Cash

Top of FormBottom of FormQuestion 1Rommel Company keeps all its cash in a checking account. An examination of the companys accounting records and bank statement for the month ended June 30, 2013 revealed the following information:The cash balance per book on June 30 is P8,500,000.

A deposit of P1,000,000that was placed in the banks night depository on June 30does not appear on the bank statement.

The bank statement shows on June 30, the bank collected note for Rommel and credited the proceeds of P950,000to the Companys account.

Checks outstanding on June 30 amount to P300,000.

Rommel discovered that a check written in June for P200,000in payment of an account payable, had been recorded in the Companys records as P20,000.

Included with the June bank statement was NSF check for P250,000that Rommel had received from a customer on June 26.

The bank statement shows a P20,000service charge for June.

The cash in bank to be shown in the statement of financial position on June 30, 2013 is9,000,0008,300,0009,360,0009,180,000

SOLUTION:Balance per book8,500,000

Note collected by bank950,000

Book error (200,000 - 20,000)(180,000)

NSF check(250,000)

Service charge(20,000)

Adjusted book balance9,000,000

Practical Accounting 1 - Cash and Cash Equivalents (Difficult)Question 2Roger Company had the following bank reconciliation on June 30, 2013:Balance per bank statement, June 303,000,000

Deposit in transit400,000

Outstanding check(900,000)

Balance per book, June 302,500,000

The bank statement for the month of July showed the following:Deposits (including P200,000 note collected for Roger)9,000,000

Disbursements (including P140,000 NSF check and P10,000 service charge)7,000,000

All reconciling items on June 30 cleared through the bank in July. The outstanding checks totaled P600,000 and the deposit in transit amounted to P1,000,000 on July 31.What is the cash balance per book on July 31?5,400,0005,350,0005,550,0004,500,000

SOLUTION:Balance per bank-June 303,000,000

July bank deposits9,000,000

July bank disbursements(7,000,000)

Balance per bank - July 315,000,000

July deposit in transit1,000,000

July outstanding checks(600,000)

Adjusted bank balance5,400,000

Balance per book (squeeze)5,350,000

Note collected by bank in July200,000

NSF check in July(140,000)

Service charge in July(10,000)


Practical Accounting 1 - Cash and Cash Equivalents (Difficult)Question 3Kenny Company had the following bank reconciliation on June 30, 2013:Balance per bank statement, June 303,000,000




The bank statement for the month of July showed the following:Deposits (including P200,000 note collected for Kenny)9,000,000


All reconciling items on June 30 cleared through the bank in July. The outstanding checks totaled P600,000 and the deposit in transit amounted to P1,000,000 on July 31.What is the amount of cash receipts per book in July?9,400,0009,600,0008,600,0009,800,000

SOLUTION:Deposits per bank statement for July9,000,000

Note collected by bank(200,000)

Deposit in transit-June 30(400,000)

Deposit in transit-July 311,000,000

Cash receipts per book for July9,400,000

Practical Accounting 1 - Cash and Cash Equivalents (Difficult)Question 4Kareen Company had the following bank reconciliation on June 30, 2010:Balance per bank statement, June 303,000,000




The bank statement for the month of July showed the following:Deposits (including P200,000 note collected forKareen)9,000,000


All reconciling items on June 30 cleared through the bank in July. The outstanding checks totaled P600,000 and the deposit in transit amounted to P1,000,000 on July 31.What is the amount of cash disbursements per book in July?6,550,0006,700,0007,300,0006,850,000

SOLUTION:Disbursements per bank statement for July7,000,000

NSF check in July(140,000)

Service charge in July(10,000)

Outstanding checks-June 30(900,000)

Outstanding checks-July 31600,000

Cash disbursements per book for July6,550,000

Practical Accounting 1 - Cash and Cash Equivalents (Difficult)Question 5Reconciliation of Jam Companys bank account at May 31 is:Balance per bank statement2,100,000

Deposits outstanding300,000

Checks outstanding(30,000)

Correct cash balance2,370,000

Balance per book2,372,000

Bank service charge(2,000)

Correct cash balance2,370,000

June data are as follows:BankBook

Checks recorded2,300,0002,360,000

Deposits recorded1,620,0001,800,000

Collection by bank (P400,000 note plus interest)420,000

NSF check returned with the June 30 statement10,000

Balances1,830,0001,810,000

The check outstanding on June 30 amounted to30,00090,00060,0000

SOLUTION:Check outstanding - May 3130,000

Checks recorded in June2,360,000

Total2,390,000

Checks recorded by bank in June(2,300,000)

Check outstanding - June 3090,000

Practical Accounting 1 - Cash and Cash Equivalents (Difficult)Question 6Cash data related to Ron Company for the month of January of the current year are shown below:Balance per book, January 313,130,000

Balance per bank statement, January 313,500,000

Collections on January 31 butundeposited550,000

NSF check received from a customer returned by the bank on February 5 with the January bank statement50,000

Checks outstanding on January 31650,000

Bank debit memo for safety deposit box rental not recorded by the depositor5,000

A creditors check for P30,000 was incorrectly recorded in the depositors book as300,000

