CASH 2014

Problem
1. Finster Company was providing the following information at the end of the year

comprising its cash account:

Cash in bank
Cash on Hand
Cash in sinking fund
Vouchers paid out of collections, not yet recorded
Total

1,000,000
500,000
300,000
100,000
1,900,000

What total cash must be reported in the financial statement?

a. 1,900,000
b. 1,800,000
c. 1,500,000
d. 1,000,000
2. The petty cash fund of Castro Enterprises at the end of the fiscal year ended June 30, 2014 is

composed the following:

Currencies............................................................................................... P 380
Coins...................................................................................................... 120
Paid Vouchers:
Office supplies............................................................................ 175
Postage Stamps............................................................................ 200
Loans to Employees..................................................................... 600
Check drawn by the manager, retuned by bank marked NSF.................... 275
Check drawn by the company, payable to the order of the petty
cash custodian, representing her salary................................................ 1250
The amount of petty cash fund that should be shown on the balance sheet at June 30, 2014 of
Castro Enterprises is
a. P 500
c. P2,025
b. P 1,750
d. P3,000
3. The Makopa Companys ledger showed a balance in its cash account at December 31, 1993 of

P68,225, which was determined to consist of the following:

Petty cash fund....................................................................................P
360
Cash in Metrobank, per bank statement, with a check for P600 still outstanding...
33,675
Notes receivable in the possession of a collecting agency.................... 2,500

Undeposited receipts, including a post-dated check for P1, 050 and

a travellers check for P1,000............................................................. 17,800
Bond sinking fund-cash........................................................................ 12, 750
IOUs signed by employees...................................................................
495
Paid vouchers, not yet recorded...........................................................
645
Total
P68, 225
4. Yoyubukai Company has a following account balance on December 31,2014

Time Deposit
Cash on hand
Petty Cash Fund
Cash in bank
Commercial paper with maturity of 2mos.
Post stamps unused
Postdated Check

500,000
1,000,000
2,000,000
1,500,000
600,000
1,000,000
4,000,000

What total amount would be reported as Cash and Cash Equivalent in December 31, 2014?
a. 10,600,000
b. 6,600,000
c. 5,600,000
d. 5,000,000
5. The cash account balance of Enigma Company was 5,400,000. At the end of the month, the bank

didnt include the 10,000 cash deposit of Enigma Company. The bank also caught an error that the
customers check was recorded as 30,000 which was the original price was 40,000, and 56,000 error
that the original price was 65,000. On December 31, 2014 the check of 37,000 was returned
because it is NSF. Outstanding check was 205,200.
On December 31, 2014 what amount should be recorded in the bank account of Enigma Company?
a. 5,400,000
b. 5,429,000
c. 5,186,800
d. 5,000,000
6. Hong Company had the following account balances on December 31, 2013:

Cash on hand and in bank

Time deposit
Saving deposit set aside for dividend payable on
December 31, 2014

3,000,000
3,000,000
1,000,000

What total amount should be reported as cash on December 31, 2013?

a. 6,000,000
b. 5,000,000
c. 4,000,000

d. 7,000,000
7. On April 1, 2013, Mirror Company established an imprest petty cash fund for P10,000 by writing a

check drawn against its checking account. On April 30, 2013, the fund contained the following:
Currency and coins
Receipts for office supplies
Receipts for postage still unused
Receipts for transportation

3,000
4,000
3,000
800

On April 30, 2013, the entity wrote a check to replenish the fund. What is the amount of
replenishment under the imprest fund system?
a. 8,200
b. 6,600
c. 7,000
d. 3,000
8. The cash account of Academe Company showed a balance of P6,500,000. The bank statement did

not include a deposit of P230,000 made on the last day of the month. The bank statement showed
a collection by the bank of P34,000 and a customers check for P62,000 returned because it was
NSF.
A customers check for P35,000 was recorded on the books asP74,000.and a check written for
P79,000 was recorded as P97,000. What is the correct balance in the cash account?
a.
b.
c.
d.

