5. The following compound journal entry was made to reconcile the February 28, 2014 cash in bank balance in the accounting records and the balance per bank statement as of the same month end:

Accounts receivable 20,000

Bank service charges 1,000

Notes receivable 2,500

Interest income 3,500

Cash in bank 15,000

Unadjusted cash balance taken from the ledger amounted to P 93,000 (includes P 1,500 cash on hand in coins and currencies).There were no check deposits in transit.Outstanding checks for December amounted to P 3,000.What was the balance of cash balance per bank statement as of February 28, 2014?

A. P 78,000 B. P 79,500 C. P 76,500 D. P 75,000

PETTY CASH

6. The petty cash fund of Rift's Dress Shop, a sole proprietorship, contains the following:

Coins and currency P465.00

Postage stamps 129.00

An I.O.U. from Jake, an employee, for cash advance 250.00

Check payable to Rift's Dress Shop from lvan, an employee, marked NSF 120.00

Vouchers for the following:

Stamps

Printer toner cartridge

P400.00

611.50

1,011.50

P1,975.50

The general ledger account Petty Cash has a balance of P 2,000. Upon replenishment, what is the amount of cash shortage?

A. P 201.50 B. P 153.50 C. P 24.50 D. P 489.5

7. If a petty cash fund is established in the amount of P 500, and contains P 400 in cash and P 90 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts:

A. Petty Cash P 90 C. Cash P 90; Cash Over and Short P 10

B. Petty Cash P 100 D. Cash P 100

COMPUTATION OF OUTSTANDING CHECKS AND DEPOSITS IN TRANSIT

8. On December 31, 20 14, the cash account of Jam Company shows the following composition:

A. March outstanding checks P 1,500 C. Checks cleared in the bank during April P115,050

B. Checks written during April 118,000

Outstanding checks for April must be:

A. P 4,450 B. P 3,000 C. P 6,500 D. P 6,000

9. The accountant of Happy Merchandising prepared the following bank reconciliation dated June 30 of the current year:

Balance per bank 980,000

Deposit in transit 40,000

Outstanding checks (140,000)

Balance per book 880,000

There were total deposits of P 650,000 and charges for disbursements of P 900,000 for July per bank statement.All reconciliation items as at June 30 cleared the bank on July 31.Checks were outstanding amounted to P 100,000 on July 31.How much was the cash disbursement per book in July?

A. P 860,000 B. P 760,000 C. P 940,000 D. P 840,000

10. The following data for the month of May 2014 are presented to you for analysis:

Recorded cash receipts per books (book debits) for May 2014 = P 400,000.Included in the total are the following:

Receipts from accounts receivable placed in and collected by the bank in April 2014 P53,000

Collections in May deposited in the bank for the correct amount of P 20,000. It was recorded in the books as 2,000

Recorded cash receipts per bank (bank credits) for May 2014 = P 550,000.Included in the total are the following:

Automatic credit for proceeds of loan to the depositor P180,000

Deposits in transit from April that cleared this month 17,000

What is the deposit in transit balance for May 2014?

A. P 12,000 B. P 29,000 C. P 5,000 D. P 20,000

EFFECTIVE INTEREST ON LOANS

11. Cookie needs P 900,000.In negotiating a loan with Westnorth Bank, the following agreements took place:

- Cookie must maintain a compensating balance of 15% of the loan amount

- Interest rate on the loan is 12%

Cookie currently maintains a balance of P 50,000 in the checking account.Westnorth pays 4% interest on these accounts.

The principal amount of the loan is

A. P 950,000 B. P 985,000 C. P 1,000,000 D. P 850,000

The effective interest on the loan is

A. 12.7% B. 12% C. 16% D. 12.9%

PRACTICE QUESTIONS

12. On December 31, 2014, the cash account of Calm Company shows the following composition:

Funds:

Petty cash P3,000

Payroll 200,000

Travel 15,000

Interest and dividend 25,000

Tax 12,000

Sinking - bond redemption 80,000

Preferred stock redemption 40,000

Contingent 30,000

Insurance 20,000

Long-lived assets (expected to be disbursed a month after 2014) 50,000

Cash accounts and checks:

