Problem 4

The controller of Pacatang Company is attempting to determine the amount of cash to be reported on its December 31, 2006 balance sheet. The following information is provided:

1. Commercial savings account of and a commercial checking account balance of P900,000 are held at Phil. Banking Corporation.

2. Money market fund account held at Allied Bank, P600,000

3. Travel advance of P180,000 for executive travel for the first quarter of next year (employee to reimburse through salary reduction)

4. A separate fund in the amount of is restricted for the retirement of longterm debt.

5. Petty cash fund, P5,ooo

6. An IOU from David Santos, a company officer, in the amount of PIO,OOO.

7. A bank overdraft of PI 10,000 has occurred at one of the banks the company uses to deposit its cash receipts. At the present time, the ccrnpany has no other deposits at this bank.

8. The company has two certificates of deposit, each totaling P500,OOO. These certificates of deposit have a maturity of 120 days.

Pacatang Company has received a check that is dated January 12, 2007 in the amount of P125,OOO.

j. Currency and coins on hand amounted to P5,300.

Questions

1. PACATANG COMPANY'S adjusted cash and cash equivalents balance at December 31, 2006 is:

1. P1,910,300

2. P2,400,300

3. P2,510,300

4. P3,510,300

2. The travel advance of P180,OOO for executive travel should be classified as:

1. Accounts receivable c. Prepaid expenses

Travel expenses d. Advances to employees