6,500,000
6,486,000
6,539,000
6,662,000

9. In an audit of Ben Company on December 31, 2013,the following data are gathered:

Balance per book

Bank charges
Outstanding checks
Deposit in transit
Customers note collected by bank
Interest on customer note
Customer check returned NSF
Depositors note charged to account
What is the adjusted cash in bank on December 31,2013?
a. 1,575,000
b. 2,065,000
c. 2,187,000
d. 1,325,000

2,000,000
2,000
235,000
300,000
380,000
17,000
58,000
150,000

10. Hamilton Company has cash in bank of $10,000, restricted cash in a separate account of $3,000, and a bank
overdraft in an account at another bank of $1,000. Hamilton should report cash of
a.
b.
c.
d.

$9,000.
$10,000.
$12,000.
$13,000.

11. The cash account shows a balance of $45,000 before reconciliation. The bank statement does not include a
deposit of $2,300 made on the last day of the month. The bank statement shows a collection by the bank of
$940 and a customer's check for $320 was returned because it was NSF. A customer's check for $450 was
recorded on the books as $540, and a check written for $79 was recorded as $97. The correct balance in the
cash account was
a.
b.
c.
d.

$45,512.
$45,548.
$45,728.
$47,848.

12. At June 30, Almond Co.'s cash balance was $10,012 before adjustments, while its ending bank statement
balance was $10,772. Check number 101 was issued June 2 in the amount of $95, but was erroneously
recorded in Almond's general ledger balance as $59. The check was correctly listed in the bank statement at
$95. The bank statement also included a credit memo for interest earned in the amount of $35, and a debit
memo for monthly service charges in the amount of $50.
What was Almond's adjusted cash balance at June 30?
a. $9,598
b. $9,961
c. $10,048
d. $10,462
13. Cotton companys checkbook balance bat December 31,2013 was P180,000. In addition, Cotton held the
following items in its safe on that date.
Check payable to Cotton dated January 2, 2014 in payment of a sale made in December 2013,
included in December 31 checkbook balance.
P65,000
Check payable to Cotton deposited December 15, but returned by the bank on December 30
stamped DAIF.
P20,000
Check drawn on Cottons account, payable to a vendor, dated and recorded on December but
not yet mailed to payee as of December 31, 2013.
P15,000
What is the amount shown as cash on Cottons December 31,2013 statement of financial position.
a. P110, 000
c.P280, 000
b. P100, 000
d. P240, 000
14. The following information is shown in the accounting records of a company:

Balances as of January 1, 2002

Cash
Merchandise inventory

P93,000
129,000

Accounts Receivable
Accounts payable
Balances as of December 31, 2002
Merchandise Inventory
Accounts receivable
Accounts payable

100,500
79,500
P117,000
136,500
72,000

Total sales and cost of goods sold for 2002 were P1,197,000 and P874,500, respectively. All sales
and all merchandise purchases were made on credit. Various operating expenses of P160,500 were
paid in cash. Assume that there were no other pertinent transactions. The cash balance on
December 31, 2002 would be
a. 162,500
b. 223,500
c. 384,000
d. 457,500
15. The controller of the Red Wing Corporation is in the process of preparing the companys 2013 financial
statements. Shes trying to determine the correct balance of cash and cash equivalents to be reported as
current asset in the statement of financial position. The following items are being considered:
Balances in the companys accounts at First National Bank; checking P13,500, savings P22,100
Undeposited customer checks of P5,200
Currency and coins on hand P580
Savings account at East Bay Bank with a balance of P400,000. This account is being used to
accumulate cash for future plant expansion (2015)
P20,000 in checking account at East Bay Bank. The balance in the account represent a 20%
compensating balance for a P100,000 loan with the bank. Red Wing may not withdraw the funds
until the loan is due in (2015)
Treasury bills; 2-month maturity bills totaling P15,000(purchased 2-months before maturity), and 7month bills totaling P20,000.
Q1. What is the correct balance of cash?
a. P41,380
b. P36,180
c. P441,380
d. P436,180
Q2. What is the correct amount for cash equivalents?
a. P35,000
b. P15,000
c. P20,000
d. P0

