Cash and Cash Equivalents

DLSU Accountancy Department
Practical Accounting One
CASH AND CASH EQUIVALENTS

I. Components of Cash and Cash Equivalents (PAS 1 and PAS 7)
Problem 1. The following items are found in the Accounting Records of F1 Inc. on December 31,2011:
Coins
P1,000,000
Currency
2,500,000
Money Orders
1,500,000
Foreign Currency Deposit (restricted)
2,000,000
Petty Cash Fund (P20,000 in vouchers and P30,000 IOUs from Employee)
100,000
Postage Stamp
50,000
IOU from the Company president
200,000
Postdated check from a customer of F1 Inc.
300,000
Unreleased or undelivered check for payment of accruals drawn by F1
400,000
Postdated check issued to a supplier of F1 Inc.
100,000
Savings Deposit in a Bank closed by BSP
500,000
Fund set aside for acquisition of Land to be disbursed on December 31,2013
3,000,000
Fund set aside for acquisition of Building to be disbursed on July 1,2012
2,000,000
Payroll fund
1,000,000
Dividend fund
200,000
Travel fund
300,000
Interest fund
100,000
Tax fund
400,000
Bond sinking fund Bonds payable will be due on December 31,2013
2,000,000
Bond sinking fund Bonds payable will be due on July 1,2012
1,000,000
Cash surrender value
10,000
Saving Deposit in BDO Bank (compensating balance of P200,000 unrestricted)
2,000,000
Saving Deposit in BPI Bank (compensating balance of P100,000 restricted for
Short-term borrowing)
1,600,000
Saving Deposit in MetroBank (compensating balance of P300,000 restricted for
Long-term borrowing)
2,800,000
Time Deposit with remaining term of 30 days and acquired on September 1,2011
4,000,000
Time Deposit with original term of 5 years and remaining term of 80 days on
December 31,2011. It was acquired on December 21,2011
5,000,000
Current Account in PNB - (Overdraft)
(500,000)
First Current Account in RCBC (Overdraft)
(1,000,000)
Second Current Account in RCBC
3,000,000
Stale Check from a Customer
200,000
Stale Check issued to a supplier against Second Account in RCBC
100,000
Investment in Ordinary Shares
300,000
Investment in Preference Shares
400,000
Investment in Redeemable Preference Shares 90 days term
500,000
Required: What is the total cash and cash equivalents to be presented in the December 31,2011 Statement of Financial
Position of F1 Inc.?
II. Petty Cash Fund

Problem 2. Account at the petty cash fund of UFC Inc. showed its composition as follows:
Coins and currency
P3,300
Paid Vouchers:
Transportation
600
Gasoline
400
Office Supplies
500
Postage Stamps
300
Due from employees
1,200 3,000
Managers check returned by bank marked NSF
1,000
Check drawn by company to the order of petty cash custodian
2,700
A sheet of paper with names of several employees together with contribution for
a birthday gift of a co-employee. Attached to the sheer of paper is a currency of
5,000
Required: What is the amount of petty cash fund to be presented in the Statement of Financial Position?
DLSU CPA Board Operation

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III. Bank Reconciliation:

Problem 3. The following items are provided by Ayala Land Inc. regarding the bank reconciliation of one of its current
accounts in the Bank Philippine Islands for the year ended December 31,2011:
Ayala Land Inc. Bank Statement Balance
P3,000,000
Current Account in BPI Bank
4,500,000
Bank Service Charge for the year 2011
200,000
Note Receivable Collected by Bank
300,000
NSF Check from Ayala Land Inc.s Customer
400,000
Interest on Note Receivable
100,000
Pre-authorized payment for electric bill (Ayala Land Inc. authorized BPI to
automatically pay its electric bill as submitted directly to BPI
300,000
Outstanding check (including P100,000 certified check by BPIs manager) 400,000
Deposit in Transit
1,000,000
Check of P300,000 drawn and issued to a supplier but recorded by Ayala
Land Inc. as P200,000
100,000
Ayala Corporations Deposit credited by BPI to Ayala Land Inc.
500,000
Notes Payable of Ayala Property Management charged by BPI to Ayala
Land Inc.
300,000
Time deposit of Ayala Land Inc. of P500,000 matures on Dec. 31,2011
and credited by BPI to Ayala Land. Inc Account on that date
500,000
Note: The bank has not committed any error during 2011 except those specifically stated above. Any remaining difference
after reconciliation pertains to the cash shortage resulting from cashier and accountants defalcation of companys cash.
Required: Based on the result of your audit, determine the following as of December 31,2011:
____________1. Adjusted balance per bank
____________2. Adjusted balance per book
____________3. Cash shortage arising from the cash defalcation by companys cashier and accountant
IV. Deposit in Transit and Outstanding Checks

