FATHER SATURNINO URIOS UNIVERSITY

ACCOUNTANCY PROGRAM

FINANCIAL ACCOUNTING AND REPORTING

Name: Date: Score:

Instructor: Sean Justin F. Espina, CPA

Prelim Quiz #1: Cash and Cash Equivalents; Bank Reconciliation; Proof of Cash

Instruction: Answer the following questions below. Provide your solutions. No Solutions, No Points.

Problem 1. Ascending Company has the following balances for the year 2018:
Postage stamps 3,000 Supplies
3 month-Time deposit 10,000 CE
Coins and Currencies 15,000 C
BDO Savings Account 50,000 C
Checks 25,000 C
Postdated customer checks 10,000 AR
Sinking Fund (if silent, NCA) 100,000 NCA
Treasury bill purchased 12/1/2018, maturing 2/28/2019 800,000 CE
Money market instruments (If silent, CE) 150,000 CE
Plant Expansion Fund 500,000 NCA
Money orders 50,000 C
Petty cash fund 10,000 C
Bank drafts 25,000 C
IOUs 5,000 AR
Treasury Bond, purchased 3/1/2018, maturing 2/28/2019 250,000 NCA
Preference share redemption fund 50,000 NCA
Tax Fund 50,000 C
Payroll Fund 300,000 C
Certificate of Deposit 100,000 CE
Redeemable preference share, purchased 11/1/2018 due on 3/1/2019 350,000 NCA

1. How much should be reported as CASH for the year 2018? 525,000
2. How much should be reported as CASH EQUIVALENTS for the year 2018? 1,060,000

Problem 2. The December 31, 2018 trial balance of E Company included the following accounts:

Cash on hand 200,000 - Cash

Petty cash fund 20,000 - Cash
Philippine Bank Current account 5,000,000 - Cash
Manila Bank current account 4,000,000 - Cash
City Bank Current account (100,000) - Liability
Asia Bank Saving Account 250,000 - Cash
Asia Bank time deposit, 90 days 2,000,000 - CE

 Cash on hand included the following items:

Customer’s check for 35,000 returned by bank December 26, 2018 due to insufficient fund but
subsequently redeposited and cleared by the bank on January 10, 2019. NSF Check , deducted to cash
on hand balance, the check should be added on January 10, 2019 as part of cash on hand, because it
was cleared and redeposited on such date. (35,000). Adjusting entry: Accounts Receivable 35,000
Cash 35,000

Customer’s check for 15,000 dated January 10, 2019 received December 23, 2018. Postdated customer
check. Deducted on cash on hand. Adjusting Entry: Accounts Receivable 15,000
Cash 15,000

 Petty cash fund consisted of the following items on December 31, 2018:
Currency and Coins 5,000 – Remaining balance of Petty cash
IOUs from officers 2,000
Unreplenished petty cash vouchers 12,000
* There is cash shortage of 1,000,this is not accounted as part of petty cash fund, but to be included for
replenishment.

 Included among the checks drawn by E against the Philippine Bank Current account and recorded in
December 2018 are the following:
Check written and dated December 23, 2018 and deliver to payee on January 3, 2019, P 25,000.
* Undelivered check. Add to cash. Adjusting entry: CIB – Ph. Bank 25,000
AP 25,000

Check written December 26, 2018, dated January 30, 2019, delivered to payee on December 28, 2018,
P45,000. * Postdated check payable to supplier. Add to cash.
 Adjusting entry: CIB – Ph. Bank 45,000
AP 45,000

 The credit balance in City Bank current account represents checks drawn in excess of the deposit
balance are still outstanding on December 31, 2018. * Bank overdraft. Cannot be offset to any account.
Current liability of the entity.

 The savings account deposit in Asia Bank has been set aside by the Board of Directors for acquisition
of new equipment. This amount is expected to be disbursed in the next 3 months from the end of the
reporting period. * This is not classified under cash account, because the cash is restricted for
Acquisition of new equipment.