Q3. What is the total amount of cash and cash equivalents to be reported in the current asset section of the
2013 statement of financial position?
a. P56,380

b. P76,380
c. P476,380
d. P456,380

Q4. What would be the classification for the P400,000 savings account at East Bay Bank?
a. Current Asset, as cash
b. Noncurrent Asset, as long-term investment
c. Current Asset, as temporary investments
d. None of the choices given
Q5. What is the classification for the P20,000 7-month treasury bills?
a. Current Asset, as cash
b. Noncurrent Asset, as long-term investment
c. Current Asset, as temporary investments
d. None of the choices given
16. Burr Company had the following account balances at December 31, year 2:
Cash in banks $2,250,000 Cash on hand 125,000 Cash legally restricted for additions to plant (expected to be
disbursed in year 3) 1,600,000 Cash in banks includes $600,000 of compensating balances against short -term
borrowing arrangements. The compensating balances are not legally restricted as to withdrawal by Burr. In
the current assets section of Burrs December 31, year 2 balance sheet, total cash should be reported at
a. $1,775,000
b. $2,250,000
c. $2,375,000
d. $3,975,000
17. Trans Co. had the following balances at December 31, year 2:
Cash in checking account $ 35,000 Cash in money market account 75,000 US Treasury bill, purchased
11/1/year 2, maturing 1/31/year 3 350,000 US Treasury bill, purchased 12/1/year 2, maturing 3/31/year 3
400,000 Transs policy is to treat as cash equivalents all highly liquid investments with a maturity of three
months or less when purchased. What amount should Trans report as cash and cash equivalents in its
December 31, year 2 balance sheet?
a. $110,000
b. $385,000
c. $460,000
d. $860,000
18. On October 31, year 2, Dingo, Inc. had cash accounts at three different banks. One account balance is
segregated solely for a November 15, year 2 payment into a bond sinking fund. A second account, used for
branch operations, is overdrawn. The third account, used for regular corporate operations, has a positive
balance. How should these accounts be reported in Dingos October 31, year 2 classified balance sheet?
a. The segregated account should be reported as a noncurrent asset, the regular account should be reported
as a current asset, and the overdraft should be reported as a current liability.
b. The segregated and regular accounts should be reported as current assets, and the overdraft should be
reported as a current liability.
c. The segregated account should be reported as a noncurrent asset, and the regular account should be
reported as a current asset net of the overdraft.
d. The segregated and regular accounts should be reported as current assets net of the overdraft.

19. Poe, Inc. had the following bank reconciliation at March 31, year 2:
Balance per bank statement, 3/31/Y2 $46,500 Add deposit in transit 10,300 56,800 Less outstanding checks
12,600 Balance per books, 3/31/Y2 $44,200 Data per bank for the month of April year 2 follow:
Deposits $58,400 Disbursements 49,700 All reconciling items at March 31, year 2, cleared the bank in April.
Outstanding checks at April 30, year 2, totaled $7,000. There were no deposits in transit at April 30, year 2.
What is the cash balance per books at April 30, year 2?
a. $48,200
b. $52,900
c. $55,200
d. $58,500
20.

