CASH AND CASH EQUIVALENTS

Summary of Generally Accepted Accounting Principles for Cash

cash items

*unrestricted and
immediately available for use other than for
for use in the current current operations
operation

"Cash" in the current

other non current
asset section

*for payment of operating expense, current liabilities and current assets

Definition of Cash

Cash includes money and other negotiable instrument that is payable in money and
acceptable by the bank for deposit and immediate credit. It includes cash on hand,
demand deposits and other items that are unrestricted for use in the current
operations.

a. Cash on hand
1. undeposited dated cutomer’s checks or customer’s checks awaiting
deposit
2. Traveler’s check
3. Cashier’s/ Treasurer’s and Manager’s checks
4. Postal money orders (a demand credit instrument issued and payable by
a post office)
5. Undeposited cash collections (currencies such as bills and coins)
6. Bank overdrafts ( a written order addressed to the bank to pay an amount
of money to the order of the maker)

b. Cash in bank
1. Demand deposit/commercial deposit/current account/checking account
* generally non-interest bearing
* withdrawable by checks against bank

2. Savings deposit (Savings Account-SA)

* Generally non-interest bearing
* Depositor is issued an ATM card or passbook
* Withdrawable in ATM station or within the bank.

c. Cash fund (current operations)

1. Change fund
2. Payroll fund
Purchasing fund (for purchasing of inventories)
3. Revolving fund (fund that is used for limited or specific purpose set by
management)
 4. Interest fund
5. Petty cash fund (for small and miscellaneous disbursements)
6. Dividend fund
7. Travel fund
8. Tax fund

Fund For Non Current Operations

1. Pension fund – if related liability is current, then pension fund is current,
thus part of cash.
2. Preferred redemption fund - non current investment (unless the preferred
share capital has a mandatory redemption and the redemption is already
within one year from the reporting period in which case this fund is already
part of ash equivalent)
3. Acquisition of Property, plant and equipment – always noncurrent even if
expected to be disbursed next year.
4. Contingent fund – non current investment
5. Insurance fund – Non current investment
6. Sinking fund – if the related bonds payable is current, then sinking fund is
current, thus part of cash.

Classification of cash fund as current or non current should parallel the

classification applied to the related liability. Thus, an entity should classify
such non current asset if the related liability becomes current.

Cash Equivalents

are short-term and highly liquid investments that are readily convertible into cash and
so near their maturity that they present insignificant risk of changes in value because of
changes in interest rates.

Examples:
1. Time deposit
- acquired within three months from maturity date
2. Money market instrument and commercial paper
3. Treasury bills
4. Redeemable preference shares with mandatory redemption period and
acquired three months before maturity.

 If an item cannot be included as cash equivalent because it did not qualify the
cut-off time period ( ie three months), it will always be classified as
investments (short term or long term) depending on the period up to
maturity.
 If the problem is silent with regard to:
1. Treasury note – assumed investment
2. Cash in money market account – cash and cash equivalent
3. Time deposit – cash and cash equivalent

Measurement Issues in Cash and Cash Equivalents

1. Cash - measured at face value

2. Cash in foreign currency - translated to Philippine Peso

3. Deposit in foreign bank - unrestricted (included as cash)

Restricted (if material, classified separately
among noncurrent assets as receivables

4. Cash in closed bank/banks

In bankruptcy - non current asset (estimated realizable value)
5. Bank overdraft - Different banks (current liabilities)
Same bank (netted against the account with
positive balance but cannot be offset
against restricted account.

6. Compensating balance - is the minimum checking or demand deposit

account balance that must be maintained in
connection with a borrowing agreement with a
bank
not legally restricted – part of cash
legally restricted
a. short term- presented as “cash held as
compensating balance”, current
(Receivable)

b. long term- presented as “cash held as

compensating balance” , non
current (Receivable)
*If the problem is silent with regard to
compensating balance, it is assumed
not legally restricted.

