ST VINCENT COLLEGE

AUD2
CASH
EXERCISE

1. The “cash” account in Gainseville Company’s ledger on December 31, 2019

showed a balance of P510,000 which included the following:

Petty cash fund 10,000

Undeposited receipts, including a postdated check of 140,000
P20,000
Cash in bank 250,000
Cash in sinking fund 75,000
Vouchers paid out of collections, not yet recorded 25,000
IOUs signed by employees __10,000
Total 510,000

At what amount should Gainseville Company report as “cash” on the December

31, 2019 statement of financial position?

a. 400,000 c. 475,000
b. 380,000 d. 455,000

2. Schmukler Company has the following bank accounts:

Overdrawn checking account - Bank A ( 65,000)

Payroll account - Bank B 200,000
Value added tax Account - Bank B 150,000

In addition to the bank accounts, the following items are on hand:

Employee’s NSF check 8,000

Postage stamps 4,000
IOU from the president 50,000
Traveler’s check 25,000
Customer check undeposited for lack of
countersignature 30,000
Money order 60,000
Petty cash fund (expense receipts of P10,000) 20,000

What is the “cash” balance to be reported on the statement of financial position?

a. 445,000 c. 475,000
b. 455,000 d. 380,000

3. On December 31, 2019, the cash account of Tanya Company has a debit balance
of P3,515,000. An analysis of the cash account shows the following details:

Undeposited collections 100,000

Cash in bank - PCIB checking account 500,000
Cash in bank — PNB (overdraft) ( 75,000)
Undeposited NSF check received from customer,
dated December 1, 2019 . 15,000
Undeposited check from a customer, dated
January 15, 2020 25,000
Cash in bank PCIB (fund for payroll) . 150,000
Cash in bank - PCIB (saving deposit) 100,000
Cash in bank - PCIB (money market instrument,
90 days) 2,000,000

1
 Cash in foreign bank (restricted) 200,000
IOUs from officers 50,000
Sinking fund cash 350,000
Listed stock held as temporary investment 100,000
3,515,000

Compute the cash and cash equivalents that should be shown in the statement of
financial position.

a. 2,800,000 c. 2,775,000
b. 2,950,000 d. 2,850,000

4. At December 31, 2019, Hillison Company had the following balances in the
accounts it maintains at First State Bank:

Checking account # 101 1,800,000

Checking account # 201 ( 150,000)
Time deposit account 30 days 350,000
90-day treasury bill, due February 28, 2020 500,000
180-day treasury bill, due March 15, 2020 700,000

Hillison classifies investments with original maturities of three months or less as

cash equivalents. In its December 31, 2019 statement of financial position what
amount should Hillison report as cash and cash equivalents?

a. 2,650,000 c. 3,350,000
b. 2,500,000 d. 3,200,000

5. The following information pertains to Pavelka Company on December 31, 2019.

Correct cash balance in general checking account

with First Bank 600,000
Overdraft in special checking account with Second
Bank ( 50,000)
Cash accumulated in a special fund that will be
used for plant expansion 2,000,000
Cash surrender value 85,000
Cash travel advances in the hands of company
salespersons 40,000
Currency and coins in petty cash fund (The
company has not replenished the fund to the
imprest amount of P25,000) 15,000

What is the total amount that Pavelka should report as “cash” in the current
assets section of the statement of financial position on December 31, 2019?

a. 2,615,000 c. 615,000
b. 655,000 d. 465,000

6. The petty cash fund of XYZ Company on December 31, 2019 is composed of the
following:

Currencies 5,000
Coins 2,000
Petty cash vouchers:
Gasoline 3,500
Supplies 1,500
IOUs 4,000
A check drawn by XYZ Company to the
order of Nellie Anson, petty cash
custodian, representing her salary 7,000

2
 A sheet of paper with the names of
several employees together with a
contribution for a wedding gift. Attached
to the sheet of paper is a currency of 2,000

The petty cash general ledger account has an imprest balance of P25,000. What
is the correct petty cash balance on December 31, 2019?

a. 14,000 c. 9,000
b. 16,000 d. 7,000

7. The statement of financial position of Brooks Company as of December 31, 2019

showed a cash balance of P1,000,000. It was found to include the following items:

Postal money order from customers 100,000

Note receivable in the possession of a
collecting agency 100,000
Customers’ postdated checks 50,000
Customers’ checks returned by bank
marked “NSF” 30,000
Currencies and coins on hand 40,000
Petty cash fund 10,000

It was determined that check of P150,000 in payment of an equipment was drawn

and recorded on December 31, 2019 but delivered to the payee on January 31,
2020. The correct cash balance on December 31, 2019 is:

a. 870,000 c. 820,000
b. 970,000 d. 670,000

8. The “cash” balance of Fiebelkorn Company consists of the following on December

31, 2019.