On December 31, 2011, the cash account of Emerson Company has a debit balance
of P3,500,000. An analysis of the cash account shows the following details:
Undeposited collections
Cash in bank-PCIB checking account
Cash in bank-PNB (overdraft)
Undeposited NSF check received from a customer,
dated December 1, 2011
Undeposited check from a customer, dated January 15, 2012
Cash in bank-PCIB (fund for payroll)
Cash in bank-PCIB (savings deposit)
Cash in bank-PCIB (money market instrument, 90 days)
Cash in foreign bank (restricted)
IOUs from officers
Sinking fund cash
Listed stock held as temporary investment

P 60,000
500,000
(50,000)
15,000
25,000
150,000
100,000
2,000,000
100,000
30,000
450,000
120,000
P3,500,000

Cash and cash equivalents on Emersons December 31, 2011 balance sheet should be
a. P2,760,000
c. P2,885,000
b. P2,810,000
d. P2,935,000
21.

The December 31, 2011 trial balance of Emerson Co. contained the following
accounts:
Checking account balance- BPI
Certificate of deposit
Cash advances to a subsidiary
Deposit paid to utility companies
Checking account balance no. 1 BDO
Checking account balance no. 2 BDO
Cash on hand (including a post dated check for P10,000 and a
certified check for P45,000)
Cash held as bond sinking fund

P1,000,000
1,400,000
900,000
20,000
500,000
(100,000)
250,000
200,000

Money market balance at a mutual fund (with checking privileges)

Petty cash fund

300,000
15,000

The cash and cash equivalents of Emerson Company should be

a. P3,510,000
c. P3,295,000
b. P3,355,000
d. P3,455,000
22.

While checking the cash accounts of the ABC Co. on December 31, 2011, you
find the following information:
Balance per books
Balance in checking account (outstanding checks per books of
P9,876)
Deposit in bank closed by BSP
Deposit in transit
Currency and coins counted
Petty cash fund (of which P450 is in the form of paid vouchers)
Bank charges not yet taken up in the books
Bond sinking fund cash
Receivables from employees
Error in recording a check in the books. The correct amount as
paid by the bank is P890 instead of P980 as recorded in the
books, or a difference of

P67,760
65,323
16,000
12,345
9,500
1,000
58
10,000
700

90

The correct cash in bank balance for ABC Co. on December 31, 2011 is
a. P55,415
c. P67,792
b. P70,229
d. P83,792
23.

Emerson Company was incorporated on January 1, 2011 by issuing common stock

with a par value of P50,000,000 for P60,000,000. The other transactions that
affected the cash account during January were:
Land and building were purchased for P25,000,000 with a down payment of
P10,000,000. A note was signed for the remainder, the property being given as
collateral to the note due in six months time only.
Bonds with a face amount of P5,000,000 were issued at 120 for additional working
capital requirements.
A check was written for P7,500,000 to pay for computers and other equipment.
A check in the amount of P1,500,000 was written to acquire software technology.
A computer unit which did not fit the companys requirements was sold at its original
sales price of P2,000,000 and the cash was deposited in the companys checking
account.
What is the balance of the checking account on January 31, 2011?
a. P34,000,000
c. P49,000,000

b. P48,000,000

d. P43,000,000

24.

In your audit of Emerson Company as of December 31, 2011, you gathered the
following information:
Balance per bank
Deposit in transit
Outstanding checks
Customers note collected by bank
Customers NSF check
Checkbook printing charge
Certified checks included in the outstanding checks
Depositors note charged to account

P5,000,000
2,500,000
1,200,000
650,000
148,000
2,000
300,000
200,000

The cash balance per book of Emerson Company on December 31, 2011 is
a. P6,600,000
c. P6,100,000
b. P6,300,000
d. P6,950,000
25.
On January 1, 2010, Kyle Corporation established a petty cash fund of P400. On December 31, 2010, the petty
cash fund was examined and found to have receipts and documents for miscellaneous expenses amounting
to P364. In addition, there was cash amounting to P44. What entry would be required to record
replenishment of the petty cash fund on December 31, 2010?
a. Petty Cash.................... 364
b.
c.
d.

Cash Short and Over.........

Cash........................
Miscellaneous Expense.........
Cash Short and Over.........
Petty Cash..................
Miscellaneous Expense.........
Cash Short and Over.........
Cash........................
Miscellaneous Expense.........
Cash Short and Over.........
Cash........................