Requirements:
3. Cash on hand (200,000 – 35,000 – 15,000) = 150,000
4. Petty cash fund 5,000 – currency and coins
5. Philippine Bank Current account (5,000,000 + 25,000 + 45,000) = 5,070,000
6. Cash equivalents 2,000,000 – 90 days time deposit

7. Cash and Cash equivalents Cash on hand 150,000

Petty cash fund 5,000
Philippine Bank 5,070,000
Manila Bank 4,000,000
Asia bank saving 250,000
Total Cash 9,475,000
Cash Equivalents 2,000,000
Cash & CE 11,475,000

Problem 3. Dove Company reported checkbook balance on December 31, 2015 at P4,000,000.
* A customer check amounting to P200,000 dated January 2, 2016 was included in the December 31, 2015
checkbook balance. Postdated customer check. Since it was included it should be deducted to the cash balance.
Adjusting entry: Accounts Receivable 200,000
Cash 200,000

* Another customer check for P500,000 deposited on December 22, 2015 was included in the checkbook balance
but returned by the bank for insufficiency of fund. This check was redeposited on December 26, 2015 and
cleared two days later. Although the check is considered NSF check, but it was redeposited within the year 2015
(December 26, 2015 and cleared on December 28, 2015) so tama ra na na include siya sa balance. No effect.

* A P400,000 check payable to supplier dated and recorded on December 30, 2015 was mailed on January 16,
2016. Undelivered check. The check was recorded on December 30, 2015 but it was delivered only in January
16, 2016. Therefore the entity is still the owner of the check, this should be added back to the cash balance.
Adjusting entry: Cash 400,000
AP 400,000

* A petty cash fund of P50,000 comprised the following on December 31, 2015:
Coins and currencies 5,000 – remaining petty cash balance
Petty cash vouchers 43,000 - expenses
Return value of 20 cases of soft drinks 2,000 -

* A check of P43,000 was drawn on December 31, 2015 payable to Petty Cash. (Petty cash fund replenishment),
addition to the petty cash balance

8. What total amount should be reported as cash on December 31, 2015? 4,248,000
Checkbook balance 4,000,000
Postdated customer check (200,000)
Undelivered check 400,000
Petty cash:
Currency & coins 5,000
Replenishment 43,000 48,000
Total Cash 4,248,000

Problem 4. If a petty cash fund is established in the amount of P250, and contains P200 in cash and P45 in
receipts for disbursements when it is replenished,

9. The journal entry to record replenishment should include credit to the following accounts
a. Petty Cash, P45.
b. Petty Cash, P50.
c. Cash, P45; Cash Over and Short, P5.
d. Cash, P50.
* There is a cash shortage of 5 pesos
Entry upon replenishment:
Expenses 45
Cash short or over 5
Cash 50
Problem 5. The accounting records and bank statement of Entity A show the following information:

SUBSIDIARY LEDGER
CASH IN BANK - BPI CURRENT ACCOUNT
Date Description Debit Credit Balance
6/1 Bal. forwarded 881,000
6/11 Check #1113 130,800 750,200
6/15 Check #1114 220,000 530,200
6/16 Deposit 295,800 826,000
6/22 Deposit 670,000 1,496,000
6/24 Check #1115 80,000 1,416,000
380,000
6/28 Check #1116 1,036,000
(OC)
160,000
6/29 Deposit - 1,196,000
(DIT)

BPI
BANK STATEMENT - ENTITY A

Description Debit Credit Balance

Date
6/1 Bal. forwarded 881,000
350,000
Deposit 1,231,000
6/10 (CM)
2,000
6/15 Payment 1,229,000
(DM)
6/15 Check #1114 1,009,000
220,000
6/16 Deposit 295,800 1,304,800
50,000
6/20 Payment 1,254,800
(DM)
6/22 Deposit 1,924,800
670,000
Check #1115 80,000 1,844,800
6/24
Check #1113 130,800 1,714,000
6/26
410,000
Deposit 2,124,000
6/28 (CM)

Additional information:
 The payments of ₱2,000 and ₱50,000 shown on the bank statement pertain to the cost of checkbook requested
from the bank and the monthly amortization of a bank loan, respectively. The loan payment includes payment
for interest of ₱8,000.
 Deposits shown on the bank statement but not on the cash ledger represent collections of accounts receivable.