7. Undelivered/unreleased check - Reverted back to cash

8. Stale checks/Checks outstanding

for more than six months
from the date of check - Reverted back to cash

9. Postdated checks - checks dated after reporting period

Company’s check – reverted back to
cash
Customer’s check – not yet cash (A/R)

10. IOUs (I owe you) - Part of receivable

11. Equity securities - cannot be classified as cash equivalents

because shares do not have maturity a
date (except redeemable preference
shares)

12. Redeemable preference shares - specified redemption date and acquired

three months before maturity date are
classified as cash equivalents

13. Callable preference shares - shareholder’s equity

14. NSF/DAUD/DAIF - Reverted back as part of receivables.

NSF – no sufficient funds
DAUD – drawn against uncleared
deposits
DAIF – drawn against insufficient funds

15. Expenses advances - Receivable or prepaid expenses

16. Temporary investments in

shares of stock - either FVTPL or FVTOCI
17. Unused credit line - Disclosed in the notes

18. Treasury warrants - a warrant for the payment of money into

or from public treasury. (included as
part of cash)

19. Escrow deposit - restricted amount held in trust for

another party, ie deposit required by
court of law for a pending case.
(other current or noncurrent)

20. Unrecorded cash disbursements - increase recording of disbursements

21. Unrecorded cash collections - increase recording of receipts

22. Certificate of deposits - Invested 3 months before maturity –

cash equivalents
Invested for more than three months –
investment (short or long term)

23. Postage stamps on hand - office supplies

Problem 1

In connection with your audit of Camil Company for the year ended December 31,
2016, you gathered the following:
Savings account at Kapatid Bank P 4,000,000
Current account at Kapuso Bank ( 200,000)
Demand deposit, Kapamilya bank 2,000,000
Cash collection not yet deposited 700,000
Payroll account 1,000,000
Travel advances of Php720,000 for executive travel
for the first quarter of the next year (employee to
reimburse through salary deduction 720,000
A separate cash fund in the amount of P6,000,000
is restricted for the retirement of a long term debt 6,000,000
Camil Company has received a check dated
January 2, 2017, part of SA, Kapatid Acct 300,000
Camil Company has agreed to maintain a cash
balance at all times at Kapuso bank to ensure
future credit availability 400,000
A customer’s check returned by the bank for
insufficient fund, S/A Kapatid Bank 300,000
A check drawn by the Vice-President of the
Corporation dated January 15, 2017 140,000
A check dated May 31, 2016 drawn by the
Corporation against the kapuso Bank in payment of
custom duties. Since the importation did not
materialize , the check was returned by the
customs broker. This was an outstanding check in
the reconciliation of the Kapuso Bank account 820,000
Foreign bank account- restricted (in equivalent
pesos) 2,000,000
Credit memo from a vendor for a purchase return 40,000
Traveler’s check 100,000
Money order 60,000
Petty cash fund (Php8,000 in currency and
expense receipts for Php11,900) 20,000
Treasury bills, due 2/28/17 (purchased 12/15/2016) 400,000

Additional information related to Demand deposit at Kapamilya Bank:

a. Check of Php200,000 in payment of accounts payable was recorded on
December 31, 2016 but mailed to suppliers on January 5, 2017.
b. Check of Php100,000 dated January 5, 2017 in payment of accounts
payable was recorded and mailed on December 31, 2016.
c. The company uses the calendar year. The cash receipts journal was held
open until January 15, 2017, during which time Php400,000 was collected
and recorded on December 31, 2016.

Based on the above information and the result of your audit. Compute for the cash and
cash equivalents that will be reported on the December 31, 2016 statement of financial
position, ______________.

Problem 2

The cash account in the ledger of Pau Company had a balance of Php1,689,600 at
December 31, 2016. An examination of the account, however, disclosed the following:
a. The sales book was left open up to January 5, 2017, and cash sales totaling
Php240,000 were considered as sales in December.
b. Checks of Php148,800 in payment of liabilities were prepared before December
31, 2016, recorded in the books , but not mailed or delivered to payees.
c. Customer’s Post-dated checks totaling Php124,800 are being held by the
cashier as part of cash. The company’s experience shows that post-dated
checks are eventually realized.
d. Customer’s check for Php24,000 deposited with but returned by bank, “NSF” on
December 27, 2016.
e. The cash account includes Php640,000 earmarked for the purchase of personal
computers which will be soon delivered.

