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Cash & Cash Equivalents

1. Lipton Company shows the following account balances in their financial records as of
December 31, 2014.
Checking account at Morgan Bank, P(20,000); Checking account at Land Bank, P500,000;
Payroll account- National bank, P100,000; Foreign bank account-restricted, P 750,000;
Postage stamps, P22,000; Employees’ postdated checks, P30,000; I.O.U. from president’s
brother, P75,000; Traveler’s check P50,000; No-sufficient funds check, P18,000; Petty cash
fund (P16,000 in currency & expenses receipts for P84,000), P100,000 and Cashier’s checks,
P36,000.
What is the correct cash balance to be reported in the balance sheet of Lipton Company on
Dec. 31, 2014?
a. P582,000 c. P702,000
b. P686,000 d. P704,000
2. The cash account in the current asset section in the balance sheet for Heater company showed
a balance of P555,000. It was found to include the following items:
Petty cash fund (P1,000 is in the form of paid vouchers), P5,000; Checking account balance,
per bank statement (A P25,000 check is still outstanding), P255,000, Undeposited receipts
(including a post-dated check for P5,000), P120,000; Currencies and coins awaiting deposit,
P55,000; Bond sinking fund – cash, P100,000; Check drawn by manager, returned by bank
marked NSF, P20,000
What is the correct cash balance for Heater Company’s balance sheet?
a. P404,000 c. P430,000
b. P429,000 d. P529,000
3. Delta Corporation has supplied you with the following list of its bank accounts and cash at
December 31, 2014; Checking account (compensating balance of P15,000 with no restriction),
P48,000; Savings account, 2%, P30,000, Certificate of deposit, 6 months, 10% due April 20,
2015, P60,000; Money market (30-day certificate), current rate, 9.75%, P40,000; Payroll
account, P20,000; Certificate of deposit, 3 months, 10%, due February 15, 2015, P75,000 and
Petty cash, P1,500. What should be the balance to be reported as “Cash and Cash Equivalents”
in the December 31, 2014 statement of financial position of Delta Corporation?
a. P139,500 c. P214,500
b. P199,500 d. P274,500
4. On December 31, 2014, First Company had the following cash balances:
Cash in banks P1,800,000
Petty cash funds (all funds were reimbursed on 12/31/14) 50,000
Cash in banks included P600,000 in a separate bank where-in the company is the required to
maintain a minimum average of P800,000 of 10 workings on a rolling basis.
In the current assets section of First’s December 31, 2014 statement of financial position,
what total amount should be shown as cash?
a. P1,200,000 c. P1,800,000
b. P1,250,000 d. P1,850,000
5. On December 31, 2014, Everlasting Company has the following composition of its cash and
cash equivalents:
Demand deposit, P1,500,000; Certificate of deposit-30 days P500,000; NSF check of
customer, P20,000; Money market placement (due date: June 30, 2015), P1,000,000; Savings
deposit in closed bank, P50,000; IOU from an employee, P30,000; Petty cash fund, P10,000;
Customer’s check dated January 31, 2015, P60,000; Customer’s check outstanding for 18
months, P30,000.
Additional information:
 Check of P100,000 in payment of accounts payable was recorded on December 31, 2014
but mailed to creditors on January 15, 2015.
 Check of P50,000 dated January 31, 2015 in payment of accounts payable was not
recorded and mailed December 31, 2014.
 The company uses the calendar year. The cash receipts journal was held open until
January 15, 2015, during which time, P200,000 was collected and recorded on December
31, 2014.
How much “cash and cash equivalents” should be shown on the December 31, 2014 balance
sheet?
a. 1,910,000 c. 2,160,000
b. 1,960,000 d. 2,360,000
6. Timber Company provided the following data for the purpose of reconciling the cash balance
per book
Balance per book P170,000
Outstanding checks (including certified check of P20,000) 100,000
Deposit in transit 40,000
December NSF checks (of which P10,000 had been 30,000
re-deposited and cleared on December 27)
Erroneous credit to Timber’s account, representing 60,000
proceeds of loan granted to another company
Proceeds of note collected by bank for Timber, net of 150,000
Service charge of P4,000
Erroneous bank charge 3,000
A check of P5,000 in payment of account was recorded 500
by the company as
The correct cash balance to be shown in the company’s December 31, 2014 statement of
financial position is:
a. 285,500 c. 335,500
b. 295,500 d. 345,500
7. In your audit of Glamour Company as of December 31, 2014, you gathered the following:
Balance per book, P600,000; Bank charges, P1,500, Balance per bank, P605,000, Deposit in
transit, P180,000; Customer note collected by bank, P225,000; Interest on customer note,
P9,000; Customer check returned NSF, P37,500; Depositor’s note charged to account,
P150,000. What is the total amount of outstanding checks?
a. 140,000 c. 160,000
b. 150,000 d. 165,000
8. The following information was included in the bank reconciliation for Fox Company. Assume
all other reconciling items are listed below.
Checks & charges returned by bank in June including a June service charge of P5,000,
P900,000; Check issued by company for P9,000 was recorded at P900; Erroneous bank debit
P6,000; Service Charge made by bank in May and recorded on book in June, P10,000: Total
credit to cash in all journals during June P800,000; Customer’s NSF check returned as a bank
charge in June (no entry was made on book), P100,000; Customer’s NSF check returned in
May and re-deposited in June (no entry was made in either May or June), P50,000;
Customer’s NSF check returned in May and recorded in June, P20,000; Outstanding checks at
May 31, P200,000. What is the adjusted amount of cash disbursement for June?
a. 833,100 c. 891,200
b. 883,100 d. 894,100
9. The following information was included in the bank reconciliation of Silicon Company on
December 31, 2014:
Total recorded company receipts for December P850,000
Credit memo for November recorded in December 60,000
Credit memo for December not yet recorded 80,000
Erroneous receipt by the company during December, no 50,000
correction was made until the following year
Erroneous bank disbursement in December corrected by 18,000
bank in December
Deposit of Siliman Co. credited to Silicon Company 20,000
during December
Total receipts per bank in December 900,000
Deposit in transit-December 31, 2014 100,000
Book receipt for P50,000 in Dec. recorded by the company as 5,000
What is the correct/adjusted receipt for December?
a. 845,000 c. 865,000
b. 850,000 d. 895,000
10. Rock Company had the following bank reconciliation at March 31, 2014:
Balance per bank statement, 03/31 P465,000
Deposit in transit P100,000
Debit memo 10,000 110,000
Total P575,000
Less: Outstanding checks P125,000
Credit memo 60,000 185,000
Balance per book, 03/31 P390,000
All reconciliation items at March 31, 2014 cleared though the bank in April. Outstanding
checks at April 30, 2014 totaled P75,000; deposits in transit amounted to P150,000; Credit
memo for April- P80,000; debit memo for April P15,000, Erroneous book receipt on April –
P19,000 but corrected on the same month, bank receipts for April-P600,000 and a bank
disbursement for April P500,000.
What is the amount of cash receipts per book in April?
a. 590,000 c. 649,000
b. 630,000 d. 650,000

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