8
356
364
8
356
364
8
356
356
8
364

26.
A company has a petty cash fund of P25. At the end of the month, petty cash includes the following:
Currency and coins ....................................
Receipted vouchers for:
Postage ...............................................
Travel ................................................
Donation to charity ...................................

P 1.50
6.00
7.50
10.00
P25.00

Which of the following is the correct entry to simultaneously reimburse the fund and increase it to P100?
a. Petty Cash..................... 100.00
b.

Cash ........................
Petty Cash.....................

100.00
98.50

c.

d.

Cash ........................
98.50
Postage........................
6.00
Travel.........................
7.50
Donations......................
10.00
Cash.........................
23.50
Petty Cash.....................
75.00
Postage........................
6.00
Travel.........................
7.50
Donations......................
10.00
Cash.........................
98.50

cash 2014
Answer Section
PROBLEM
1. ANS:

C
Cash
Cash
Total Cash

1,000,000
500,000
1,500,000

PTS: 1
2. ANS:

B
Solution: the amount of petty cash fund that should be shown on the balance sheet at June
30, 2014 is P 1,750, computed as follows:
Currencies.............................................................P 380
Coins...................................................................... 120
Check drawn by the company payable to the order
of the petty cash custodian, representing her salary.......... 1, 250
Amount of petty cash fund to be shown on the
balance sheet at June 30, 1988........................................... P 1,750
PTS: 1
3. ANS:

Answer: A
Solution: cash on hand and in bank should be reported on Makopas balance sheet in the
amount of P50, 185, computed as follows:
Balance per ledger ...............................................................................................P 68, 225
Less: Outstanding check....................................................................P 600
Notes recievable in the possession of a collecting agency....... 2,500
Post-dated check....................................................................... 1,050
Bond sinking fund- cash ..........................................................12,750
IOUs signed by employees ......................................................

495

Paid vouchers, not yet recorded ...............................................

645

18, 040

Cash on hand and in bank, as corrected ................................................................ P50, 185

PTS: 1
4. ANS:

C
Time Deposit

500,000

Cash on hand

1,000,000

Petty Cash fund

2,000,000

Cash in bank

1,500,000

Commercial paper with maturity of 2mos

600,000

Total Cash and Cash equivalent

5,600,000

PTS: 1
5. ANS:

C
Bank Account

5,400,000

Deposit in Transit

10,000

Error

10,000

Error

9,000

Total

5,429,000

Outstanding Check

(205,200)

NSF

(37,000)

Bank balance

5,186,800

PTS: 1
6. ANS:

D
Cash on hand and in bank
Time deposit
Saving deposit set aside for dividend payable on
December 31, 2014

3,000,000
3,000,000
1,000,000

7,000,000
PTS: 1
7. ANS:

A
Receipts for office supplies
Receipts for postage still unused
Receipts for transportation
CSO

4,000
3,000
800
400
8,200

PTS: 1
8. ANS:

B
Balance per book
collection by bank
NSF check
book error- customers check (P74,00-45,000)
book error-check written (P97,000-P79,000)
Adjusted book balance

6,500,000
39,000
(62,000)
(9,000)
18,000
6,486,000

PTS: 1
9. ANS:

C
Balance per book
Bank charges
Note collected by bank
Interest on note
NSF
note charged to account
Adjusted book balance
PTS: 1
10. ANS:

Answer

cash in bank of $10,000

PTS: 1
11. ANS:

Answer:b
45,000 + $940 $320 $90 + $18 = $45,548

2,000,000
(2,000)
380,000
17,000
(58,000)
(150,000)
2,187,000

PTS: 1
12. ANS:
B
Choice "b" is correct. Almond's adjusted cash balance is computed as follows:
Adjusted cash balance = Unadjusted cash balance +/- bank errors + credit memos service charges
Adjusted cash balance = $10,012 - ($95 - $59) + $35 - $50 = $9,961
PTS: 1
13. ANS:
answer: A
Book balance