Problem 4. The following data are presented by Globe Inc. concerning its Deposits in Transit and Outstanding Checks for
the year month of December 2011:
December 1,2011 Deposits in Transit
P 200,000
December 1,2011 Outstanding Checks
300,000
December Total Debits per book
3,200,000
December Total Credits per book
4,400,000
December Total Debits per bank
3,500,000
December Total Credits per bank
3,300,000
The following reconciling items are also provided:
Reconciling Items
November
December
Bank Service Charge
P 10,000
P 20,000
NSF Check
100,000
200,000
Note Receivable Collected
200,000
300,000
Interest Earned
50,000
60,000
Book error
150,000
Bank error
200,000
NSF Check redeposited by Globe customer
300,000
Note: 1. The book error refers to a check issued and drawn by Globe for P150,000 but recorded in the cash disbursements
journal as P200,000.
2. The bank error refers to a note payable of Gloves Inc. charged to Globe Inc. account.
3. All reconciling items in November were recorded, adjusted and cleared by Bank and Book on the month of December
4. During December, the bank credited the account of Globe in the amount of P500,000 which actually pertains to
deposit of Globo Inc. The bank was able to correct the error on the same month after the discovery.
5. During December, Globe erroneously debited the cash in bank account in the amount of P400,000 which should be
debited to accounts receivable. Globe Inc. was able to correct the error on the same month after the discovery.
Required: Based on the result of your audit, determine the following:

____________1. Total Deposits by Globe on the month of December
____________2. Total Deposits of Globe credited by bank on the month of December
____________3. Deposits in Transit on December 31,2011
____________4. Total Checks issued by Globe on the month of December
____________5. Total Checks debited by bank on the month of December
____________6. Outstanding Checks on December 31,2011

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V. Proof of Cash
Problem 5. The following data are provided by Meralco Inc. regarding its Current Account in RCBC Bank for the months
of November and December, 2011:
November 30 December 31
Balance per Book
P 50,000
P 70,000
Balance per Bank
84,000
120,000
Book debits or receipts
?
Book credits or disbursements
180,000
Bank debits or disbursements
?
Bank credits or receipts
210,000
Deposits in transit
40,000
75,000
Outstanding checks
65,000
119,000
NSF Checks
5,000
10,000
Bank Service Charge
1,000
4,000
Note collected by bank
15,000
20,000
Another NSF Check on December and redeposited by customer on
December (Meralco didnt prepare entry on redeposit)
40,000
Note: All reconciling items on November are recorded, adjusted and cleared by the book and bank on December.
Required: Based on the result of your audit, determine the following:
____________1. Unadjusted Book debits or receipts on the month of December
____________2. Unadjusted Bank debits or disbursements on the month of December
____________3. Adjusted Balance per book or bank on November 30
____________4. Adjusted Bank receipts or Book receipts on the month of December
____________5. Adjusted Bank disbursements or Book disbursements on the month of December
____________6. Adjusted Balance per book or bank on December 31

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DLSU Accountancy Department

Practical Accounting One

CASH AND CASH EQUIVALENTS

II. Petty Cash Fund

DLSU CPA Board Operation

III. Bank Reconciliation:

IV. Deposit in Transit and Outstanding Checks

Required: Based on the result of your audit, determine the following:

DLSU CPA Board Operation

DLSU CPA Board Operation

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