CASHANDCASHEQUIVALENTS-QuizNo.1withanswer
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Far Eastern University**We aren't endorsed by this school
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ACCOUNTING FINANCIAL
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Accounting
Date
Jan 15, 2025
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6
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CASH AND CASH EQUIVALENTSQUIZ NO. 11.The accountant of Pau Company is in the process of preparing the company’s financial statements for the year ended December 31, 2024. He is trying to determine the correct balance of cash and cash equivalents to be reported as a current asset in the statement of financial position. The following items are being considered:•Balances in the company’s accounts at the Pasikat Bank:❖Current accountPhp81,000❖Saving account132,600•Undeposited customer checks of Php22,200 (including a customer check dated January2, 2025, for Php3,000)•Currency and coins on hand of Php3,480.•Savings account at the Buhay Philippines Bank with a balance of Php2,400,000.This account is being used to accumulated cash for future plant expansion (in 2025).•Petty cash of Php4,000 (currency of Php1,200 and unreplenished vouchers for Php2,800).•Php120,000 in a current account at the Buhay Philippines Bank. This represents a 20% compensating balance for Php600,000 loan with the bank. Pau Company is legally restricted to withdraw the funds until the loan is due in 2027.•Treasury bills:Two-month maturity billsPhp90,000Seven-month bills120,000•Time deposit (placement term is 2 months)Php100,000What total amount of cash and cash equivalents should be reported under current assets?Answer:Savings and current accounts (132,600+81,000)Php213,600Undeposited customer checks (Php22,200-Php3,000)19,200Currency and coins on hand3,480Petty cash1,200Two-month treasury bills90,000Time deposit100,000------------------------ TotalPhp427,480=============2.The following information has been extracted from the accounting records of Pau Company at December 31, 2024:a.Cash on hand (see note below)Php230,000b.Impukan Bank savings account (the required minimum monthlyaverage daily balance is Php10,000)9,500c.364-day treasury bills purchased March 1, 2024400,000d.Petty cash fund (see note below)20,000e.Tipid bank current account (see below)160,000f.Time deposits placements:DateTermDec 15, 202430 days30,000Oct 31, 202490 days40,000Nov 30, 2024180 days 25,000g.Employee travel advances7,000000
h.Cash in bond sinking fund500,000i.Customer’s note receivable45,000j.Postage stamps2,400The following are included in cash on hand•A customer check for Php43,000 returned by the bank on December 28, 2024. It was redeposited and cleared the bank on January 2, 2025.•A customer check for Php75,000 dated January 2025, received December 27, 2024.•PHL Post money orders received from customers , Php30,000.The petty cash fund consists of the following:Currency and coins Php13,500IOUs from officers and employees3,000Unreplenished petty cash disbursements1,500Currency in envelope with the notations:“We were She Bang’s coworkers. Words may not be adequate to express how sorry we feel. Please acceptour heartfelt sympathies on the loss of your loved one”.1,500---------------------- Php20,000============The following information pertains to Tipid Bank current account:•A check for Php13,000 was dated and recorded on December 29, 2024 but delivered to payee on January 5, 2025.•A check for Php5,000 dated January 10, 2025, payable to a supplier was recorded and released to payee on December 19, 2024. Tipid Bank requires current account depositors to maintain a monthly average daily balance of Php50,000What total amount should be recorded as cash and cash equivalents on December 31, 2024?Solution:Cash on hand (Php230,000-Php43,000-Php75,000)Php112,000Impukan savings bank9,500Petty cash fund13,500Tipid bank current (Php160,000+Php13,000+Php5,000)178,000Time deposits:30 days30,00090 days40,000------------------------ Total Cash and Cash EquivalentsPhp383,000==============3.The Controller of Pau Corporation is trying to determine the amount of cash and cash equivalents to be reported on its December 31, 2024, statement of financial position. The following information is provided:1.Balances in the company’s accounts at the Monte Bank:▪Checking account, Php540,000▪Savings account, Php884,0002.Undeposited customer checks of Php208,0003.Currency and coins on hand of Php23,0004.Savings account at the Naic Bank with a balance of Php350,000. This account is being used to accumulate cash for the future plant expansion (in 2026).5.Php800,000 balance in checking account at the Naic Bank.6.Treasury bills; 30-day maturity bills totaling Php600,000, and 180-day bills totaling Php800,000.
