Ateneo de Zamboanga University

School of Management and Accountancy

Financial Accounting, Part I

Assignment 1: Cash and cash equivalents

Instructor: Kelvin Jaluag Culajara, BSA, CPA

Case 1: Computation of cash balance

The accountant of Santiago Company is in the process of preparing the companys financial
statements for the year ended December 31, 2016. he is trying to determine the correct
balance of cash and cash equivalents to be reported as a current asset on the statement
of financial position. The following items are being considered:
Balances in the companys account at the Metropolitan Bank: Current account,
P81,000; Savings account, P132,000.
Undeposited customer checks of P22,200 (including a customer check dated January
2, 2017 for P3,000)
Currency and coins on hand of P3,480
Savings account at the Northern Philippines Bank with a balance of P2,400,000.
this account is being used to accumulate cash for future plant expansion in 2017.
Petty cash of P4,000 (currency of P1,200 and unreplenished vouchers for P2,800).
P120,000 in a current account at the Northern Philippines Bank. This represents
a 20% compensating balance of P600,000 loan with the bank. Santiago Company is
legally restricted to withdraw the funds until the loan is due in 2019.
Treasury bills: Two-month maturity bills worth P90,000; and seven-month bills
worth P120,000.
Time deposit worth P100,000.

Required: Compute the correct cash and cash equivalents balance to be reported in the
current assets section of the 2016 statement of financial position.

Case 2: Computation of cash balance

Your examination of the 2016 financial statements of Dionisio Corporation reveals the
following:
Current account at Prime Bank, P(30,000)
Current account at Prudent Bank, P135,000
Treasury bills (acquired 3 months before maturity), P300,000
Treasury bills (maturity date is December 31, 2017), P1,500,000
Payroll account, P390,000
Foreign bank account restricted (translated using the December 31, 2016 exchange
rate), P2,000,000
Postage stamps, P1,250
Employees postdated check, P4,500
IOUs from the vice president, P8,000
Credit memo from a supplier for a purchase return, P8,100
Travelers check, P21,000
Money order, P12,900
Petty cash fund (P3,000 in currency and expense receipts for P12,000), P15,000

Required: Compute the correct cash and cash equivalents balance to be reported in the
current assets section of the 2016 statement of financial position.
Case 3: Accounting for petty cash fund
Anying Velasco is reviewing the cash accounting for ABX, Inc. Anyings review will focus
on the petty cash fund account and the bank reconciliation for the month ended May 31,
2016. She has collected the following information from ABXs bookkeeper for this task.
The petty cash fund was established on May 2, 2014, in the amount of P10,000.
Expenditures from the fund by the custodian as of May 31, 2014, were evidenced by
approved petty cash vouchers for the following: Various office supplies, P3,920;
IOUs from employees, P1,200; Shipping charges, P2,298; Miscellaneous expense,
P1,526.
On May 31, 2014, the petty cash fund was replenished and increased to P12,000;
currency and coin in the fund at that time totaled P756.

Required: Journalize the transaction.

Case 4: Bank reconciliation

The accountant of Narcisa Company provided the following data in reconciling the April
30 cash in bank balance:

Balance per bank, April 30 P 130,350

Balance per books, April 30 85,000
Bank service charge 2,000
Deposits in transit 49,000
Outstanding checks 17,650
Note collected by bank including P11,200 interest
(Narcisa is not yet informed) 136,000
Check drawn by XYZ Co. erroneously charged by bank
to Narcisas account 54,600

A transposition error was made in recording a sale and deposit in the sales journal and
cash receipts journal in April. The correct amount was P13,658 while the recorded amount
was P16,358.

Required: cash balance to be reported in the statement of financial position on April

30.

Case 5: Proof of cash

The following data are assembled by the accountant of Harold Company:

Nov. 30, 2016 Dec. 31, 2016

Cash account balance 41,175.00 100,712.50
Bank statement balance 267,705.00 344,542.50
Deposits in transit 20,502.50 32,200.00
Outstanding checks 69,295.00 75,280.00
Bank service charges 1,800.00 1,500.00
NSF check* 20,625.00
Company's notes receivable collected by
bank 179,537.50 202,250.00

*Redeposited in the same month. No entries made to take up the return and redeposit.

The bank statement and the companys cash records show the following totals:

Canceled checks and debit memos per bank P 545,932.50

Cash receipts per cash book 411,592.50
Checks written per cash book 529,792.50
Deposits and credit memos per bank statement 622,770.00

Required: Prepare a proof of cash.