Quiz On Cash And Cash Equivalent

I. Components of Cash and Cash Equivalents Problem 1. The following items are found in the Accounting Records of F1 Inc. on December 31,2011: Coins

P1,000,000

Currency

2,500,000

Money Orders

1,500,000

Foreign Currency Deposit (restricted)

2,000,000

Petty Cash Fund (P20,000 in vouchers and P30,000 IOUs from Employee)

100,000

Postage Stamp

50,000

IOU from the Company president

200,000

Postdated check from a customer of F1 Inc.

300,000

Unreleased or undelivered check for payment of accruals drawn by F1

400,000

Postdated check issued to a supplier of F1 Inc.

100,000

Savings Deposit in a Bank closed by BSP

500,000

Fund set aside for acquisition of Land – to be disbursed on December 31,2013

3,000,000

Fund set aside for acquisition of Building – to be disbursed on July 1,2012

2,000,000

Payroll fund

1,000,000

Dividend fund

200,000

Travel fund

300,000

Interest fund

100,000

Tax fund

400,000

Bond sinking fund – Bonds payable will be due on December 31,2013

2,000,000

Bond sinking fund – Bonds payable will be due on July 1,2012

1,000,000

Cash surrender value Saving Deposit in BDO Bank (compensating balance of P200,000 – unrestricted)

10,000 2,000,000

Saving Deposit in BPI Bank (compensating balance of P100,000 – restricted for Short-term borrowing)

1,600,000

Saving Deposit in MetroBank (compensating balance of P300,000 – restricted for Long-term borrowing)

2,800,000

Time Deposit with remaining term of 30 days and acquired on September 1,2011

4,000,000

Time Deposit with original term of 5 years and remaining term of 80 days on December 31,2011. It was acquired on December 21,2011

5,000,000

Current Account in PNB - (Overdraft)

(500,000)

First Current Account in RCBC – (Overdraft)

(1,000,000)

Second Current Account in RCBC

3,000,000

Stale Check from a Customer

200,000

Stale Check issued to a supplier against Second Account in RCBC

100,000

Investment in Ordinary Shares

300,000

Investment in Preference Shares

400,000

Investment in Redeemable Preference Shares – 90 days term

500,000

Required: What is the total cash and cash equivalents to be presented in the December 31,2011 Statement of Financial Position of F1 Inc.?

II. Petty Cash Fund Problem 2. Account at the petty cash fund of UFC Inc. showed its composition as follows: Coins and currency Paid Vouchers:

P3,300

Transportation

600

Gasoline

400

Office Supplies

500

Postage Stamps

300

Due from employees

1,200 3,000

Manager’s check returned by bank marked NSF

1,000

Check drawn by company to the order of petty cash custodian

2,700

A sheet of paper with names of several employees together with contribution for a birthday gift of a co-employee. Attached to the sheer of paper is a currency of

5,000

Required: What is the amount of petty cash fund to be presented in the Statement of Financial Position?

III. Bank Reconciliation:

Problem 3. The following items are provided by Ayala Land Inc. regarding the bank reconciliation of one of its current accounts in the Bank Philippine Islands for the year ended December 31,2011:

Ayala Land Inc. Bank Statement Balance

P3,000,000

Current Account in BPI Bank

2,500,000

Bank Service Charge for the year 2011

200,000

Note Receivable Collected by Bank

300,000

NSF Check from Ayala Land Inc.’s Customer

400,000

Interest on Note Receivable

100,000

Pre-authorized payment for electric bill (Ayala Land Inc. authorized BPI to automatically pay its electric bill as submitted directly to BPI

300,000

Outstanding check (including P100,000 certified check by BPI ’s manager) Deposit in Transit

400,000 1,000,000

Check of P300,000 drawn and issued to a supplier but recorded by Ayala Land Inc. as P200,000

100,000

Ayala Corporation’s Deposit credited by BPI to Ayala Land Inc.

500,000

Notes Payable of Ayala Property Management charged by BPI to Ayala Land Inc.

300,000

Time deposit of Ayala Land Inc. of P1,000,000 matures on Dec. 31,2011 and credited by BPI to Ayala Land. Inc Account on that date

500,000

Note: The bank has not committed any error during 2011 except those specifically stated above. Any remaining difference after reconciliation pertains to the cash shortage resulting from cashier and accountant’s defalcation of company’s cash.

Required: Based on the result of your audit, determine the following as of December 31,2011:

____________1. Adjusted balance per bank ____________2. Adjusted balance per book ____________3. Cash shortage arising from the cash defalcation by company ’s cashier and accountant

IV. Proof of Cash

Problem 4. The following data are provided by Meralco Inc. regarding its Current Account in RCBC Bank for the months of November and December, 2011:

November 30 December 31 Balance per Book

P 50,000

P 70,000

Balance per Bank

84,000

120,000

Book debits or receipts

?

Book credits or disbursements

180,000

Bank debits or disbursements

?

Bank credits or receipts

210,000

Deposits in transit

40,000

75,000

Outstanding checks

65,000

119,000

NSF Checks

5,000

10,000

Bank Service Charge

1,000

4,000

15,000

20,000

Note collected by bank

Another NSF Check on December and redeposited by customer on December (Meralco didn’t prepare entry on redeposit)

40,000

Note: All reconciling items on November are recorded, adjusted and cleared by the book and bank on December.

Required: Based on the result of your audit, determine the following:

____________1. Unadjusted Book debits or receipts on the month of December ____________2. Unadjusted Bank debits or disbursements on the month of December ____________3. Adjusted Balance per book or bank on November 30 ____________4. Adjusted Bank receipts or Book receipts on the month of December ____________5. Adjusted Bank disbursements or Book disbursements on the month of December ____________6. Adjusted Balance per book or bank on December 31