The cash balance to be shown on the statement of financial position at December 31,
2016 should be ____________.

Problem 3

You were able to gather the following from the December 31, 2016 trial balance of Mari
Corporation in connection with your audit of the company:
Cash on hand Php 1,000,000
Petty cash fund 20,000
Kapuso bank current account 2,000,000
Kapatid bank current account No. 1 2,160,000
Kapatid bank current account No. 2 ( 160,000)
Kapamilya savings account 2,400,000
Kapamilya time deposit 1,000,000

Cash on hand includes the following items:

a. Customer’s check for Php80,000 returned by bank on December 26, 2016 due to
insufficient fund but subsequently redeposited and cleared by the bank on
January 8, 2017.
b. Customer’s check for Php40,000 dated January 2, 2017, received on December
29, 2016.
c. Postal money orders received from customers, Php60,000.

The petty cash fund considered of the following items as of December 31, 2016.
Currency and coins Php 4,000
Employees’ vales 3,200
Currency in an envelope marked “collections
for charity” with names attached 2,400
Unreplenished petty cash vouchers 2,600
Check drawn by Mari Corporation, payable
to the petty cashier 8,000
-------------------
20,200
===========

Included among the checks drawn by Mari Corporation against the Kapuso bank
current account and recorded in December 2016 are the following:
 Check written and dated December 29, 2016 and delivered to payee on
January 2, 2017, Php160,000.
 Check written on December 27, 2016, dated January 2, 2017, delivered to
payee on December 29, 2016, Php80,000.

The credit balance in the Kapatid bank current account no. 2 represents checks drawn
in excess of the deposit balance. These checks were still outstanding at December 31,
2016.

The savings account deposit in Kapamilya Bank has been set aside by the board of
directors for acquisition of new equipment. This account is expected to be disbursed in
the next 3 months after the end of the reporting period.
Based on the above and the result of your audit, determine the adjusted balances of the
following:
1. Cash on hand

2. Petty cash fund

3. Kapuso bank current account

4. Cash and cash equivalents

Problem 4

While checking the cash accounts of Pau Company on December 31, 2016, you find the
following information:
Balance per books P 677,600
Balance in checking account (outstanding
Checks per books of P98,760) 653,230
Deposit in bank closed by Bangko Sentral 160,000
Deposit in transit 123,450
Currency and coins counted 95,000
Petty cash fund (of which P4,500 is in the
form of paid vouchers) 10,000
Bank charges not yet taken up in the books 580
Bond sinking fund cash 100,000
Receivables from employees 7,000

Book error in recording a check, the correct amount as paid by the bank is
P8,900 instead of P9,800 as recorded in the books.

1. What is the correct cash in bank balance for Pau Company on December 31,
2016?

2. What is the correct cash on hand balance for Pau Company on December 31,
2016?

Problem 5

The books of Mari Company show the following balances at December 31, 2016:

Cash on hand P200,000

Cash in bank – Busan Bank, current account 700,000
Cash in bank – BBO, savings account 4,000,000
Cash I bank – BBI dollar deposit ( unrestricted) $200,000
Cash in bank- Tsina Bank (restricted) $40,000
Cash in money market account P500,000
6-month Time Deposit $120,000
Treasury bill, purchased 12/1/2016, maturing
2/28/2017 P1,600,000
Treasury bond, purchased 3/2016, maturing
2/28/2017 1,000,000
Treasury note 400,000
Unused credit line 4,000,000
Redeemable preference shares, purchased
12/1/2016, due on 3/1/2017 740,000
Treasury shares, purchased 12/1/2016, to be
reissued on 3/5/2017 100,000
Sinking fund 400,000
Additional information:
a. Cash on hand includes a P40,000 check payable to Mari Company dated
January 10, 2017.
 b. During December 2016, checks amounting to P120,000 and P80,000 were
drawn against the current account in payment of accounts payable. The
P120,000 check is dated January 15, 2017. The P80,000 check is dated
December 31, 2016 but was delivered to the payee only on January 15, 2017.
c. The cash in bank-peso savings deposit includes a deposit in escrow in the
amount of P680,000 and a compensating balance amounting to P500,000 which
is legally restricted.
d. The cash in bank- dollar deposit (unrestricted) account includes interest of
$4,000, net of tax, directly credited to Mari Company’s account. The exchange
rate as of year end is $ 1 is to P51.