180,000

Deposit in transit

(65,000)

DAIF

(20,000)

Outstanding check

15,000
110,000

PTS: 1
14. ANS:

B
Cash balance, January 1, 2002
Add: Collections on accounts receivable
Total cash available
Deduct disbursements:
Payments on accounts payable
Payments for operating expenses
Cash balance, December 31
PTS: 1
15. ANS:
Q1.ANS: A
Balance in checking account
Balance in savings account
Undeposited customer checks
Currency and coins on hand
Total Cash

P93,000
1,161,000
1,254,000
870,000
160,500
1,030,500
P223,500

P13,500
22,100
5,200
580
P41,380

Q2.ANS: B (Only those treasury bills acquired or purchased 3 months or less before maturity can qualify as
cash equivalents)

Q3.ANS: A
Balance in checking account
Balance in savings account
Undeposited customer checks
Currency and coins on hand
2-month Treasury Bills
Cash and cash equivalents

P13,500
22,100
5,200
580
15,000
P56,380

Q4.ANS: B
Q5.ANS: C
PTS: 1
16. ANS:
(c) Cash on hand ($125,000) and cash in banks ($2,250,000) are both reported as cash in the current asset
section of the balance sheet because they are both unrestricted and readily available for use. Cash legally
restricted for additions to plant ($1,600,000) is not available to meet current operating needs, and therefore
should be excluded from current assets. Instead, it should be shown in the long-term asset section of the
balance sheet as an investment.
PTS: 1
17. ANS:
(c) The definition of cash includes both cash (cash on hand and demand deposits) and cash equivalents
(short-term, highly liquid investments). Cash equivalents have to be readily convertible into cash and so near
maturity that they carry little risk of changing in value due to interest rate changes. This will include only
those investments with original maturities of three months or less from the date of purchase by the
enterprise. Common examples of cash equivalents include treasury bills, commercial paper, and money
market funds. Trans should report a total of $460,000 ($35,000 + $75,000 + $350,000) on its December 31,
year 2 balance sheet. The US treasury bill purchased on 12/1/Y2 is not included in the calculation because its
original maturity is not within three months or less from the date of purchase.
PTS: 1
18. ANS:
(a) Cash which is segregated and deposited into a bond sinking fund is presented in a classified balance
sheet as a noncurrent asset because its use is restricted. Bank overdrafts are presented as current liabilities,
unless other accounts at the same bank contain sufficient cash to offset the overdraft. The operating
account that has a positive balance, should be presented as a current asset.
PTS: 1
19. ANS:

(a) The balance per books at 3/31/Y2 is $44,200. The amount would be increased by cash receipts per books
and decreased by cash disbursements per books. Cash receipts per the bank in April were $58,400, but this
amount includes the $10,300 in transit at 3/31. Therefore, cash receipts per books in April are $48,100
($58,400 $10,300). Cash disbursements per the bank in April were $49,700. This amount includes the 3/31
outstanding checks ($12,600) but does not include the 4/30 outstanding checks ($7,000). Therefore, April
cash disbursements per books is $44,100 ($49,700 $12,600 + $7,000). The cash balance per books at
4/30/Y2 is $48,200 ($44,200 at 3/31/Y2, plus $48,100 receipts, less $44,100 disbursements). An alternative
solutions approach is to first compute the 4/30/Y2 bank balance ($46,500 + $58,400 $49,700 = $55,200),
and then adjust for outstanding checks ($55,200 $7,000 = $48,200).
PTS: 1
20. ANS:
B
PTS: 1
21. ANS:
B
PTS: 1
22. ANS:
C
PTS: 1
23. ANS:
C
PTS: 1
24. ANS:
B
PTS: 1
25. ANS:
C
PTS: 1
26. ANS:
D
PTS: