PROBLEMS & ILLUSTRATIONS ON Check drawn on SAYO LANG’s account, payable P900,000

CASH AND CASH EQUIVALENTS to a vendor, recorded in SAYO LANG’s books on

December but not mailed until January 15, 2024
Check drawn on SAYO LANG’s account, payable 850,000
to KINAKAYA PA, for supplies purchased,
Illustration 1-1: recorded and delivered KINAKAYA PA on
December 20 but dated January 16, 2024.
NASAKTAN Company had the following balances on December Time deposit 75,000
31, 2023: Petty cash fund, P10,000 unreplenished 60,000
Cash in checking account P400,000 Treasury bills 100,000
Cash on hand 750,000
Time deposit purchased Dec. 31, 2022 maturing 1,500,000 a. What amount should be reported as “cash” at year-
Jan. 31, 2024 end? 7,800,000
Cash in bank to be used for building 2,000,000 b. What amount should be reported as cash equivalents?
construction in 2024 175,000
Treasury bill purchased Nov. 1, 2023 maturing 725,000 c. What amount should be reported as cash and cash
Jan. 1, 2024 equivalents? 7,975,000
Petty cash fund 10,000

Compute for the following: Illustration 1-6:

a. Total cash 1,160,000
b. Total cash equivalents 725,000 KANYA Company had the following balances on December 31,
c. Total cash and cash equivalents 1,885,000 2023:

Illustration 1-2: Cash on hand P700,000

Cash in bank – current account 600,000
SINAKTAN Company had the following balances for its cash and Cash in bank – payroll account 77,000
cash equivalents at year end: Petty cash fund, P10,000 unreplenished, P5,000 60,000
IOUs
Cash on hand P500,000 Treasury bills 1,000,000
Traveler’s check 90,000 Cash in bank – sinking fund 2,000,000
Postdated customer check 150,000 Cash in bank – to be used for purchase of plant 1,500,000
Manager’s check 100,000 and equipment to be disbursed next year
Petty cash fund, including P3,000 IOUs 15,000
Time deposit, maturing in 2 months from 130,000 Cash on hand included a customer check payable to KANYA
purchase date dated January 13, 2024, P50,000.

What amount should be reported as “cash” at year-end? The bond sinking fund is set aside to settle bonds payable due
832,000 on December 31, 2024.

Illustration 1-3: In exchange for a guaranteed line of credit, the entity has agreed
to maintain a minimum balance of P200,000 in the unrestricted
KINAKAYA PA Company had the following balances at year-end: current bank account.

Cash on hand P900,000 What total amount should be reported as cash and cash
Cash in bank 1,700,000 equivalents on December 31, 2023? 4,372,000
Foreign currency deposit, restricted as to 1,800,000
withdrawal Illustration 1-7:
Petty cash fund, including P3,000 currecy and 9,000
coins NASIF Company reported petty cash fund which comprised:

The entity’s cash in bank included a P500,000 compensating Coins and currencies P3,300
balance against short-term borrowing arrangement which is Paid vouchers for expenses 3,000
legally restricted as to withdrawal. Customer check returned by the bank marked as
“NSF” 1,000
What amount should be reported as “cash” under current assets Check drawn to the order of the PCF custodian. 2,700
at year-end? 2,109,000
What amount should be reported as petty cash fund? 6,000
Illustration 1-4:
Illustration 1-8:
KAKAYANIN Company reported a checkbook balance on
December 31, 2023 at P6,500,000 which included the following: On December 1, 20x4, Arxinexus Company established a petty
cash fund of P50,000. On December 31, 20x4, the petty cash fund
Check payable to KAKAYANIN, received at year- P800,000 comprised the following information:
end dated January 15, 2024 in payment of a sale
made in October 31, 2023. Coins and currencies P6,000
Check payable to KAKAYANIN, deposited 550,000 Petty cash vouchers for miscellaneous expenses 46,000
December 20 but returned by the bank on
December 27 stamped “NSF”. The check was How much is the overage/shortage? 2,000 over
redeposited on January 4, 2024.
Check payable to KAKAYANIN, dated December 620,000 Prepare the journal entries to replenish the PCF.
31, 2023 but was not received until January
10,2024. Expenses 46,000
Cash 44,000
What amount should be recorded as “cash” at year-end? Cash S/O 2,000
4,530,000
Illustration 1-9:
Illustration 1-5:
TREASURIES Company reported an imprest petty cash fund of
SAYO LANG Company reported a checkbook balance on P50,000 with the following details:
December 31, 2023 at P6,000,000 and held the following items:
Currencies P20,000
Coins 2,000
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 Petty cash vouchers: • Check of P100,000 in payment of accounts payable
Gasoline payments for delivery equipment 3,000 was dated and recorded on December 31, 2023 but
Medical supplies for employees 1,000 mailed to vendors on January 16, 2024.
Repairs for office equipment 1,500 • Check of P300,000 dated January 31, 2024 was record
Loans to employees 3,500 and mailed to vendors on December 30, 2024.
A check drawn by the entity payable to the order of
Elmo Chasen Plaza, petty cash custodian, What amount should be reported as cash and cash equivalents
representing his salary. 15,000 on December 31, 2023? 2,440,00
An employee check returned by the bank for
insufficiency of fund. 3,000 Exercise 1-4:
A sheet of paper with names of several employees
together with contribution for a birthday gift of a The cash account of KAYA PALA Company on December 31, 2023
co-employee. 5,000 has a balance of P151,000 and it consists of the following:

How much is the cash shortage/overage? 1,000 short Bills and coins on hand P52,780
Traveler’s check 22,400
What amount of petty cash fund should be reported in the Credit memo from supplier for purchase 6,500
statement of financial position? 37,000 returns
Postage stamps 120
Petty cash fund including unreplenished 2,000
EXERCISES ON CASH & CASH EQUIVALENTS expenses of P1,650
Balance in savings account with a closed 36,000
bank
Exercise 1-1 Customer postdated check 8,000
Money order 800
KAYA PA Company had the following information at year-end: IOU of an employee 400
Checking account balance in BPI 22,000
Cash on hand P900,000 Total P151,000
Current account – First bank 7,000,000
Current account – Second bank 2,500,000 The correct cash and cash equivalents balance on December 31,
Time deposit – Third bank 3,000,000 2023 is? 98,330

• A check for P100,000 was drawn against First bank Exercise 1-5:
current account, dated and recorded December 29,
2023 but not delivered until January 15, 2024. A count of petty cash fund, with an imprest balance of P10,000, in
• The time deposit in Third bank is set aside for land the morning of January 1, 20x4 revealed the following:
acquisition in early January 2024.
Bills and coins P4,560
What amount should be reported as “cash and cash equivalents” Petty cash vouchers
on December 31, 2023? 10,500,000 Dated December 20x3 3,140
Dated January 20x4 1,130
Exercise 1-2: IOUs from employees
Dated December 20x3 1,800
YAKANG YAKA Company provided the following information at Dated January 20x4 1,000
year-end: Unsigned payroll envelope that has
been found open. 2,000
Cash on hand P200,000 An unopened envelope containing
Manila Bank current account 700,000 contributions of employees for the death
Mindanao Bank current account no. 1 900,000 of a fellow employee. 3,000
Mindanao Bank current account no. 2 (600,000) An opened envelope containing
Visayas Bank savings account 500,000 contributions for the birthday of a fellow
Treasury bills 300,000 employee which stated an amount of
Asia bank time deposit, 90 days 1,000,000 P200. 150

Included among the checks drawn against Manila current How much petty cash fund should be included in the cash and
account and recorded in December 2023 are: cash equivalents? 4,640
• Check written and dated December 25, 2023 but
delivered to payee on January 2, 2024, P50,000. How much is the cash shortage/overage? 420 short
• Check written and delivered to payee on December 30,
2023 but dated January 15, 2024, P50,000. Exercise 1-6:

What amount should be reported as cash and cash equivalents Your audit firm were able to gather the following information
on December 31, 2023? 3,100,000 from the trial balance of Maj Company dated December 31, 20x4:

