for 18 months
Undelivered check
Postdated check delivered
Collection on January 2020 recorded on December 31, 2019
Adjusted Cash in Bank
Cash in Bank
Time Deposit- 30 DAYS
Petty Cash Fund
TOTAL CASH AND CASH EQUIVALENT
3,000,000
(200,000)
250,000
100,000
(450,0000)
2,700,000
2,700,000
1,000,000
20,000
3,720,000
3. Explain the presentation of the items excluded from cash and cash
equivalents.
* Saving deposit in closed bank is not included in the computation because cash in
closed banks or in bank having financial difficulty or in bankruptcy should be
classified as receivable.
* The money market placement of 2,000,000 is not included in the computation of
Cash and Cash Equivalent because it is classified as current asset, its due is on
June 30, 2020 which is more than 3 months and less than a year.
* The sinking fund of 1,500,000 is also not included because it is classified as noncurrent asset, its due is on June 30 2022 which is more than a year.
Problem 1-2. Argentina Company reported the following accounts on December 31 2020;
Cash on hand
1,000,000
Petty cash fund
50,000
Security bank current account
2,000,000
PNB current account
1,500, 000
BDO current account (overdraft)
(200,000)
BSP treasury bill 120 days
3,000,000
BPI time deposit 90 days
2,000,000
Bond sinking fund
2,500,000
* The cash on hand included a customer post dated check of 150,000 and postal money orders
of 50,000
*The petty cash fund included are replenish petty cash vouchers for 10,000 pesos and an
employee check for 5000 pesos dated january 31 2021
* The BPI time deposit is a set aside for acquisition of land to be made in early january 2021
*The bond sinking fund is set aside for payment of bond payable due december 31 2021
Problem 2-1
1. Prepare adjusting entries on December 31,2020
Cash on hand:
Postdated check
● Account Receivable
150,000
Cash on hand
150,000
Petty cash fund
● Expenses
10,000
Receivable from employee
Petty Cash Fund
5,000
15,000
2. Compute the total amount of cash and cash equivalent
Cash on hand
Postdated check
Adjusted cash on hand
Petty cash fund
Unreplenished petty cash expense
Postdated employee check
Adjusted Petty Cash Fund
Cash on hand
Petty Cash Fund
Security Bank Current Asset
PNB current account
Bond sinking fund
TOTAL CASH AND CASH EQUIVALENT
1,000,000
(50,000)
850,000
50,000
(10,000)
(5,000)
35,000
850,000
35,000
2,000,000
1,500,000
2,500,000
6,885,000
3. Explain the presentation of the items excluded from cash and cash
equivalents.
The BSP 120- day Treasury bill of 3,000,000 is classified and be presented
in current asset and should not be included in the computation of cash and
cash equivalent because its term is more than 3 months and less than a
year.
● Overdraft is considered as current liability, since the 200,000 in BDO is
overdraft then it's classified as current liability and will not be included in
computation of cash and cash equivalent.
● The BPI Time deposit 2,000,000 is not included, it should be classified as
non-current asset because it is restricted for land acquisition so it's
considered as non-current asset regardless of its year disbursement.
●
Problem 1-3. Armenia company reported the following information on december 31 2020.
Cash on hand
Petty cash fund
Cash and bank
Saving Deposit
1,000,000
50,000
4,000,000
2,000,000
7,050,000
Cash on hand included the following;
* Customer check of 100,000 returned by bank December 26 2020 due to insufficient fund but
subsequently deposited and cleared by bank January 5, 2021.
* Customer check for 150,000 dated January 15, 2020 one received December 22, 2020
* Postal money orders received from customer 200,000.
Petty cash fund consisted of the following items:
Currency and coins
Employee IOUs
Currency in envelope marked collection for Christmas party
Check drawn by Armenia payable to petty cashier
2,000
10,000
5000
33,000
50,000
*Check written and dated December 22 2020 and delivered to payee on January 5 2021
200,000.
* Check written december 26 2020 and dated january 31 2021 delivered to pay on december
26, 2020 300,000.
Problem 1-3
1. Prepare adjusting entries on December 31,2020
Cash on hand:
NSF customer check:
a. Account Receivable
100,000
Cash on hand
100,000
Postdated customer check:
b. Account Receivable
50,000
Cash on hand
50,000
Petty Cash Fund:
● Advance to Employees
10,000
Cash short or over
5,000
Petty Cash Fund
15,000
Cash in bank:
⮚
⮚
Cash in bank
Accounts Payable
Cash in bank
200,000
200,000
300,000
Accounts Payable
300,000
2. Compute the total cash on December 31,2020
Cash on hand
NSF customer check
Postdated customer check
Adjusted cash on hand
1,000,000
(100,000)
(150,000)
750,000
Currency and coins
Payable to Cashier
Adjusted Petty Cash Fund
2,000
33,000
35,000
Cash in bank
Undelivered check for payment to payable
Postdated Company check delivered
Adjusted cash in bank
4,000,000
200,000
300,000
450,000
Cash on hand
Petty Cash Fund
750,000
35,000
Cash in bank
Saving Deposit
TOTAL CASH
4,500,000
2,000,000
7,285,000
Problem 1-4. Callous Company reported the following accounts on December 31
2020;
Cash and hand included the following items;
* Customer check for 35000 returned by bank december 26 , 2020 due to insufficient
fund but subsequently deposited and clear been back on January 10 ,2021.
* Checks customer check for 15,000 dated January 10 2020 one received December 23
2020.
The Petty cash fund consisted of the following items;
Currency and Coins
5,000
IOUs from officers
2,000
Unreplenished patty cash vouchers
12,000
* Included among the checks drawn by Callous company against the Philippine bank
current account and recorded in December 2020 where the following:
* Check written and dated december 23, 2020 and delivered to payee on January 31,
2021 25,000
* Check written december 26 2020 dated january 30 2020 1 delivered to pay on
december 28, 2020, 45,000.
Problem 1-4
1. Compute the total cash on December 31,2020
Cash on hand
NSF customer check
Postdated customer check
Adjusted cash on hand
200,000
(35,000)
(15,000)
150,000
Petty cash fund:
Petty Cash Fund
20,000
Receivable from officer
Expenses
Cash short or over
(2,000)
(12,000)
(1,000)
Currency and coins
5,000
Philippine Bank Current Account
Undelivered drawn payable to petty cashier
Postdated company check delivered
Adjusted balance
5,000,000
25,000
45,000
5,070,000
Cash on hand
Petty Cash Fund
Philippine Bank Current Account
City Bank Current Account No. 1
City Bank Current Account No. 1
Asia Bank saving deposit
Asia Bank Time deposit
TOTAL CASH AND CASH EQUIVALENT
150,000
5,000
5,070,000
3,900,000
4,000,000
(100,000)
250,000
2,000,000
11,375,000
2. Prepare adjusting entries on December 31,2020
Cash on hand:
NSF customer check:
● Accounts Receivable
35,000
Cash on hand
35,000
Postdated customer check:
● Account Receivable
15,000
Cash on hand
15,000
Petty cash fund:
● Receivable from officer
2,000
Expenses
12,000
Cash short or over
1,000
Petty Cash Fund
● Philippine Bank Current
Accounts Payable
● City Bank
100,000
15,000
70,000
70,000
Overdraft
100, 000