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 Manager’s 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?

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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 BPI’s 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 Corporation’s 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 accountant’s defalcation of company’s 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 company’s 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 didn’t 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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