PAGE 1

PRACTICAL ACCOUNTING PROBLEMS I SUGGESTED SOLUTIONS Cash and Cash Equivalents 1. Checkbook balance Undelivered check Treasury bills with 3 month term Cash and cash equivalents 2. Cash in bank (5,000,000 500K STI + 1M PDC) PCF Money market placement (Cash equivalent if silent) Savings deposit Cash and cash equivalents 3. PCF (50,000 5,000 5,000) Current account Payroll account Cash on hand (500,000 100,000) Cash in bank for bonds payable due on June 30, 2014 Cash 5,000,000 1,000,000 2,500,000 8,500,000 5,500,000 50,000 1,500,000 800,000 7,850,000 40,000 4,000,000 1,000,000 400,000 1,500,000 6,940,000

The current account is an unrestricted bank deposit while the payroll account even though restricted, is for a current purpose there for included as cash. The sinking fund restricted for the bonds payable should be included as cash because the liability that it was meant for is now included in the current liabilities section of the balance sheet. Meanwhile, the time deposit shall be classified as cash equivalent. 4. Balance per book Note collection Service charge NSF checks Overstatement in recording a check issued Adjusted balance per book Balance per bank Outstanding checks (1.5M 200K certified check) Deposit in transit Adjusted balance per book Cash in bank Currency and coins on hand PCF Correct cash balance 5. Unadj. Bal. June DIT July DIT June OC July OC Note coll. NSF check Ser. Char. Adj. Bal. June 30 Bank Book 3,000 2,500 400 ( 900) 200 . . 2,500 . . 2,500 . . 9,600 . . 9,600 . . 6,700 140 ( 10) 6,700 . . 5,400 Receipts Bank Book 9,400 9,000 ( 400) 1,000 Disbursements Bank Book 6,550 7,000 7,400,000 1,100,000 ( 20,000) ( 500,000) 100,000 8,080,000 8,180,000 (1,300,000) 1,200,000 8,080,000 8,080,000 600,000 50,000 8,730,000 A July 31 Bank Book 5,350 5,000 1,000 ( 900) 600 ( 600) 200 ( 140) ( 10) 5,400

--END--

5711