2614-2616 a.

deposits credited by the bank but not yet

recorded by the company
Borrowing Costs; Cash and Cash Equivalents; Bank
b. outstanding checks
Reconciliation
c. deposits in transit
1. Capitalization of borrowing costs should cease d. bank charges not yet recorded by the company
a. when the asset is brought into use.
6. If the cash balance shown in a company’s
b. during periods in which active development is
accounting records is more than the correct cash
interrupted.
balance and neither the company nor the bank has
c. when expenditures are being incurred, borrowing
made any errors, there must be
costs are being incurred and activities that are
a. deposits credited by the bank but not yet
necessary to prepare the asset for its intended use
recorded by the company
or sale are in progress.
b. bank charges not yet recorded by the company
d. when substantially all of the activities necessary
c. outstanding checks
to prepare the asset for its intended use or sale are
d. deposits in transit
complete.
7. Maganda Co.’s accountant is preparing its March
2. PAS 23 does not apply to
bank reconciliation and has collected the ff data:
a. borrowing costs directly attributable to the
acquisition, construction, or production of Per books Per bank
inventories that are manufactured, or otherwise Mar. 1 bal P 11,600 P 10,000
produced, in large quantities on a repetitive basis. Mar. deposits 25,800 21,200
b. actual or imputed cost of equity, including Mar. O.Checks 27,800 29,000
preferred capital not classified as a liability. Note collected
c. borrowing costs directly attributable to the (inc. 10% interest) - 4,400
acquisition, construction, or production of a Mar. service charge - 20
qualifying asset measured at fair value. Mar. 31 bal 9,600 6,580
d. all of the above
Additionally, deposits in transit of P4,400 and
3. Which of the following is not a basic characteristic outstanding checks of P2,800 were from February’s
of a system of cash control? reconciliation. The correct cash balance at March 31
a. internal audits at irregular intervals should be:
b. use of a voucher system a. P13, 980 c. P11, 180
c. weekly deposit of all cash received b. P12, 780 d. P10, 960
d. segregated responsibility for handling and
For the next two questions.
recording cash
The following information is available from the cash
4. Which statement is true?
records of Hanu Company:
a. savings accounts are usually classified as cash on
the statement of financial position. April 31 Bank Reconciliation
b. cash equivalents are investments with original Bal per bank P262, 460
maturities of six months or less. DIT 19, 200
c. certificates of deposit are usually classified as cash OC 38, 000
on the statement of financial position. Bal per books P243, 660
d. companies include postdated checks and petty
cash funds as cash May Results Per bank Per book
May, deposits P107,840 P158,890
5. If the cash balance in a company’s bank statement May, checks 111,000 100,800
is more than the correct cash balance and neither May, bank charge 350 -
the company nor the bank has made any errors, May, note collected 30, 000 -
there must be Balance May 31 279,950 303,550
8. The deposits in transit as of May 31 is Interest rate swap receivable 50,000
a. P72, 050 c. P51, 050 Prepaid rent 50,000
b. P70, 250 d. P42, 050
a. P4, 600, 000 c. P2, 550, 000
9. The outstanding checks as of May 31 is b. P4, 550, 000 d. P2, 600, 000
a. P27, 800 c. P37, 150
13. On 1 January 2016, Bibi, Inc. signed a fixed-price
b. P27, 600 d. P31, 750
contract to have Rising Towers construct a plant
10. The following items were included as cash in the facility at a cost of P4M. Also on the same date, Bibi
books of Benching Co.: borrowed P4M payable in ten annual installments of
P400,000 plus interest at the rate of 10%, to finance