Requirement: Compute for the amount of cash and cash equivalents to be reported in
the 2016 financial statement.

Problem 6

The cash balance of Camil Company comprises the following:

Cash on hand P 300,000
Cash in bank savings-BBO 600,000
Cash in bank current – BBO ( 240,000)
Cash in bank – deposit in escrow – Tsina Bank 300,000
Cash in bank current – Tsina Bank ( 60,000)
Cash in bank current – Malay Bank ( 90,000)
-----------------------
810,000
=============
Additional information:
a. Cash on hand includes undeposited collection of P20,000.
b. The cash in bank – savings maintained at BBO includes a P100,000
compensating balance which is not restricted.

Required: Compute for the amount of cash to be reported in the statement of financial
position.

Problem 7

On September 1, 2016, the board of directors of Pau Company passed a resolution for
the establishment of a P100,000 petty cash fund. Single disbursements amounting to
P20,000 or more will be made through checks. The following were the transactions
during the period.
2016
Sept 1 Established P100,000 petty cash fund P 100,000
Sept 1 to 21 Disbursements are made fro the ff:
Groceries for use of employees in the
pantry 14,000
Transportation of messenger 5,000
Snacks during meeting 10,000
Gasoline for company vehicles 30,000
Pedicure of secretary of the boss-
authorized 30,000
TOTAL 89,000
Sept 22 Total coins and currencies in the petty
cash box is P5,000. Replenishment is
made.

Required:
1. Provide journal entries.

2. Assuming that the PCF was not replenished and statement financial position are
prepared on September 30, 2016, the adjustment to the PCF is:
Problem 8

As of December 31, 2016, the petty cash fund of Pau Company with a general ledger
balance of P50,000 comprises the following:

Coins and currencies P8,500

Petty cash Vouchers:
Gasoline for delivery equipment 10,000
Medical supplies for employees 6,800
IOUs:
Advances to employees 7,400
A sheet of paper with names of several employees together
with contribution to bereaved employee, attached is a
currency of: 8,000
Checks:
Check drawn to the order of the petty cash custodian 10,000
Personal check drawn by petty cash custodian 8,000
Requirement 1: How much of the petty cash fund will be included as part of cash in Pau
Company’s December 31, 2016 statement of financial position?

Coins P 8,500
Check drawn to the order of
Petty cash custodian 10,000
---------------------
P 18,500
============

Requirement No. 2: What is the entry to replenish the fund as of December 31, 2016?

Problem 9

Mari Company is preparing its September 30, 2016 bank reconciliation. Relevant
information is shown below:
Balance per books P 17,400
Balance per bank statement 20,000
Collection on note by bank (including P500
Interest) 11,500
NSF check returned by bank 6,000
Bank service charges for December 200
Deposits in transit 7,800
Outstanding checks (including certified
Checks of P1,000) 10,000
a. Collection on receivables of P4,500 was erroneously recorded by Mari Company
as P5,400. The actual amount deposited of P4,500 was correctly credited by the
bank in Mari Company’ bank account.
b. Amortization of loan by Abaka Company amounting to P3,000 was erroneously
debited by the bank from Mari Company’s bank account.

Requirements:
1. Bank reconciliation .
2. Prepare the month-end adjusting entry.
Problem 10

Shown below is the bank reconciliation for Mari Company for May 2016:
Balance per bank, May 31, 2016 Php 300,000
Add: Deposits in transit 48,000
----------------------
Total Php 348,000
Less: Outstanding checks Php 56,000
Bank credit recorded
in error 20,000
-------------------- 76,000
----------------------
Cash balance per books, May 31, 2016 Php 272,000
============

The bank statement for June 2016 contains the following data:

Total deposits Php 220,000

Total charges, including an NSF check
of Php16,000 and a service charge
of Php800 192,000

All outstanding checks on May 31, 2016, including the bank credit, were cleared in the
bank in June 30, 2016.