Current (with P 50,000 compensating balance not legally restricted as to withdrawal) P300,000

Foreign bank (restricted) 50,000

Customer's check dated Jan. 15, 2015 (excluded from the current account) 6,000

Customer's check dated Dec. 30, 2014 returned for lack of funds (excluded from the current account) 4,000

Money market savings account 30,000

Travelers' checks 6,000

Cashier's checks 10,000

Placements and Investments:

90-day certificate of deposit P100 ,000

180-day certificate of deposit 150,000

60-day money-market 50,000

6-month money market 90,000

30-day BSP T-bill 100 ,000

3-year BSP T-bill acquired 3 months before maturity 120,000

2-year bonds (held for almost 1 year and 9 months at Dec. 31, 2014; 3 months to maturity) 80,000

Other items:

Notes receivable that has already matured - 2 months overdue P50,000

Deposit with a utility company 25,000

What is the total amount of "cash"?

A. P 591,000 B. P 651,000 C. P 551,000 D. P 601,000

What is the correct cash and cash equivalents balance to be reported by Calm Company on Dec. 31, 2014?

A. P 801,000 B. P 941,000 C. P 1,041,000 D. P 971,000

13. Determine the amount of "cash" from the following list:

A. Money market checking account, P20,000 B. Mutilated check from customers, P1,000

C. Manager's check, P 4,000 D. VAT account/fund, P 10,000

E. Undelivered check to suppliers, P15,000 F. Cash in bank (excludes item B & D), P 50,000

A. P 76,000 B. P 90,000 C. P 99,000 D. P 85,000

14. Burr Company had the following account balances at December 31, 2014:

Cash in banks P2,250,000

Cash on hand 125,000

Cash legally restricted for additions to plant (expected to be disbursed in 2015) 1,600,000

Cash in banks includes P 600,000 of compensating balances against short-term borrowing arrangements. The compensating balances are not legally restricted as to withdrawal by Burr. In the current assets section of Burr's December 31, 2014 statement of financial position, total cash should be reported at

A. P 1,775,000 B. P 2,250,000 C. P 2,375,000 D. P 3,975,000

15. Ral Corp.'s checkbook balance on December 31, 2014, was P 5,000. In addition, Ral held the following items in its safe on that date:

Check payable to Ral Corp., dated January 2, 2015, in payment of a sale made in December 2014, not included in December 31 checkbook balance

P2,000

Check payable to Ral Corp., deposited December 15 and included in December 31 checkbook balance, but returned by bank on December 30 stamped "NSF."The check was re-deposited on January 2, 2015, and cleared on January 9

500

Check drawn on Ral Corp.'s account, payable to a vendor, dated and recorded in Ral's books on December 31 but not mailed until January 10, 2015

300

The proper amount to be shown as Cash on Ral's statement of financial position at December 31, 2014 is

A. P 6,800 B. P 6,500 C. P 5,300 D. P 4,800

16. Determine the amount of "cash equivalents" from the following items at December 31, 2014:

A. Money market placement - P 200,000

B. 120-day certificate of deposit - P 300,000

C. Postal money order - P 50,000

D. Investment on 1-year treasury bills acquired January 31, 2014 - P 500,000

E. Investment on 3-year treasury notes dated January 15, 2012 acquired October 1, 2015 - P 500,000

F. Investment on 3-year treasury notes dated March 1, 2012 acquired December 29, 2014 - P 200,000

A. P 450,000 B. P 600,000 C. P 400,000 D. P 500,000

17. At December 31, 2014, Kale Co. had the following balances in the accounts it maintains at First State Bank:

Checking account #101 P175,000

Checking account #201 (10,000)

Money market account 25,000

90-day certificate of deposit, due February 28, 2015 50,000

180-day certificate of deposit, due March 15, 2015 80,000

Kale classifies investments with original maturities of three months or less as cash equivalents. In its December 31, 2014 statement of financial position, what amount should Kale report as cash and cash equivalents?