Requirements:
10. How much is the deposit in transit? 160,000
11. How much is the credit memo? (350,000 + 410,000) = 760,000
12. How much is the outstanding check? 380,000
13. How much is the adjusted cash balance? 1,904,000
Book Balance 1,196,000 Bank balance 2,124,000
CM 760,000 DIT 160,000
DM (50,000+2,000) (52,000) OC (380,000)
Adjusted cash 1,904,000 Adjusted Cash 1,904,000

14. Prepare the necessary adjusting entries to reconcile the cash in bank balance.
We can only prepare adjustments for book reconciling items.
Credit memo: Collection of AR
Cash 760,000
AR 760,000
Debit memo:
Checkbook charge 2,000
Interest Expense 8,000
Loan Payable 42,000
Cash 52,000
Problem 6. S Company prepared the following bank reconciliation on December 31, 2015:

Balance per bank statement 3,000,000

Add: Deposit in transit 195,000
Checkbook printing charge 5,000
Error made by bank 35,000
NSF Check 110,000 345,000__
Total 3,345,000

Less: Outstanding check 100,000

Note collected by bank including
15,000 interest 215,000 315,000

Balance per book 3,030,000

The entity had cash on hand P500,000 and petty cash fund P50,000 on December 31, 2015.

15. What amount should be reported as cash in bank on December 31, 2015? 3,130,000
Balance per bank 3,000,000 Balance per book 3,030,000
DIT 195,000 CM: Note collected 215,000
Error by bank 35,000 DM: Printing charge (5,000)
OC (100,000) NSF Check (110,000)
Adjusted cash in bank 3,130,000 Adjusted cash in bank 3,130,000

16. What total amount of cash should be reported on December 31, 2015? 3,680,000
Adjusted cash in bank 3,130,000
Cash on hand 500,000
Petty cash fund 50,000
Cash 3,680,000

Problem 7. A Company provide the following bank reconciliation on May 31:

Balance per bank statement 2,100,000

Deposits outstanding 300,000
Checks outstanding (80,000)____

Correct cash balance 2,320,000

Balance per book 2,322,000

Bank service charge (2,000)_____
Correct cash balance 2,320,000

Data for the month of June:

Bank Book
Checks recorded 2,360,000 2,400,000
Deposits recorded 1,800,000 1,900,000
Collection by Bank (400,000 note
Plus interest ) 420,000
NSF check returned with June 30 10,000
Balances 1,830,000 1,810,000

17. What is the amount of deposits in transit on June 30? 400,000

Beginning DIT (May) 300,000
Book deposits (recorded) 1,900,000
Bank deposits ( recorded) (1,800,000)
Ending DIT (June) 400,000

18. What is the amount of checks outstanding on June 30? 120,000/118,000

Beginning OC (May) 80,000
Book checks recorded 2,400,000
Bank checks paid (recorded) (2,360,000)

Problem 8. Information on ABC Co. is shown below:

30-Jul Aug. 31
Book balance 132,200 180,000
Book debits 60,000
Book credits ?
Bank balance 100,600 169,000
Bank debits 20,600
Bank credits ?
Notes collected by bank 10,000 35,000
Debit memos 7,800 8,900
 Understatement of book receipts - 2,800
Deposit in transit 45,000 43,800
Outstanding checks 11,200 3,900

Compute for the ff:

19. How much is the adjusted receipts in August? 87,800
20. How much is the adjusted disbursements in August? 13,300
21. How much is the adjusted balance of cash on August? 208,900
22. How much is the cash disbursements per book/ledger (Book credits) on August? 12,200
23. How much is the cash receipts per bank (Bank credits) on August? 89,000

Solutions to #s 25 to 27:
30-Jul Receipts Disbursements 31-Aug
Per books 132,200 60,000 12,200 180,000
ADD: CM
July 10,000 (10,000)
August 35,000 35,000
LESS: DM
July (7,800) (7,800)
August 8,900 (8,900)
Book errors:
August 2,800 2,800
Adjusted bal. 134,400 87,800 13,300 208,900

30-Jul Receipts Disbursements 31-Aug

Per bank 100,600 89,000 20,600 169,000
ADD: DIT
July 45,000 (45,000)
August 43,800 43,800
LESS: OC
July (11,200) (11,200)
August 3,900 (3,900)

Adjusted bal. 134,400 87,800 13,300 208,900