Cash on hand, including customer postdated check of

20,000 300,000
Cash in bank, net of bank overdraft of P100,000 in a
separate bank account 300,000
Petty cash, including IOU from employee of P5,000 20,000
Saving deposit, earmarked for acquisition of machinery 250,000

What is the correct “cash” balance?

a. 695,000 c. 945,000
b. 595,000 d. 615,000

9. Macur Company had the following account balances at December 31, 2019

Cash in bank 3,150,000

Cash on hand 125,000
Cash legally restricted for addition to plant
and expected to be disbursed in 2020 1,500,000

Cash in bank includes P500,000 compensating balances against short-term

borrowing arrangements. The compensating balances are legally restricted as to
withdrawal by Macur. In the current assets section of Macur’s December 31, 2019
statement of financial position, total cash should be reported at

a. 3,275,000 c. 2,775,000
b. 3,775,000 d. 4,175,000

3
10. On December 31, 2019, West Company had the following cash balances:

Cash in bank 2,000,000

Petty cash funds (all funds were
reimbursed on December 31, 2019) 50,000

Cash in bank includes P500,000 compensating balances against short-term

borrowing arrangements at December 31, 2019. The compensating balances are
not legally restricted as to withdrawal by West. In the current assets section of
West’s December 31, 2019 statement of financial position, what total amount
should be reported as cash?
a. 2,000,000 c. 1,550,000
b. 1,500,000 d. 2,050,000

11. Tale Corporation had the following account balances at December 31, 2019:

Cash on hand and in bank 2,500,000

Cash restricted for bond redemption 500,000
Time deposit 180 days 250,000

In the current assets section of Tale’s December 31, 2019 statement of financial
position, what total amount should be reported as “cash and cash equivalents”?

a. 3,250,000 c. 2,500,000
b. 2,750,000 d. 3,000,000

12. Apex Corporation’s checkbook balance on December 31, 2019 was P1,500,000.
The same date Apex held the following items in its safe:

A P100,000 check payable to Apex, dated January 2, 2020, that was included in
the December 31 checkbook balance.

A P25,000 check payable to Apex, deposited December 22 and included in the

December 31 checkbook balance, that was returned by the bank on December 30
marked “NSF”. The check was redeposited January 2, 2020, and cleared January
7, 2020.

A P300,000 check payable to a supplier and drawn on Apex’s account, that was
dated and recorded December 31, but not mailed until January 15, 2020.

In its December 31, 2019 statement of financial position, Apex should report cash
at

a. 1,775,000 c. 1,765,000
b. 1,375,000 d. 1,675,000

13. The following information is shown in the accounting records of a company:

Balances as of January 1, 2019

Cash P72,000
Merchandise inventory 96,000
Accounts receivable 67,000
Accounts payable 63,000
Balances as of December 31, 2019
Merchandise inventory P68,000
Accounts receivable 91,000
Accounts payable 38,000

4
 Total sales and cost of goods sold for 2016 were P798,000 and P583,000,
respectively. All sales and all merchandise purchases were made on credit.
Various operating expenses of P120,000 were paid in cash. Assume that there
were no other pertinent transactions. The cash balance on December 31, 2019
would be

a. P146,000 c. P196,000
b. P149,000 d. P305,000

14. The cash account in the current asset section of the statement of financial
position of Roig Company showed a balance of P68,600. It was found to include
the following items:

Petty cash fund (P200 is in the form of paid

vouchers) P 600
Checking account balance in Philippine Trust
Company, per bank statement (a P4,500
check is still outstanding) 27,500
Undeposited receipts, including a post-dated
check for P1,000 12,000
Currencies and coins awaiting deposit 5,500
Bond sinking fund - cash 20,000
Check drawn by manager, returned by bank
marked NSF 3,000

The correct cash balance for Roig Company’s statement of financial position is

a. P40,400 c. P44,400
b. P39,900 d. P40,900

15. The December 31, 2019 trial balance of Karla Company includes the following
accounts:

Cash on hand 600,000

Petty cash fund 25,000
Security Bank current account 1,000,000
PNB Current account No. 1 450,000
PNB Current account No.2 ( 100,000)
BSP treasury bill - 60 days 3,000,000
BPI time deposit - 30 days 3,000,000

* The cash on band includes a customer postdated check of P200,000, NSF

customer check of P50,000 and postal money order of P80,000.

* The petty cash fund includes unreplenished petty cash vouchers for P3,000
and an employee check for P2,000 dated January 31, 2020.

* A check for P200,000 was drawn against Security Bank account, dated
January 15, 2020, delivered to the payee and recorded December 31, 2019.

* The BPI time deposit is set aside for acquisition of land to be used as a factory
site.

How much is the cash and cash equivalents?

a. 4,840,000 c. 4,970,000
b. 4,915,000 d. 4,920,000

5
 - End –

Answer Key

Cash and Cash Equivalents

1. B 6. A 11. C
2. A 7. B 12. D
3. D 8. A 13. A
4. B 9. C 14. B
5. C 10. D 15. D