FAR

CASH AND CASH EQ

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Problem 1

Karla Company provided the following information on December 31,2014:

Cash on hand 500,000
Petty cash fund 20,000
Security Bank current account 1,000,000
PNB Current account No. 1 400,000
PNB Current account No. 2 ' ( 50,000)
BSP treasury bill - 60 days 3,000,000
BPI time deposit - 30 days 2,000,000
* The cash on hand included a customer postdated check of P 100,000 and postal money order of P40,000.
* A check for P200,000 was drawn against Security Bank account, dated January 15, 2015, delivered to the
payee and recorded December 31, 2014.
* The BPI time deposit is set aside for acquisition of equipment.
What total amount of cash and cash equivalents should be reported on December 31,2014?
_________________

Problem 2

i. On December 31,2014, Erika Company reported "cash account" balance per ledger of P3,600,000 which included
the following:
Demand deposit 1,500,000
Time deposit - 30 days 500,000
NSF check of customer 20,000
Money market placement due on June 30, 2015 1,000,000
Saving deposit 50,000
IOU from an employee 30,000
Pension fund 400,000
Petty cash fund 10,000
Customer check dated January 31,2015 60,000
Customer check outstanding for 18 months 30,000
3,600,000
* Check of P100,000 in payment of accounts payable was dated and recorded on December 31, 2014 but
mailed to creditors on January 15,2015.
* Check of P50,000 dated January 31, 2015 in payment of accounts payable was recorded and mailed
December 31,2014.
* The entity used the calendar year. The cash receipts journal was held open until January 15, 2015, during
which time P200,000 was collected and recorded on December 31,2014.
What total amount should be reported as "cash and cash equivalents" on December 31,2014?
A. 1,510,000 C. 1,960,000
B. 1,860,000 D. 2,010,000

Problem 3
iiCelineCompany provided the following information on December 31,2014:
Cash on hand 200,000
Petty cash fund 20,000
Philippine Bank current account 5,000,000
Manila Bank current account 4,000,000
City Bank current account (bank overdraft) (100,000)
Asia Bank saving account for equipment acquisition 250,000
Asia Bank time deposit, 90 days 2,000,000
Cash on hand included customer check of P30,000 dated January 10, 2015 received on December 23,2014.
Included among the checks drawn by Celine against the Philippine Bank current account and recorded in
December 2014 are:
* Check written and dated December 23, 2014 and delivered to payee on January 3,2015, P25,000.
* Check written December 26, 2014, dated January 30, 2015, delivered to payee on December 28, 2014,
P45,000.
What total amount should be reported as cash and cash equivalents on December 31,2014?
A. 11,160,000 C. 11,330,000
B. 11,260,000 D. 11,510,000

BANK RECONCILIATION

Problem 4

Core Company provided the following data for the purpose of reconciling the cash balance per book with the
balance per bank statement on December 31,2014:
Balance per bank statement 2,000,000
Outstanding checks (including certified check of P100,000) 500,000
Deposit in transit 200,000
December NSF checks (of which P50,000 had
been redeposited and cleared by December 27) 150,000
Erroneous credit to Core's account, representing
proceeds of loan granted to another company 300,000
Proceeds of note collected by bank for Core, net of service charge of P20,000750,000
What amount should be reported as cash in bank on December 31,2014?
A. 1,400,000 C. 1,500,000
B. 1,450,000 D. 1,800,000
Problem 5

ii. Aries Company kept all cash in a checking account. An examination of the accounting records and bank
statement for the month ended June 30, 2014 revealed the following information:
* The cash balance per book on June 30 is P8,500,000.
* A deposit of P1,000,000 that was placed in the bank's night depository on June 30 does not appear
on the bank statement. * The bank statement shows on June 30, the bank collected note for Aries and
credited the proceeds of P950,000 to the entity's account. * Checks outstanding on June 30 amount
to P300,000.
* Aries discovered that a check written in June for P200,000 in payment of an account payable, had
been recorded in the entity's records as P20,000.
* Included with the June bank statement was NSF check for P250,000 that Aries had received from a
customer on June 26. * The bank statement shows a P20,000 service charge for June.
What amount should be reported as cash in bank on June 30,2014?
A. 8,300,000 C. 9,180,000
B. 9,000,000 D. 9,360,000 FA © 2014

