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PROBLEMS
Alternative computation:
The outstanding checks of P15,200 was simply ignored since the given balance of cash is a cash
balance per books. Short-term treasury bills of P52,000 is reported as part of trading securities
unless there is an indication of a maturity of three months or less in which case, it is included as
part of cash and cash equivalents. Meanwhile, sinking fund cash of P35,000 is reported as a
noncurrent financial asset.
NSF checks, IOUs and customers’ post dated checks are reported as receivables while postage
stamps and travel advances are prepaid expenses. Meanwhile, cash in sinking fund is reported
as a noncurrent financial asset.
Chapter 2 – Cash and Cash Equivalents
IOU from an employee and customers’ post dated check are receivable items; the bank overdraft
in another bank is reported as a current liability (offset can be made only if the accounts are with
the same bank); the savings deposit is a non-current item since it is intended for a non-current
purpose (for plant expansion).
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Chapter 2 – Cash and Cash Equivalents
or
Unadjusted bank statement balance at August 31
(180,000 + 275,000 – 220,000) P235,000
Outstanding checks, August 31 ( 25,000)
Deposits in transit, August 31 35,000
NSF check 35,000
Bank service charges 1,500
Note collected by bank ( 50,000)
Unadjusted cash balance per ledger at August 31 P231,500
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Chapter 2 – Cash and Cash Equivalents
or
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Chapter 2 – Cash and Cash Equivalents
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Chapter 2 – Cash and Cash Equivalents
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Chapter 2 – Cash and Cash Equivalents
Employee advances of P880 is reported as a receivable; unreplenished petty cash vouchers are
expenses; and currency in an enveloped marked collections for charity is a non-company fund.
Postal money orders of P1,800 is a proper inclusion to cash. The savings account deposit in
Security Bank is reported as a non-current asset since it is intended for a non-current purpose.
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Chapter 2 – Cash and Cash Equivalents
Theory
MC1 b MC10 c MC19 d
MC2 d MC11 b MC20 d
MC3 a MC12 a MC21 c
MC4 a MC13 c MC22 d
MC5 d MC14 c MC23 d
MC6 c MC15 b MC24 b
MC7 d MC16 d MC25 c
MC8 d MC17 b MC26 a
MC9 b MC18 b
Problems
MC27 c 2,250,000 + 125,000 = 2,375,000
MC28 d 50,000 + 20,000 = 70,000
MC29 b 320,000 + 580 = 320,580
MC30 d Dr. Expenses-950; Dr. Cash Short and Over-50; Cr. Cash in Bank-1,000
MC31 b 3,800 + 12,00 + 12,500 = 17,500
MC32 c
MC33 d 50,000 + 20,000 – 15,000 = 55,000; 43,000 – 6,000 + 15,000 = 52,000
55,000 – 52,000 = 3,000
MC34 a 180,500 + 32,500 – 27,500 = 185,500
MC35 a 682,250 – 6,000 – 25,000 – 10,500 – 127,500 – 4,950 – 6,450 = 501,850
or 3,600 + (336,750-6,000) + (178,000-10,500) = 501,850
MC36 b 677,600 – 580 + 900 = 677,920
or 653,230 – 98,760 + 123,450 = 677,920
MC37 b 95,000 + (10,000 – 4,500) = 100,500
MC38 b 17,000 + 490,000 – 476,000 = 31,000
MC39 a 39,000 + 610,000 – (617,000 – 15,000) = 47,000
MC40 a 768,370 – 132,274 + 20,750 = 656,846
MC41 b 450,000 + 9,400 – 3,200 - 900 + 180 = 455,480
MC42 b 67,000 + 798,000 – 91,000 = 774,000 collections from sales;
583,000+78,000–86,000 + 53,000 – 48,000 = 580,000 payments to trade creditors;
62,000 + 774,000 – 580,000 – 107,000 =149,000
MC43 d 1,500 + 5,000 + 486,000 + 12,000 = 504,500
MC44 d 96,000 – 4,000 + 7,000 = 99,000
MC45 c 650,000+1,300,000–1,100,000 = 850,000 + 150,000–84,000+7,500 = 923,500
MC46 d 1,154,800 + 180,000 + 2,700 = 1,337,500
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Chapter 2 – Cash and Cash Equivalents
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