A. P 190,000 B. P 200,000 C. P 240,000 D. P 320,000

18. Trans Co. had the following balances at December 31, 2014:

Cash in checking account P35,000

Cash in money market account 75,000

BSP Treasury bill, purchased 11/1/2014, maturing 1/31/2015 350,000

BSP Treasury bill, purchased 12/1/2014, maturing 3/31/2015 400,000

Trans's policy is to treat as cash equivalents all highly liquid investments with a maturity of three months or less when purchased. What amount should Trans report as cash and cash equivalents in its December 31, 2014 statement of financial position?

A. P 110,000 B. P 385,000 C. P 460,000 D. P 860,000

19. The cash account shows a balance of P 38,000 before reconciliation. The bank statement does not include a deposit of P 2,300 made on the last day of the month. The bank statement shows a collection by the bank of P 940 and a customer's check for P 220 was returned because it was NSF.A customer's check for P 450 was recorded on the books as P 540, and a check written for P 79 was recorded as P 97. The correct balance in the cash account was

A. P 38,648 B. P 38,612 C. P 38,828 D. P 40,948

20. Mildwest, Inc. reported a balance of 14,300 is its cash account at the end of the month. There were P 12,000 of deposits in transit and P 11,500 of checks outstanding. The bank statement showed a balance of P 15,000, service charges of P 600, and the collection of a note plus interest. The note had a face value of P 1,500. How much interest did the bank collect for the company?

A. P 1,800 B. P 300 C. P 2,400 D. P 1,200

21. In preparing its bank reconciliation at December 31, 2014, Liwanag Company has the following available data:

Cash balance per bank statement, December 31, 2014 126,000

NSF checks 30,400

Deposit it transit 3,000

Outstanding checks 6,100

Erroneous bank credit 1,000

Bank service charges 300

Notes collected by bank 4,000

Interest on notes collected by bank 200

Determine the net adjustment to cash.

A. P 4,100 debit B. P 4,100 credit C. P 26,500 debit D. P 26,500 credit

Determine the unadjusted balance of cash per general ledger.

A. P 95,400 B. P 117,800 C. P 148,400 D. P 121,900

22. The following pertains to the petty cash account of Little Trading:

A. Size of the fund P 5,000

B. Petty cash vouchers representing expenditures (postage meals) for the month P 4,700

C. I.O.Us from employees (advances for travel, not yet liquidated) P 100

D. Unused postage stamps P 50 (paid out of petty cash funds)

E. Coins counted P 180

Replenishment check must amount to

A. P 5,000 B. P 4,800 C. P 4,820 D. P 4,980

If unreplenished at period-end, amount of petty cash presented as cash must be

A. P 200 B. P 180 C. P 280 D. P 330

Shortage amounts to

A. P 200 B. P 180 C. P 20 D. P 0

23. On January 1, 2014, Determined Company established a petty cash fund of P 10,000.On December 31, 2014, the petty cash fund was examined and found to have receipts and documents for miscellaneous general expenses amounting to P 8,120.In addition, there was cash amounting to P 1,500.What is the amount of petty cash shortage or overage?

A. P 380 overage B. P 380 shortage C. P 1,880 shortage D. P 1,880 overage

24. La Mesa Tables Co. uses four-column bank reconciliation.The bank statement reports May payments of P 263,000, including service charges of P 4,000.At the beginning of May, there were P 18,000 of checks outstanding.At the end of May, there were P 24,000 of checks outstanding.Before recording the bank service charges, La Mesa Tables must have recorded May payments of:

A. P 265,000 B. P 253,000 C. P 261,000 D. P 273,000

25. Consider the following data as of December 31, 2012:

A. Total book credits in December, P 500,000

B. November service charge taken up in December, P 1,000

C. December service charge taken up in January 2013, P 1,500

D. November outstanding checks, P 10,500

E. December outstanding checks, P 5,000

Solve for total bank debits.

A. P 488,000 B. P 482,000 C. P 494,000 D. P 506,000

26. The following relate to Vital Heating Enterprises:

A. Deposits in transit - May, P 150,000

B. Deposits recorded in books - June, P 900,000

C. Receipts per bank statement - June, P 1,020,000

D. Note collected by bank from Vital's customers (included in C above), P 210,000

Deposits outstanding for June must be:

A. P 30,000 B. P 90,000 C. P 120,000 D. P 240,000