Exercise 1-3: Cash on hand P500,000

Petty cash fund 10,000
On December 31, 2023, KINAKAYA KO PA Company reported BPI current account 1,000,000
cash account balance per ledger of P4,350,000 which included Land Bank current account No. 1 1,080,000
the following: Land Bank current account No. 2 (80,000)
First Bank savings account 1,200,000
Cash in bank – demand deposit P400,000 Second time deposit 500,000
Time deposit – 120 days 800,000
NSF customer check 200,000 Cash on hand includes the following items:
IOU from employee 10,000 1. Customer’s check for P40,000 returned by the bank on
Treasury bill purchased Nov. 1, 2023 990,000 December 26, 20x4 due to insufficient fund but
maturing Jan. 1, 2024 subsequently redeposited and cleared by the bank on
Petty cash fund 50,000 January 8, 20x5.
Customer postdated check 500,000 2. Customer’s check for P20,000 dated January 2, 20x5
Savings deposit 600,000 received on December 29, 20x4.
Customer check outstanding for 18 800,000 3. Postal money orders received from customers, P30,000.
months
The petty cash fund consisted of the following items as of
December 31, 20x4:
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 2. A customer's note dated September 25 was discounted
Bills and coins P2,000 on October 12. The note was dishonored on December
Employees’ vales 1,600 29 (maturity date). The bank charged Manila account for
Currency in an envelope marked “collections for 1,200 P142,650 including a protest fee of P2,650.
charity” with names attached 3. The deposit of December 24 was recorded on the books
Unreplenished petty cash vouchers 1,300 as P28,950 but it was a deposit of P27,000.
Checks drawn by Maj Company, payable to the petty 4,000 4. Outstanding checks totaled P98,850 as of December 31.
cashier 5. There were bank service charges for December of
P2,100 not yet recorded in the books.
Included among the checks drawn by Maj Company against the 6. Manilas account had been charged on December 26 for
BPI current account and recorded in December 20x4 are the a customer’s NSF check for P12,960
following: 7. Manila properly deposited P6,000 on December 3 that
1. Checks written and dated December 29, 20x4 and was not recorded by the bank.
delivered to payee on January 2, 20x5, P80,000 8. Receipts of December 31 for P134,250 were recorded by
2. Check written on December 27, 20x4, dated January 2, the bank on January 2.
20x5, delivered to the payee on December 29, 20x4, 9. A bank memo stated that the customer's note for
P40,000. P45,000 and interest of 1650 had been collected on
December 27, and the bank charged a P360 collection
The credit balance in the Land Bank current account No. 2 fee.
represents checks drawn in excess of the deposit balance. These
checks were still outstanding at December 31, 20x4. How much is the adjusted cash balance? 589,200
Net adjustment to cash as of December 31, 20x4 (indicate debit or
The savings account deposit in First Bank has been set aside by credit)? 98,370
the board for the acquisition of new equipment. This account is
expected to be disbursed in the next 3 months after the end of Illustration 2-4:
the reporting period.
Baguio Corporation showed it cash in bank below:
Compute for the following:
Balance per bank, 12/31/24 P38,830
1. Cash on hand. 440,000 Collections recorded but not yet deposited in the 4,353
2. Petty cash fund. 6,000 bank
3. BPI current account. 1,120,000 NSF Check – not recorded in the books 1,820
4. Cash and cash equivalents. 3,066,000 Bank charges not yet recorded 35
Not collected by the bank and not yet recorded in 1,790
the books
BANK RECONCILIATION AND PROOF OF CASH Outstanding checks 2,200