Savings acct at BDO P5,359
the construction cost. It was estimated that it would
Checking acct at Metro bank (1,100)
take three years to complete the project. During
Checking acct at BPI used for
2016, Bibi made deposits and payments and realized
payment of salaries 5,800
an investment income of P250,000. What amount
Postage stamps 107
should be reported as capitalized interest at
Postal money order 500
December 31, 2016?
A check marked “DAIF” 1,250
a. P190, 000 c. P150, 000
IOU from an employee 200
b. P165, 000 d. P440, 000
Petty cash fund (P324 in
expense receipts) 500 14. On 1 January 2018, Dante Company borrowed
Certificate of time deposit 5,000 P6M at an annual interest rate of 10% to finance the
costs of building a major power plant. Construction
The correct cash amount that should be reported is
commenced on the same date and cost P6M. The
a. P11, 835 c. P16, 511
excess borrowed funds were invested in short-term
b. P11, 011 d. P11, 511
securities from which the company generated
11. Ongki Corporation had the following account interest income of P60,000. The project was
balances at December 31, 2017: completed on November 30, 2018. What is the
carrying amount of the plant at November 30, 2018?
Cash in bank and on hand P1,500,000 a. P6, 550, 000 c. P6, 490, 000
Cash restricted for bonds payable b. P6, 000, 000 d. P6, 520, 000
due on June 30, 2018 3,000,000
Savings deposit set aside for 15. Based on the preceding question, the correct
dividends payable on journal entry is
June 30, 2018 500,000 a. Debit, Interest Income 60, 000
Time deposit 1,000,000 b. Debit, Property Plant Equipment 550, 000
c. Credit, Interest Expense 600, 000
The total cash and cash equivalents to be reported d. Credit, Interest Income 60, 000
as of December 31, 2017 is
a. P5, 000, 000 c. P6, 500, 000
b. P6, 000, 000 d. P5, 500, 000
12. Compute for the total amount considered as
financial assets using the given data below:
Cash P1,000,000
Accounts receivable 2,000,000
Furniture and Fixture 1,500,000
Investment in associate 300,000
Investment in shares-trading 500,000
Investment in debt securities-AFS 400,000
Investment in debt securities-HTM 350,000
SOLUTIONS: Investment in shares-trading 500,000
Investment in debt securities-AFS 400,000
1.) D. (2614 handout #7)
Investment in debt securities-HTM 350,000
2.) D. (2614 handout DIY #1) Interest rate swap receivable 50,000
TOTAL P4,600,000
3.) C. (2615 handout #18)
13.) C. (2614 handout DIY #4)
4.) A. (2615 handout DIY #1)
Specific cost P4,000,000
5.) B. (2616 handout #2) Interest rate * 10%
6.) B. (2616 handout #3) P 400,000
Realized income ( 250,000)
*computations Capitalized Interest P 150,000
7.) A. (2616 handout DIY #3) 14.) C. (2614 handout #10)
End bal. per book P 9,600 Specific cost P6,000,000
DIT (last month) 4,400 Interest rate * 10%
Service charge ( 20) P 600,000
Mar 31 correct cash bal. P 13,980 * 11/12
8.) B. (2616 handout #13) P 550,000
Less: Interest income ( 60,000)
DIT beg. P 19,200 Capitalized Interest P 490,000
Collec. this period 158,890 Cost 6,000,000
Total P178,090 Carrying Amount P6,490,000
Deposits credited by bank this prd. (107,840)
DIT end P 70,250 15.) A.

9.) A. (2616 handout #14) Journal Entry:

OC beg. P 38,000 Property, Plant, Equipment 490,000

Checks issued this prd. 100,800 Interest Income 60,000
Total P138,800 Interest Expense 550,000
Checks paid by bank this prd. ( 111,000)
OC end P 27,800
10.) A. (2615 handout DIY #5)
Savings acct at BDO P 5,359
Checking acct at BPI used for
payment of salaries 5,800
Postal money order 500
Petty cash fund 176
Total cash and cash equi. P 11,835
11.) B. (2615 handout #10)
All items are cash and cash equi. P6,000,000
12.) A. (2615 handout #3)
Cash P1,000,000
Accounts receivable 2,000,000
Investment in associate 300,000