On December 31, 2024, what amount should be reported as cash and cash equivalents?Solution:Balance in Monte Bank checking accountPhp540,000Balance in Monte Bank savings account884,000Undeposited customer checks208,000Currency and coins on hand23,000Checking account in Naic bank800,000Treasury bills with 30-day maturity600,000------------------------ Total cash and cash equivalentsPhp 3,055,000=============4.The following facts apply to Pau Company during 2024:1.Savings account of Php900,000 and a checking account balance of Php1,200,000 are held at Manila Bank.2.Money market placement with maturity of 3 months, Php7,500,0003.Currency and coins on hand amounted to Php11,5004.Travel advances of Php270,000 for the first quarter of next year (employee reimbursement will be through salary deduction).5.Pau Company has purchasedPhp3,150,000 of commercial paper of Cam Corp. which is due in 60 days.6.A separate cash fund amounting to Php2,550,000 is restricted for the retirement of long-term debt.7.Petty cash fund of Php1,500.8.An IOU from an employee of Pau Company in the amount of Php2,000.9.Two certificates of deposit, each totaling Php500,000.These CDs have a maturity of 120 days.10.Pau Company has received a check from a customer in the amount of Php187,500 dated January 15, 2025.11.On January 1, 2024, Pau Company purchased marketable equity securities to be held as “trading” for Php3,000,000. On December 31, 2024, its market value is Php4,300,000.What amount should be reported as cash and cash equivalents on December 31, 2024?Solution:Savings account-Manila BankPhp900,000Checking account-Manila Bank1,200,000Money market placements7,500,000Petty cash1,500Commercial paper3,150,000Currency and coins11,500-------------------------- Total cash and cash equivalentsPhp 12,763,000===============5.Your checking of the December 31, 2024, financial statements of Pau Corporation, reveals the following:Current account at Prime BankPhp ( 30,000)Current account at Prudent bank135,000Treasury bills (acquired 3 months before maturity)300,000Treasury bills (maturity date is December 31, 2025)1,500,000Foreign bank account-restricted (translated using the December 31, 2024, excluding exchange rate)2,000,000Postage stamps1,250Employee’s postdated check4,500IOU from the vice-president8,000Credit memo from supplier for a purchase return8,100Traveler’s check21,000Money order12,900Petty cash fund (Php3,000 in currency and expense
Receipts for Php12,000)15,000What amount would be reported as “cash and cash equivalents” in the statement of financial position on December 31, 2024?Answer:Current account at Prudent BankPhp135,000Treasury bills (acquired 3 months before maturity)300,000Traveler’s check21,000Money order12,900Petty cash fund3,000------------------------ Total cash and cash equivalentsPhp471,900==============6.The Cash account of the Pau Corporation as of December 31, 2024, was composed of the following:On deposit in current account with the Bank of PIPhp900,000Cash collection not yet deposited to the bank350,000A customer’s check returned by the bank for insufficient fund150,000A check drawn by the Vice-President of the company datedJanuary 15, 202570,000A check drawn by a supplier dated December 28, 2024, for goodsreturned by the company60,000A check dated May 31, 2024, drawn by the company againstthe Bank of Manila in payment of custom duties. Since theimportation did not materialize, the check was returnedby the customer broker. This check was an outstandingcheck in the reconciliation of the Bank of Manila410,000Petty cash fund of which Php10,000 is in currency; Php7,200 in for of employees’ IOUs; and Php2,800 is supported by approved petty cash vouchers for expenses all datedprior to closing of the books on December 31, 2024.20,000-------------------------- Total1,960,000Less: Overdraft with the Bank of Manila secured by a Chattel mortgage on the inventories300,000------------------------- Cash balance per ledgerPhp 1,660,000============== What is the amount of cash to be reported on the December 31, 2024, statement of financial position of Pau Corporation?Answer:Current account-Bank of PIPhp900,000Undeposited collection350,000Supplier’s check for goods returned by the company60,000Petty cash fund10,000Bank of Manila (Php410,000-Php300,000)110,000------------------------ Correct cash balancePhp 1,430,000=============
