CASH AND CASH EQUIVALENTS:

PROBLEM 1 KaraMia Company revealed the following information on December 31, 2018:

Cash on hand – undeposited collections P60,000

Cash in BPI checking account (includes P50,000 compensating balance
against short-term borrowing arrangement) 350,000
Cash in BDO Checking account (30,000)
Cash in BDO savings account 100,000
Cash in Robinson Bank’s Checking account 350,000
Cash in China Bank checking account (50,000)
Cash in BDO’s dollar savings account 100,000
Deposits in a foreign bank 500,000
Cash in money market account 750,000
180-day Treasury bill, purchased November 1, 2018 maturing January 31,
2019 3,500,000
180-day Treasury bill, due March 15, 2019 800,000
Time deposit purchased December 1, 2018 maturing March 31, 2019 4,000,000
Cash legally restricted for addition to plant expected to be disbursed in 2019 2,000,000
Postage stamps unused 5,000
Certificate of time deposit with maturity of 3 months 1,500,000
Commercial paper with maturity of 2 months 1,000,000
Postdated customers checks 200,000
Money order 50,000
Manager check 100,000
Traveler check 1,000,000
Cash in sinking fund set aside for payment of serial bonds ( An amount of
P500,000 is due on June 30, 2019) 2,000,000
Investment in JFC share securities 1,000,000
Petty Cash Fund (includes unreplenished December 2018 petty cash
expense vouchers of P5,000 and employee IOU of P5,000) 50,000
Additional information:

1. A check drawn on KaraMia’s BPI Checking account, payable to supplier, P500,000, was dated
and recorded on December 31, 2017 but not mailed until January 31, 2019.
2. Check payable to KaraMia, deposited December 20, and included in the December 31 BDO
checking account balance, P50,000, but returned by bank on December 30, stamped “NSF”. The
check was redeposited January 2, 2019, and cleared January 3, 2019.
3. A check drawn and recorded against KaraMia’s Robinson Bank’s checking account of P50,000
remains outstanding or uncleared as of December 31, 2018. The check is dated May 1, 2018.
4. The cash in BDO Savings account included a customer check of P10,000 outstanding for 18
months.
5. The investment in JFC shares are actively traded in the Philippine Stock Exchange.

Requirements:

1. Compute for the adjusted cash as of December 31, 2018.

2. Compute for the adjusted cash equivalents as of December 31, 2018.
3. Propose necessary adjusting entries on December 31, 2018.