Cash and Cash Equivalent

Problem Solving
1. KYLA Company had the following account balances on December 31, 2021:

Cash in bank – current account 5,000,000

Cash in bank – payroll account 1,000,000
Cash on hand 500,000
Cash in bank – restricted for building construction
expected to be disbursed in 2022 3,000,000
Treasury bills, purchased December 15, 2021
and due March 1, 2022 2,000,000

The cash on hand includes a P200,000 check payable to KYLA, dated January 15, 2021.
On December 31, 2021, the cash and cash equivalents is to be reported at ________.

Solution:
Cash in bank – current account 5,000,000
Cash in bank – payroll account 1,000,000
Cash on hand 500,000
Treasury bills, purchased December 15, 2021
and due March 1, 2022 2,000,000
Post dated check payable to KYLA (200,000)
Cash and Cash Equivalents 8,300,000

2. The cash account in EDLE Company’s ledger showed a balance at December 31, 2021 of P4,415,000
which included the following items:
Vouchers paid out of collections, not yet recorded 43,000
IOUs signed by employees, taken from collections 33,000
Petty cash fund 24,000
Undeposited receipts, including a postdated
customer check for P70,000 1,220,000
Cash in Allied Bank, per bank statement, with a check
for P40,000 still outstanding 2,245,000
Bond sinking fund – cash 850,000

At what amount should cash be reported on the December 31, 2021?

Solution:
Petty cash fund 24,000
Undeposited receipts, including a postdated
customer check for (P70,000 - 1,220,000) 1,150,000
Cash in Allied Bank, per bank statement, with a check
for P40,000 still outstanding (2,245,000 - 40,000) 2,205,000
Cash 3,379,000

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 Cash and Cash Equivalent
Problem Solving
3. LEE Corporation's checkbook balance on December 31, 2021, was P1,120,000. In addition, LEE held
the following items in its safe on December 31:

Check drawn onLEE Corporation's account, payable to a vendor, dated and recorded December 31,
but not mailed until January 15, 2022 140,000
Check payable to LEE Corporation, dated January 2, 2022, not included in December 31 checkbook
balance 280,000
Check payable to LEE Corporation, deposited December 20, and included in December 31 checkbook
balance, but returned by bank on December 30, stamped "DAIF." The check was redeposited January
2, 2022, and cleared January 7, 56,000

The proper amount to be shown as cash on December 31, 2021 is _________________.

Solution:
Lee Corporation's check book balanace 1,120,000
Unreleased Check 140,000
Postdated check (56,000)
Cash 1,204,000

4. On December 31, 2021, TOBI Company had the following cash balances:

Cash in bank P12,750,000

Petty cash fund 42,500
Time deposit 4,250,000
Saving deposit 1,700,000

Cash in bank includes P425,000 of compensating balance against short-term borrowing arrangement
at December 31, 2021. The compensating balance is legally restricted as to withdrawal by TOBI. A
check of P255,000 dated January 7, 2022 in payment of accounts payable was recorded and mailed on
December 31, 2021. In the current assets section of the December 31, 2021 statement of financial
position, what amount should be reported as cash and cash equivalents?

Solution:
Cash in bank P12,750,000
Petty cash fund 42,500
Time deposit 4,250,000
Saving deposit 1,700,000
Compensating balance (425,000)
Postdated check 255,000
Cash and cash equivalents 18,572,500

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 Cash and Cash Equivalent
Problem Solving
7. KIM Company’s checkbook balance on December 31, 2021 was P5,000,000. In addition, KIM held
the following items in its safe on that date:

Check payable to KIM, dated January 2, 2022 in payment of a sale made in December 2021, not
included in December 31 checkbook balance ............ 2,000,000

Check payable to KIM, deposited December 15 and included in December 31 checkbook balance, but
returned by bank on December stamped “NSF” The check was redopisted on January 2, 2022 and
cleared on January 9, 2022 ............ 500,000

Check drawn on KIM’s account payable to vendor, dated and recorded in KIM’s books on December
31, but not mailed until January 10, 2022 ............ 300,000

The proper amount to be shown as cash on KIM December 31, 2021 is ______________.

Solution:
KIM Company's check book balanace 5,000,0000
Postdated check (500,000)
Unreleased Check 300,000
Cash 4,800,000

6. At the end of the month, the bank statement shows the following:

A check drawn by DEIN Company erroneously charged by the bank

against KEZ Company ............ 85,000
Interest income on deposits ............. 450
Customer's NSF check returned ............ 70,000
Bank service charge ............ 3,000

Which of the following journal entries is to be done per book?

Journal Entry
Debit:
Bank service charge 3,000
Account receivable 70,000
Credit:
Interest income 450
Cash in bank 72,550

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