7.The Accountant of Pau Corporation examined the petty cash fund immediately after the close of business on July 31, 2024, the end of the company’s natural business year. The petty cash custodian presented the following during the count:CurrencyPhp 1,650Petty cash vouchers:Postage420Office supplies expense900Transportation expense340Computer repairs800Advances to office staff1,500A check drawn by Pau Corporation, payable to the petty cash custodian7,200Postage stamps300An employee’s check, returned by bank, marked NSF1,000An envelope containing currency of Php1,890 for a gift for a retiring employee1,890Php 16,000The general ledger shows an imprest petty cash fund balance of Php16,000.a.How much is the petty cash shortage or overage?CurrencyPhp1,650Petty cash vouchers (420+900+340+800+1,50003,960Replenishment check7,200Employee’s NSF check1,000-------------------- Petty cash counted13,810Petty cash fund per ledger (custodian’s responsibility)16,000-------------------- Petty cash shortagePhp2,190===========b.What is the adjusted balance of the petty cash fund at July 31, 2024?CurrencyPhp1,650Replenishment check7,200-------------------- Adjusted petty cash balancePhp8,850===========8.Assume the following data of Pau Company of its cash and short-term, highly liquid investments for December 31, 2024: Cash on hand Php 800,000 Checking account No. 421, Kapuso bank 2,000,000 Checking account No. 724, Kapuso bank ( 300,000) Securities Date Acquired Maturity Date Amount 120-day certificate of deposit 12/10/24 1/31/25 Php 6,000,000 BSP-Treasury bills (No.1) 11/30/24 4/30/25 50,000,000 BSP-Treasury bills (No.2) 10/31/24 1/20/25 10,000,000 180 days commercial papers 12/1/24 6/20/25 14,000,000 Money market funds 11/21/24 2/10/25 20,000,000
The correct cash and cash equivalents balance on December 31, 2024 is ________________. a. Php38,500,000 c. Php52,500,000 b. Php38,800,000 d. Php52,800,000 800,000+2,000,000-300,000+6,000,000+10,000,000+20,000,000 = 38,500,000 9. The December 31, 2024 trial balance of Mari Company includes the following accounts: Petty cash fund Php 700,000 Current account-Kapuso bank 40,000,000 Current account-Kapamilya bank (overdraft) ( 2,500,000) 120-day money market placement-K bank 10,000,000 Time deposit-KB bank 20,000,000 Additional information: a.The petty cash fund includes unreplenished December 2024 petty cash expense vouchers for Php150,000 and an employee check for Php50,000 dated January 31, 2025. b.A check for Php1,000,000 was drawn against Kapuso bank current account dated and recorded December 27, 2024 but delivered to payee on January 10, 2025. c.The KB bank time deposit is set aside for land acquisition in early January 2025. What should be reported as “cash and cash equivalents” on December 31, 2025? a. Php51,300,000 c. Php41,500,000b. Php51,500,000 d. Php48,800,000 (700,000-150,000-50,000=500,000) + (40,000,000+1,000,000=41,000,000) =41,500,000 10. Camil Company’s ledger showed a balance in its cash account at December 31, 2024 of Php1,364,500, which was determined to consist of the following: Petty cash fund Php 7,200 Checking account in Kapamilya bank ( check of Php12,000 is still outstanding) 673,500 Notes receivable in the possession of a collecting agency 50,000 Undeposited receipts, including a postdated check for Php10,500 and traveller’s check for Php10,000356,000 Bond sinking fund cash 255,000 IOUs signed by employees 9,900 Paid vouchers, not yet recorded 12,900 TOTAL 1,364,500 At what amount should “cash on hand and in bank” be reported on Camil Company’s statement of financial position?a. Php1,003,700c. Php1,258,700 b. Php1,014,200 d. Php1,324,500 7,200 + (673,500 –12,000) + (356,000-10,500) = 1,014,200