PROBLEMS AND CASES

PROBLEM 1. (Determine Cash Balance) The controller for ABC Co., is attempting to determine the amount of cash to be reported on its December 31, 2020, statement of financial position. The following information is provided.

1.Commercial savings account of P600,000 and a commercial checking account balance of P900,000 are held at First National Bank.

2.Money market fund account held at Volonte Co. (a mutual fund organization) that permits ABC Co., to write checks on this balance, P5,000,000.

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

4.As separate cash fund in the amount of P1,500,000 is restricted for the retirement of long-term debt.

5.An I.O.Ufrom Marianne Koch, a company officer, in the amount of P190,000.

6.Petty cash fund of P1,000.

7.A bank overdraft of P110,000 has occurred at one of the banks the company uses to deposits its cash receipts. At the present time, the company has no deposit at this bank.

8.The company has two certificates of deposit, each totaling P500,000. These certificates of deposit have a maturity of 120 days.

9.ABC Co., has received a check that is dated January 12, 2021, in the amount of P125,000.

10.ABC Co.,has agreed to maintain a cash balance of P500,000 at all times at First National Bank to insure future credit availability.

11.ABC Co.,has purchased P2,100,000 of commercial paper of Metro Bank which is due in 60 days.

12.Currency and coin on hand amounted to P7,700.

INSTRUCTION: Compute the amount of cash to be reported on December 31, 2020. Indicate the proper reporting for items that are not reported as cash at the end of the reporting period.

Use the format below.

CCE

Other accounts

Item no. 1

Item no. 2

Item no. 3

Item no. 4

Item no. 5

Item no. 6

Item no. 7

Item no. 8

Item no. 9

Item no. 10

Item no. 11

Item no. 12

PROBLEM 2: (Determine Cash Balance)

Presented below are a number of independent situations. For each individual situation, determine the amount that should be reported as cash.

1. Checking account balance P925,000; certificate of deposit of P1,400,000; cash advance to subsidiary of P980,000; cash in bank closed by BSP P180,000.

2. Checking account balance P600,000; an overdraft in special checking account at same bank as normal checking account of P17,000; cash held in a bond sinking fund P200,000; petty cash fund P300; coins and currency on hand P1,350.

3. Checking account balance P590,000; postdated check from customer P11,000; cash restricted due to maintaining compensating balance requirement (shortterm loan) of P100,000; certified check from customer P9,800; postage stamps on hand P620.

4. Checking account balance at bank P37,000; money market balance at mutual fund (has checking privileges) P48,000; NSF check received from customer P800.

Problem 3: On December 31, 2020, Earnest Company provided the following data:

Cash in bank

1,500,000

Time deposit- 30 days

500,000

Money market placement due on June 30, 2021

1,000,000

Saving deposit in closed bank

50,000

Pension fund

400,000

Petty cash fund

10,000

The cash in bank included customer check of P80,000 outstanding for 18 months

Check of P100,000 in payment of accounts payable was dated and recorded on December 31, 2020 but mailed to creditors on January 15, 2021

Check of P50,000 dated January 31, 2021 in Payment of accounts payable was recorded and mailed December 31, 2020.

The reporting period is the calendar year. The cash receipts journal was held open until January 15, 2021 during which time P230,000 was collected and recorded on December 31, 2020.

Required:

1. Compute the total amount of cash and cash equivalents that should be reported on December 31, 2020.

5. Checking account balance P700,000; cash restricted for future plant expansion P500,000; 120 days treasury bills P180,000; cash advance received from customer P900 (not included in checking account balance); cash advance of P7,000 to company executive, payable on demand; refundable deposit of P26,000 paid to the government to guarantee performance on construction contract.

Problem 4: Affable Company provided the following information at year-end comprising its cash account:

Cash in bank-checking account

5,000,000

Cash on hand

400,000

Postage stamps unused

5,000

Certificate of time deposit with maturityof 3 months

1,500,000

Money order

50,000

Manager's check

100,000

What total amount should be reported as "cash" at year-end?

a.5,550,000

b.7,050,000

c.5,400,000

d.5,450,000

Problem 5: Ablaze Company provided the following data at year-end:

Cash balance in checking account with Bank A 5,000,000

Overdraft in checking account with Bank B (500,000)

Cash in a special fund for plant expansion 2,000,000

Change fund 50,000

Currency and coins in petty cash fund 15,000

What total amount should be reported as "cash" at year-end?

a.4,565,000

b.5,065,000

c.7,065,000

d.5,070,000

Problem 6: Abyss Company provided the following information on December 31, 2020:

Cash on hand 200,000

Cash in bank 2,000,000

Petty cash fund 10,000

Commercial paper with maturity of 2 months 500,000

Treasury bill with maturity of 6 months 1,000,000

Postdated customer checks 100,000

What total amount should be reported as "cash and cash equivalents"?

a.2,710,000

b.3,710,000

c.2,210,000

d.2,700,000

Problem 7: On December 31, 2020, ABC Co., had the following cash balances:

Cash in bank

P15,000,000

Petty cash fund

50,000

Time deposit

5,000,000

Savings deposit

2,000,000

Cash in bank includes P500,000 of compensating balance against short-term borrowing arrangement at December 31, 2020. The compensating balance is legally restricted as to withdrawal by ABC Co. A check of P300,000 dated January 15, 2021 in payment of accounts payable was recorded and mailed on December 31, 2020. In the current assets section of the December 31, 2020 statement of financial position, what amount should be reported as "cash and cash equivalent"? a. P21,850,000

b.P16,850,000

c.P21,800,000

d.P14,850,000

Problem 8: Laborious Company closed its book on June 30, 2020. The entity provided the following transactions:

May 2 The entity established an imprest fund of P10,000.

9 The fund is replenished. The petty cash itemsinclude:

Currency and coin

2,000

Postage

1,000

Supplies

3,000

Transportation

2,500

Miscellaneous expense

1,500

June 30 The fund was not replenished. The fund is composed of the following:

Currency and coin

6,000

Supplies

2,000

Postage

1,000

Transportation

1,000

July 15The fund is replenished and increased to P15,000.

Currency and coin

3,000

Supplies

3,500

Postage

1,500

Transportation

1,500

Miscellaneous expense

500

Required:

Prepare journal entries to record the transaction under imprest fund system.

imprest fund system

May 2

May 9

June 30

July 15