A customers check for P200,000 was recorded by the depositor as20,000

The depositor neglected to make an entry in its books for a check drawn in payment of an accounts payable125,000

What is the adjusted cash in bank on January 31?3,130,0003,500,0003,400,0002,950,000


Overstatement of creditors check270,000

Understatement of customers check180,000

NSF check(50,000)

Bank debit memo for safety deposit box(5,000)

Unrecorded check(125,000)


Balance per bank3,500,000

Unepositedcollections550,000

Checks outstanding(650,000)


Practical Accounting 1 - Cash and Cash Equivalents (Difficult)Question 7Philip Company had the following account balances on December 31, 2013Cash in bank-current account5,000,000

Cash in bank-payroll account1,000,000

Cash on hand500,000

Cash in bank-restricted account for building construction expected to be finished in 20133,000,000

Time deposit purchased on December 15, 2013 and due on March 15, 20142,000,000

The cash on hand includes a P200,000 check payable to Philip, dated January 15, 2014. What amount should be reported as cash and cash equivalents on December 31, 2013.6,300,0008,300,0006,500,0008,700,000

SOLUTION:Cash in bank-current account5,000,000

Cash in bank - payroll account1,000,000

Cash on hand (500,000 - 200,000)300,000

Time deposit2,000,000

8,300,000

The cash in bank set aside for payroll is included in cash because it is for the payment of current liability.Practical Accounting 1 - Cash and Cash Equivalents (Difficult)Question 8Daina Company provided the following information with respect to its cash and cash equivalents on December 31, 2013:Checking account at First Bank(200,000)

Checking account at Second Bank3,500,000

Treasury bonds1,000,000

Payroll account500,000

Value added tax account400,000

Foreign bank account - restricted2,000,000

Postage stamps50,000

Employees postdated check300,000

IOU from presidents brother750,000

Credit memo from a vendor for a purchase return80,000

Travelers check300,000

NSF check150,000

Petty cash (P20,000 in currency and expense receipts for P30,000)50,000

Money order180,000

What amount should be reported as unrestricted cash on December 31, 2013:5,900,0004,600,0004,900,0006,900,000

SOLUTION:Checking account at Second Bank3,500,000


value added tax account400,000

Travelers check300,000

Petty cash fund20,000

Money order180,000

4,900,000

Practical Accounting 1 - Cash and Cash Equivalents (Difficult)Question 9The following data pertain to the cash transactions and bank account of James Company for May of the current year:Cash balance per accounting record1,719,000

Cash balance per bank statement3,195,000

Bank service charge10,000

Debit memo for the cost of printed checks delivered by the bank; the charge has not been recorded in the accounting record12,000

Outstanding checks685,000

Deposit of May 30 not recorded by bank until June 1500,000

Proceeds of a bank loan on May 30, not recorded in the accounting record, net of interest of P30,000570,000

Proceeds from a customers promissory notes, principal amount of P800,000 collected by the bank not taken up in the accounting record with interest810,000

Check no 1086 issued to a supplier entered in the accounting record as P210,000 but deducted in the bank statement at an erroneous amount of120,000

Stolen check lacking an authorized signature deducted from Jamess account by bank in error80,000

Customers check returned by the bank marked NSF, indicating that the customers balance was not adequate to cover the check; no entry has been made in the accounting record to record the returned check.77,000

The adjusted cash in bank is3,000,0002,910,0003,080,0002,990,000


Service charge(10,000)

Debit memo for printed checks(12,000)

Proceeds of bank loan570,000

Proceeds of customers note810,000

NSF check(77,000)


Balance per bank3,195,000

Outstanding checks(685,000)


Bank error in recording check(90,000)

Stolen check deducted by bank in error80,000


Practical Accounting 1 - Cash and Cash Equivalents (Difficult)Question 10Michael Company reported the following information as of the end ofthe current year.Investment securities of P1,000,000. These securities are share investments in entities that are traded in the Philippine Stock Exchange. As a result, the shares are very actively traded in the market.

Investment securities of P2,000,000. These securities are government treasury bills. The treasury bills have a 10-year term and purchased on December 31 at which time they had two months to go until they mature.

Cash of P3,400,000 in the form of coin, currency, saving account and checking account.

Investment securities of P 1,500,000. These securities are commercial papers. The term of the papers is nine months and they were purchased on December 31 at which time they had three months to go until they mature.

