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Chapters 1-3: Cash and Cash Equivalents, Bank Reconciliation and Proof of Cash

An entity reported cash account balance per ledger of P10,800,000 on December 31, 2019 which
included the following:

Cash in bank – demand deposit 2,800,000


Equity investment – easily convertible to cash 500,000
NSF check of customer 200,000
Money market placement 3,500,000
Saving deposit 1,000,000
IOU from an employee 300,000
Pension fund 1,500,000
Customer check dated January 5, 2019 600,000
Customer check outstanding for 14 months 400,000

 Check of 150,000 in payment of accounts payable dated and recorded on December 31,
2019 but mailed to creditor on January 7, 2020.
 Check of 300,000 dated January 31, 2020 in payment of accounts payable was recorded
and mailed on January 3, 2020.
 The cash receipts journal was held open until January 15, 2019, during which time an
amount of 400,000 was collected and recorded on December 31, 2019.

1. What total amount should be reported as cash on December 31, 2019?


a. 3,550,000
b. 3,000,000
c. 2,800,000
d. 4,050,000
2. What total amount should be reported as cash equivalents on December 31, 2019?
a. 3,500,000
b. 4,000,000
c. 4,500,000
d. 0

Julie Corporation is using an Imprest System in dealing with Petty Cash Funds. The end of the reporting
period is at the end of August. The transactions are as follows:

July 1 – Established the fund amounting to 7,000.

July 31 – Replenished the fund. The petty cash vouchers include the following:

Currencies and coins – 4,000


Transportation – 1,500
Employee contributions for a birthday party – 1,000
Miscellaneous – 500
August 30 – The petty cash fund was not replenished. The petty cash vouchers include the following:

Currencies and coins – 2,000


Transportation – 1,500
Postage – 3,000
Miscellaneous – 500

3. An entry on July 31 would include a


a. Credit to Cash in bank 3,500
b. Debit to Cash in bank 3,000
c. Credit to Miscellaneous expense 500
d. Debit to Cash short/ over 1,000

4. An entry on September 1 would include a


a. Debit to PCF 5,000
b. Debit to Transportation expense 1,500
c. Credit to PCF 5,000
d. Debit to Miscellaneous expense 500

5. If Julie Corporation used fluctuating fund system, an entry on August 31 would include a
a. Debit to PCF 5,000
b. Credit to PCF 5,000
c. Debit to Transportation expense 1,000
d. Debit to Cash short/over 1,000

Reconciliation of PQRS Company’s bank account at October 31, 2019 is:

Balance per bank statement 3,150,000


Checks outstanding: 25,000
Balance per book: 3,558,000
Bank service charge: (3,000)
Note Collected: 20,000

November 30, 2019 data are as follows:

Bank Book
Checks recorded 3,637,000 3,540,000
Deposits recorded 2,585,000 2,700,000
Collection by bank 55,000
NSF check returned 15,000

Additional information:

- Bank erroneous debits and credits amounting to 120,000.


6. What is the amount of November’s outstanding check?
a. 60,000
b. 120,000
c. 50,000
d. 25,000
7. What is the amount of October’s deposit in transit?
a. 720,000
b. 450,000
c. 120,000
d. 0
8. What is the adjusted cash balance on November 30, 2019?
a. 3,575,000
b. 2,718,000
c. 2,758,000
d. 2,098,000

On December 31, 2019, the bank statement on MNO Company had an ending balance of P747,000. The
following data were assembled in the course of reconciling the bank balance:

 The bank erroneously credited MNO Company for P4,200 on December 23.
 During the month, the bank charged back NSF checks amounting to P4,600 of which P1,600 had been
redeposited by December 27.
 Collection for December 31 totaling P20,600 was deposited on January 2, 2020.
 Checks outstanding on December 31 amounted to P60,400.
 Note collected by the bank for MNO Company was P16,000 and the corresponding bank charge was
P1,000.

9. What is the unadjusted cash in bank per ledger on December 31, 2019?
a. 703,000
b. 711,400
c. 691,000
d. 699,000
10. What is the adjusted cash per bank on December 31, 2019?
a. 703,000
b. 711,400
c. 691,000
d. 699,000