Illustration 2-1: The cash balance per book of Baguio Company on December 31,
2024, is? 40,983
BEANSTRO Company provided the following data for the
purposes of reconciling the cash balance per book with the Illustration 2-5:
balance per bank statement on December 31:
Malamig Co. had the following bank reconciliation on May 31, 20x1:
Balance per book P1,700,000
Balance per bank statement 4,200,000 Balance per bank statement – May 31 P100,000
Outstanding Checks, including certified check of 1,000,000 Deposits in transit – May 64,000
P300,000 Outstanding checks – May 12,000
Deposits in transit 200,000 Adjusted balance per bank – May 31 P152,000
December NSF Checks, of which P100,000 had 300,000
The bank statement for the month of June 20x1 shows the
been redeposited and cleared in December 27.
following:
Erroneous credit to Beanstro’s account, 700,000
representing proceeds of loan granted to
Deposits 120,000
Beanleaf Company.
Disbursements 90,000
Proceeds of note collected by bank for Beanstro, 1,500,000
net of service charge of P40,000
All reconciling items in May cleared the bank in June. There are
no reconciling items in June 30 other than for a deposit in transit
What amount should be reported as cash in bank at year end? of P30,000.
3,000,000
How much is the cash receipts per books? 86,000
Illustration 2-2: How much is the cash balance per books on June 30, 20x1?
160,000
GASTADOR Company shows its cash account balance of P525,000
before reconciliation. The bank statement does not include a Illustration 2-6:
deposit of P6,350 made on the last day of the month. The bank
statement shows a collection by the bank of P3,200 and a MSU Inc. show its cash receipts and disbursements for the last six
customer’s check for P4,157 was returned because it was NSF. A months of 2021:
check written for P480 was recorded as P840 and customer’s
check for P5,250 was recorded on the books as P7,250. Month Receipts Disbursements
July 230,000 86,000
How much should be the correct cash balance? 522,403 August 135,000 120,000
September 175,000 64,000
Illustration 2-3: October 144,000 63,000
November 195,000 137,000
The books of Manila’s Service, Inc. disclosed a cash balance of December 98,000 123,000
P687,570 on December 31, 20x4. The bank statement as of
947,000 643,000
December 31 showed a balance of P547,800. Additional
information that might be useful in reconciling the two balances
Additional information:
follows:
Book balance, 7/1/21 190,000
Bank balance, 12/31/21 452,000
1. Check number 748 for P30,000 was originally recorded
in the books as P45,000. Outstanding checks, 12/31/21 (No checks were 44,000
outstanding on July 1)
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 Undeposited receipts, 12/31/21 (included in the 43,000
December receipts) Compute the following:
Bank deposits, July to December 953,000 1. What is the total book disbursement in December?
367,660
How much is the cash shortage? 123,000 2. What is the total bank receipts in December? 308,120
3. What is the total outstanding checks on December 31?
Illustration 2-7: 74,080
4. What is the adjusted bank balance on the November
The following data are gathered by the accountant of the Cablay 30? 637,800
Company: 5. What is the adjusted book receipts in December?
307,500
04/30/21 05/31/21 6. What is the adjusted bank disbursements in
Cash account balance 53,000 87,400 December? 365,840
Bank statement balance 260,000 340,000 7. What is the adjusted book balance on December 31?
Deposits in transit 20,500 32,200 579,460
Outstanding checks 69,000 75,000
Bank service charges 1,500 1,300 Illustration 2-9:
NSF Checks 20,600*
Company notes receivable collected by Information relating to ABC Co.’s cash in bank is as follows:
the bank 160,000 211,100
*Redeposited in the same month. No entries made to take up the Nov. Dec.
return and redeposit. 30 31
Book balance 5,600 ?
The bank statement and the company’s cash records show the Book debits 31,900
following totals: Book credits 28,200
Bank balance 15,000 20,400
Canceled checks and debit memos per bank 540,000 Bank debits ?
statement Bank credits 27,300
Cash receipts per book 400,000 Note collected by the bank 2,250 3,000
Checks written per cash book 524,100 Bank service charge 20 100
Deposits and credit memos per bank statement 620,000 NSF Checks 880 1,400
Overstatement of check in payment of
Compute the following: salaries 1,900 1,200
1. What is the total book receipts in May? 560,000 Deposits in transit 6,000 11,250
2. What is the total book disbursements in May? 525,600 Outstanding checks 9,750 17,850
3. What is the adjusted book balance on April 30? 211,500 Deposit of 123 Corp. erroneously credited to
4. The adjusted bank receipts in May 31 should be 631,700 ABC Co.’s account 2,400 1,800
5. The adjusted book disbursement on May 31 should be
546,000 Compute for the following:
6. What is the adjusted book balance on May 31? 297,200 1. Unadjusted book balance in Dec. 31. 9,300
2. Unadjusted bank disbursements in December. 21,900
Illustration 2-8: 3. Adjusted cash balance as of Nov. 30. 8,850
4. Adjusted cash receipts in December. 30,750
Isagani Corp. has a current account in BDO. Your examination of 5. Adjusted cash disbursements in December. 27,600
the company’s cash reveals the following: 6. Adjusted cash balance in December 31. 12,000

1. Balances taken from company’s general ledger: Illustration 2-10:

Cash balance, 11/30/x1 637,860 The accountant of JPIA Company assembled the following:
Cash balance, 12/31/x1 576,420
Receipts, 12/1-31/x1 306,220 June 30 July 31
Cash account balance 15,822 39,745
2. Balances taken from the December bank statement: Bank statement balance 107,082 137,817
Deposits in transit 8,201 12,880
Bank balance, 12/31/x1 637,220 Outstanding checks 27,718 30,112
Bank balance, 11/31/x1 685,180 Bank service charge 72 60
Disbursements 356,080 Customer’s check deposited in July 10
returned by the bank on July 16 marked
3. Outstanding checks, November 30, 20x1 (26,140 was NSF, and redeposited immediately; no
paid by the bank in December, 64,140. entry made on books for return or
4. Deposits in transit: redeposit 8,250
Collection by bank of company’s notes
November 30, 2021 15,260 receivable 71,815 80,900
December 31, 2021 16,140
The bank statements and the company’s cash records show these
5. Checks written and recorded in December; not included totals:
in the checks returned with the December bank
statement, 36,080. Disbursements in July per bank 218,373
6. A bank credit memo was issued in December to correct Cash receipts in July per book 236,452
an erroneous charge made in November, 1,500.
7. Not collected by the bank in December (company was Compute for the following:
not informed of the collection), 2,060. 1. Adjusted cash balance, June 30? 87,565
8. A check for 2020 (payable to a supplier) was recorded in 2. Adjusted bank receipts, July? 245,537
the check register in December as 3,000. 3. Adjusted book disbursements, July? 212,517
9. A check for 2,240 was charged by the bank as 2,420 in 4. Adjusted cash balance, July 31? 120,585
December. 5. Cash shortage, July 31? 0
10. Isagani Corp. issued a stop-payment order to bank in
December. This pertains to a check written in
December which was not received by the payee. A new
check was written and recorded in the check register in
December. The old check was written off by a journal
entry also in December, 780.
11. Bank service charge, November 30 2021, 60.
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