How much should be reported as cash and cash equivalents at the endof the current year?5,400,0006,400,0006,900,0007,900,000

SOLUTION:Government treasury bills2,000,000

Cash3,400,000

Commercial papers1,500,000

Total cash and cash equivalents6,900,000

The share investments cannot qualify as cash equivalents because although they are very actively traded they do not have a maturity. The commercial papers are actually money market placements. Since the remaining term is three months from the date of acquisition, the commercial papers are considered cash equivalentsPractical Accounting 1 - Cash and Cash Equivalents (Difficult)Question 11Jason Company provided the following information with respect to its cash and cash equivalents on December 31, 2009.Checking account at First Bank( 200,000)





Foreign bank account - restricted (in equivalent pesos)2,000,000


Employee's postdated check300,000

IOU from president's brother750,000


Traveler's check300,000

Not-sufficient-fund check150,000

Petty cash fund (P20,000 in currency and expense receipts for P30,000)50,000

Money order180,000

What amount would be reported as unrestricted cash on December 31, 2009?5,900,0004,600,0004,900,0006,900,000

SOLUTION:Checking account at Second Bank3,500,000





Money order180,000

Total unrestricted cash4,900,000

Practical Accounting 1 - Cash and Cash Equivalents (Difficult)Question 12The checkbook balance of JR Company on December 31, 2009was P4,000,000. Data about certain cash items follow:A customer check amounting to P200,000 dated January 2, 2010 was included in the December 31, 2009 checkbook balance.Another customer check for P500,000 deposited on December 22, 2009 was included in its checkbook balance but returned by the bank for insufficiency of fund. This check was redeposited on December 26, 2009 and cleared two days later.A P400,000 check payable to supplier dated and recorded on December 30, 2009 was mailed on January 16, 2010.A petty cash fund of P50,000 with the following summary on December 31, 2009:Coins and currencies5,000

Petty cash vouchers43,000

Return value of 20 cases of soft drinks2,000

50,000

A check of P43,000 was drawn on December 31, 2009 payable to Petty Cash.What is the "cash" balance on December 31, 2009?4,248,0004,200,0004,205,0003,748,000

SOLUTION:Checkbook balance4,000,000

Postdated customer check( 200,000)

Undelivered check payable to supplier400,000

Adjusted cash in bank4,200,000

Petty cash:

Coins and currencies5,000

Replenishment check43,00048,000

Total4,248,000

The return value of the soft drink bottles is shown as refundable deposit as a current asset. The NSF check is redeposited and cleared before December 31, 2009. Thus, the same is not deducted anymore from the checkbook balancePractical Accounting 1 - Cash and Cash Equivalents (Difficult)Question 13On December 31, 2009, Ally Company's "cash account" balance per ledger of P3,600,000 includes the following:Demand deposit1,500,000

Time deposit - 30 days500,000

NSF check of customer20,000

Money market placement due on June 30, 20101,000,000

Saving deposit50,000

IOU from an employee30,000

Pension fund400,000


Customer check dated January 31, 201060,000

Customer check outstanding for 18 months30,000

3,600,000

Check of P 100,000 in payment of accounts payable was dated and recorded on December 31, 2009 but mailed to creditors on January 15, 2010.Check of P50,000 dated January 31, 2010 in payment of accounts payable was recorded and mailed December 31, 2009.The entity uses the calendar year. The cash receipts journal was held open until January 15, 2010, during which time P200,000 was collected and recorded on December 31, 2009.The "cash and cash equivalents" on December 31, 2009 should be2,010,0001,960,0001,860,0001,510,000

SOLUTION:Demand deposit1,450,000

Time deposit - 30 days500,000

Saving deposit50,000



Demand deposit per book1,500,000

Undelivered check100,000

Postdated check delivered50,000

Window dressing of collection( 200,000)

Adjusted balance1,450,000

Practical Accounting 1 - Cash and Cash Equivalents (Difficult)Question 14The December 31, 2009 trial balance of Fernandez Company includes the following accounts:Cash on hand500,000


Security Bank current account1,000,000

PNB Current account No. 1400,000

PNB Current account No. 2( 50,000)

BSP treasury bill - 60 days3,000,000

BPI time deposit - 30 days2,000,000

The cash on hand includes a customer postdated check of P 1 00,000 and postal money order of P40,000.The petty cash fund includes unreplenished petty cash vouchers for P2,000 and an employee check for P3,000 dated January 31, 2010.A check for P200,000 was drawn against Security Bank account, dated January 15, 2010, delivered to the payee and recorded December 31, 2009.The BPI time deposit is set aside for acquisition of land to be used as a factory site.The statement of financial position on December 31, 2009 shouldshow cash and cash equivalents at4,965,0006,965,0004,765,0001,965,000

SOLUTION:Cash on hand (500,000 - 100,000)400,000

Petty cash fund (20,000 - 2,000 - 3,000)15,000

Security Bank current account (1,000,000 + 200,000)1,200,000

PNB current account No. 1400,000

PNB current account No. 2( 50,000)

BSP treasury bill - 60 days3,000,000


Practical Accounting 1 - Cash and Cash Equivalents (Difficult)Question 15Jason Company provided the following information with respect to its cash and cash equivalents on December 31, 2009.Checking account at First Bank( 200,000)





Foreign bank account - restricted (in equivalent pesos)2,000,000


Employee's postdated check300,000

IOU from president's brother750,000



Not-sufficient-fund check150,000

Petty cash fund (P20,000 in currency and expense receipts for P30,000)50,000

Money order180,000

What amount would be reported as unrestricted cash on December 31, 2009?5,900,0004,600,0006,900,0004,900,000SOLUTION:Checking account at Second Bank3,500,000





Money order180,000

Total unrestricted cash4,900,000

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