There were outstanding checks of Php60,000 and deposits in transit of Php76,000 on

June 30, 2016.

Based on the above and the result of your audit, answer the following:

1. How much is the cash balance per bank on June 30, 2016?

2. How much is the June receipts per books?

3. How much is the June disbursements per books?

4. How much is the cash balance per books on June 30, 2016?

5. The adjusted cash in bank balance as of June 30, 2016 is

Problem 11

You obtained the following information on the current account of Pau Company during
your examination of its financial statements for the year ended December 31, 2017.

The bank statement on November 30, 2017 showed a balance of Php306,000. Among
the bank credits in November was customer’s note for Php100,000 collected for the
account of the company which the company recognized in December among its
receipts. Included in the bank debits were cost of checkbooks amounting to Php1,200
and a Php40,000 check which was charged by the bank in error against Pau
Company account. Also in November you ascertained that there were deposits in
transit amounting to Php80,000 and outstanding checks totaling Php170,000.

The bank statement for the month of December showed total credits of Php416,000
and total charges of Php204,000. The company’s books for December showed total
debits of Php735,600, total credits of Php407,200, and a balance of Php485,600. Bank
debit memos for December were: No. 008 for service charges, P1,600 and No. 009 on a
customer’s returned checks marked “ no sufficient fund” for Php24,000.
On December 31, 2017, the company placed with the bank a customer’s promissory
note with a face value of Php120,000 for collection. The company treated this note as
part of its receipts although the bank was able to collect on the note only in February
2018.

A check for Php3,960 was recorded in the company cash payments books in
December as Php39,600.

Based on the application of the necessary audit procedures and appreciation of the
above data, you are to provide the answer to the following:

1. How much is the undeposited collections as of December 31, 2017?

2. How much is the outstanding checks as of December 31, 2017?

3. How much is the adjusted cash balance as f November 30, 2017?

4. How much is the adjusted bank receipts for December?

5. How much is the adjusted book disbursements for December?

6. How much is the adjusted cash balance as of December 31, 2017?

Problem 12

The following pertains to Pau Company on December 31, 2016:

Postage stamps P 5,000

Credit memo from a vendor for a purchase Return 100,000
Current account Kapamilya bank (500,000)
Current account at Kapuso bank 10,000,000
Employees postdated check 20,000
Foreign bank account-restricted (in equivalent peso) 5,000,000
IOU from Finance Manager’s brother in law 50,000
Trading securities 75,000
Payroll account 2,500,000
Petty cash fund (Php20,000 in currency and expenses
receipts for Php30,000) 50,000
Postal money order 150,000
Traveler’s check 250,000
Treasury bills, due 1/31/17 (purchased 1/31/16) 1,500,000
Treasury bills, due 3/31/17 (purchased 12/31/16) 1,000,000
Treasury warrants 1,500,000

Additional information:
a. Check of Php1,000,000 in payment of accounts payable was recorded on
December 31, 2016 but mailed to suppliers on January 5, 2017.

b. Check of Php500,000 dated January 15, 2017 in payment of accounts

payable was recorded and mailed on December 31, 2016.
c. Check of Php250,000 dated January 15, 2016 in payment of accounts
payable was recorded and mailed on January 15, 2016. As of the reporting
period, the same has not been encashed by the payee and still outstanding.

How much cash and cash equivalents should Pau Company report on the December
31, 2016 statement of financial position?
a. Php15,650,000 c. Php17,170,000
b. Php17,000,000 d. Php18,650,000
Problem 13

Total cash and cash equivalent of Php63,250,000 reported by Mari Company on

December 31, 2017 include the following information:
a. Two certificates of deposits, each totaling Php5,000,000, having a maturity of
120 days.
b. A check is dated January 12, 2018 in the amount of Php1,250,000.
c. A commercial paper of Php21,000,000 which due in 90 days.
d. Currency and coins on hand amounted to Php770,000.

Mari Company has agreed to maintain a cash balance of Php5,000,000 in one of its
banks at all times to ensure future credit availability (this amount is legally restricted as
to withdrawal and was included in the above balance)

2. How much is the correct amount of cash and cash equivalents that Mari
Company should report in its December 31, 2017 statement of financial
position?