Problem 6

ii. Letty Company provided the bank statement for the month of April which included the following information:
Bank service charge for April 15,000
Check deposited by Letty during April was not collectible
and has been marked "NSF" by the bank and returned 40,000
In comparing the bank statement to its own records, the entity found the following:
Deposits made but not yet recorded by bank 130,000
Checks written and mailed but not yet recorded by bank 100,000
All deposits in transit and outstanding checks have been properly recorded in the entity's books. A customer
check for P35,000 payable to Letty Company had not yet been deposited and had not been recorded by
the entity.
The cash in bank account balance per ledger is P920,000.
What is the adjusted cash in bank on April 30?
A. 865,000 C. 930,000
B. 900,000 D. 965,000
Problem 7

Xanthous Company provided the following bank reconciliation on January 31 of the current year:

Bank balance 300,000

Add Deposit in transit 600,000
Total 900,000
Deduct Outstanding checks:
No. 114 240,000
115 160,000
116 60,000 460,000
Adjusted bank balance 440,000
All receipts of cash are deposited in the bank account. The bank
statement for the month of February is presented below:

THIRD BANK
Checks Deposit Date Balance
Balance forwarded Jan. 31 300,000
240,000 600,000 Feb. 1 660,000
2,000,000 3 2,660,000
200,000 5 2,460,000
900,000 400,000 7 1,960,000
160,000 9 1,800.000
1,000,000 10 2,800,000
500,000 13 2,300,000
1,200,000 16 3,500,000
1,300,000 21 4,800,000
550,000 23 4,250,000
5,000 SC 24 4,245,000
1,000,000 550,000 27 3,795,000
800,000 270,000 CM 28 3,265,000

The following information was taken from the credit memo

of February 28:
Face of the note 250,000
Interest on the note 30,000
Maturity value of the note 280,000
Collection charge 10,000
Credit to your account 270,000
 The following data were taken from the cash journals of Xanthous Company:
Cash Receipt Journal Cash Disbursement Journal
Date Debit Cash Check No. Credit Cash
Feb. 2 2,000,000 117 200,000
6 400,000 118 900,000
9 800,000 119 800,000
10 200,000 120 500,000
15 1,200,000 121 550,000
20 1,300,000 122 180,000
24 550,000 123 1,000,000
28 450,000 124 120,000
125 250,000
6,900,000 4,500,000
Required:
a. Prepare bank reconciliation on February 28, showing the book balances before and after adjustment.
b. Prepare journal entries to record the adjustments that are indicated by the bank reconciliation.

PROOF OF CASH
Problem 8
Jam Company provided the following bank reconciliation on May 31:
Balance per bank statement 2,100,000
Deposits outstanding 300,000
Checks outstanding ( 30,000)
Correct cash balance 2,370,000
Balance per book 2,372,000
Bank service charge (2,000)
Correct cash balance 2,370,000

June data are as follows:

Bank Book
Checks recorded 2,300,000 2,360,000
Deposits recorded 1,620,000 1,800,000
Collection by bank (P400,000 note plus interest) 420,000
NSF check returned with June 30 statement 10,000
Balances 1,830,000 1,810,000

ii. What is the amount of checks outstanding on June 30?

A. 0 C. 60,000
B. 30,000 D. 90,000

ii. What is the amount of deposits in transit on June 30?

A. 120,000 C. 480,000
B. 180,000 D. 680,000
ii. What is the adjusted cash in bank on June 30?
A. 1,810,000 C. 2,240,000
B. 2,220,000 D. 2,780,000

“Anything worth having doesn’t come easy.” /MAP

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