ACC 124 – Exercise 1 – Cash and Cash Equivalents

Problem I. Candid Company provided the following information with respect to cash and cash
equivalents at year-end (December 31, 2020):

Checking accounts at First Bank ( 200,000)

Checking accounts at Second Bank 5,500,000
Treasury bonds (matures on January 31, 2021) 1,000,000
Payroll account 500,000
Value added tax account 400,000
Foreign bank account in equivalent pesos 2,000,000
IOU from president 750,000
Credit memo from a vendor for a purchase return 80,000
Traveler’s check 300,000
No sufficient fund check 150,000
Petty cash fund (P20,000 in currency and expense receipts for P30,000) 50,000
Money order 180,000

What total amount should be reported as “cash and cash equivalents” at year-end?

Checking accounts at Second Bank 5,500,000

Payroll Account 500,000
Value added tax account 400,000
Traveler’s Check 300,000
Petty Cash Fund 20,000
Money Order 180,000
Cash and Cash equivalents 6,900,000

Problem II. Damsel Company reported a checkbook balance of P4,000,000 on December 31,
2020.

 A customer check amounting to P200,000 dated December 30, 2020 was not include in
the checkbook balance.
 Another customer check for P500,000 deposited on December 22, 2020 was included in
the checkbook balance but returned by the bank for insufficiency of fund. This check was
redeposited on December 26, 2020 and cleared two days later.
 Coins and currencies on hand amounted to P300,000.
 A P400,000 check payable to supplier dated and recorded on December 30, 2020 was
mailed on January 15, 2021.
 A petty cash fund of P50,000 with the following summary on December 31, 2020:

Coins and currencies 5,000

Petty cash vouchers 43,000
Return value of 20 cases of soft drinks 2,000
50,000
 A check of P43,000 was drawn on December 31, 2020 payable to Petty Cash.
 What total amount should be reported as “cash” on December 31, 2020?

Checkbook balance, beginning 4,000,000

Customer Check (200,000)
Checkbook balance, end 3,800,000
Coins and Currencies 300,000
Unreleased Check 400,000
Petty Cash Fund 5,000
Check drawn for petty cash fund 43,000
Cash 4,548,000

Problem III. Joana Company had the following account balances on December 31, 2020:

Petty cash fund 50,000

Cash on hand 500,000
Cash in bank – current account 4,000,000
Cash in bank – payroll account 1,000,000
Time deposit 2,000,000
Cash in bank – restricted account for plant addition,
expected to be disbursed in 2021 500,000
Cash in sinking fund set aside for bond payable due June 30, 2022 1,500,000

The petty cash fund included unreplenished December 2020 petty cash expense vouchers of
P5,000 and employee IOU of P5,000. The cash in bank – current account includes a
compensating balance amounting to P50,000 which is restricted. The cash on hand included a
P100,000 check payable to the entity dated January 31, 2021. What total amount should be
reported as cash and cash equivalents on December 31, 2020?

Petty Cash Fund (50,000 – 5,000 – 5,000) 40,000

Cash on Hand (500,000-100,000) 400,000
Cash in bank-current account (4,000,000-50,000) 3,950,000
Cash in Bank-payroll account 1,000,000
Time deposit 2,000,000
Cash and Cash equivalents 7,390,000

Problem IV. Marjorie Company reported the following information in relation to imprest petty
cash fund at year-end:

Coins and currency 22,000

Petty cash vouchers:
Gasoline 3,000
Check drawn payable to the order of Ann Cruz, petty cash
Medical supplies 1,000
custodian, representing her salary 15,000
Repairs 1,500
Check of an employee returned by bank marked “NSF” 3,000
A sheetIOU
of paper withemployee
from an the names of several employees together 3,500
with a contribution for a birthday party and attached to
the sheet of paper is a currency of 5,000
The petty cash ledger account had a balance of P50,000. What amount of petty cash fund
should be reported at year-end?
Coins and currency 22,000
Check drawn payable to the order of Ann Cruz,
petty cash custodian, representing her salary 15,000
Petty Cash Fund, end 37,000

Problem V. Tracy Company provided the following transactions:

2020

Dec. 5 The entity established an imprest petty cash fund of P10,000.

15 An examination of the petty cash fund disclosed the following:
Currencies and coins P3,000
Memoranda showing expenditures for:
Postage 2,000
Supplies 5,000
A check was drawn to replenish the fund and to increase its amount to
P20,000.
31 The fund was not replenished. The composition of the fund was as
follows:
Currencies and coins P11,000
Memoranda showing expenditures for:
Postage 3,000
Supplies 4,000
Transportation 2,000
2021
Jan. 20 An examination of the petty cash fund disclosed the following:
Currencies and coins P9,000
Memoranda showing expenditures for:
Postage 3,000
Supplies 6,000
Utilities 2,000
31 A check was drawn to replenish the fund. The composition was:
Currencies and coins P1,000
Postage stamps 500
Memoranda showing expenditures for:
Postage 5,000
Supplies 6,000
Utilities 7,000

Required:

1. Prepare journal entries to record the transactions under imprest fund system and fluctuating
fund system. Use the following format:

Date Imprest Fund System Fluctuating Fund System

12/5/2020
Petty Cash Fund 10,000 Petty Cash Fund 10,000
Cash in Bank 10,000 Cash in Bank 10,000

12/15/202 Petty Cash Fund 10,000 Postage 2,000

Postage 2,000 Supplies 5,000
Supplies 5,000 Petty Cash Fund 7,000
0 Cash in Bank 17,000
Petty Cash Fund 17,000
Cash in Bank 17,000

12/31/202 Postage 3,000 Postage 3,000

Supplies 4,000 Supplies 4,000
Transportation 2,000 Transportation 2,000
0 Petty Cash Fund 9,000 Petty Cash Fund 9,000

01/01/202 Petty Cash Fund 9,000 No entry

Postage 3,000
Supplies 4,000
1 Transportation 2,000

01/20/202 Postage 0
Postage 3,000 Supplies 2,000
Supplies 6,000 Transportation 0
1 Petty Cash Fund 2,000
Transportation 2,000
Cash in Bank 11,000
Petty Cash Fund 11,000
Cash in Bank 11,000

01/31/202
Postage 5,000 Postage 5,000
1 Supplies 6,000 Supplies 6,000
Utilities 7,000 Utilities 7,000
Cash in Bank 18,000 Cash in Bank 18,000

Petty Cash Fund 18,000

Cash in Bank 18,000

Cash Short 500 Cash Short 500

Cash in Bank 500 Cash in Bank 500