Problem 14

The cash account of Pau Company on December 31, 2016 has a balance of
P4,620,000 and it consists of the following:
Balance in savings account with a bank closed by the BSP P720,000
Bills and coins on hand 1,055,600
Checking account balance in Kapuso bank 440,000
Credit memo from supplier’s for purchase returns 130,000
Customer’s check dated January 15, 2016 160,000
Customer’s check dated January 16, 2017 600,000
Customer’s check returned on 12/31/16 for lack of
sufficient fund 1,000,000
IOU of an employee 8,000
Money order 16,000
Petty cash including paid cash vouchers of Php16,500 40,000
Postage stamps 2,400
Traveler’s checks 448,000
TOTAL 4,620,000

3. The correct cash and cash equivalents balance on December 31, 2016 is
_________.

Problem 15

The cashier misplaced all the bank statements for the past year. You reviewed the
accounting records and discovered that the following journal entry was made to
reconcile the June 30, 2016 bank records and accounting records:

Accounts receivable 152,024

Miscellaneous expense 1,250
Notes receivable 20,000
Interest revenue 1,000
Cash 132,274

Pre adjustment cash balance in the accounting records was Php768,370, outstanding
checks were Php20,750 and no other adjustments were required.

4. What is the bank statement balance at June 30, 2016?

Problem 16
Assume the following data of Pau Company of its cash and short-term, highly liquid
investments for December 31, 2017:

Cash on hand Php 800,000

Checking account No. 421, Kapuso bank 2,000,000
Checking account No. 724, Kapuso bank ( 300,000)

Securities Date Acquired Maturity Date Amount

120-day certificate of
deposit 12/10/17 1/31/18 P6,000,000
BSP-Treasury bills (No.1) 11/30/17 4/30/18 50,000,000
BSP-Treasury bills (No.2) 10/31/17 1/20/18 10,000,000
180 days commercial
papers 12/1/17 6/20/18 14,000,000
Money market funds 11/21/17 2/10/18 20,000,000

The correct cash and cash equivalents balance on December 31, 2017 is

Problem 17

The December 31, 2016 trial balance of Mari Company includes the following accounts:

Petty cash fund P 700,000

Current account-Kapuso bank 40,000,000
Current account-Kapamilya bank (overdraft) ( 2,500,000)
120-day money market placement-K bank 10,000,000
Time deposit-KB bank 20,000,000

Additional information:
a. The petty cash fund includes unreplenished December 2016 petty cash
expense vouchers for Php150,000 and an employee check for Php50,000
dated January 31, 2017.
b. A check for Php1,000,000 was drawn against Kapuso bank current account
dated and recorded December 27, 2106 but delivered to payee on January
10, 2017.
c. The KB bank time deposit is set aside for land acquisition in early January
2017.

What should be reported as “cash and cash equivalents” on December 31, 2016?

Problem 18

Camil Company’s ledger showed a balance in its cash account at December 31, 2016
of Php1,364,500, which was determined to consist of the following:
Petty cash fund P 7,200
Checking account in Kapamilya bank ( check
of Php12,000 is still outstanding) 673,500
Notes receivable in the possession of a collecting
agency 50,000
Undeposited receipts, including a postdated check for
Php10,500 and traveller’s check for Php10,000 356,000
Bond sinking fund cash 255,000
IOUs signed by employees 9,900
Paid vouchers, not yet recorded 12,900
TOTAL 1,364,500

At what amount should “cash on hand and in bank” be reported on Camil Company’s
statement of financial position?
Problem 19

Upon examination of the petty cash fund of Kapuso Company on Jan 3, 2017, the
following
items were found:
Total bills and coins Php 18,250
Certified check of general manager
dated December 15, 2016 15,000
Petty cash vouchers (PCVs) not yet
replenished:
PCV No.0021 Postage stamps 2,800
PCV No.0022 Supplies 6,500
PCV No.0023 IOU employee 5,000
Company check representing replenishment
of petty cash fund 51,500
Unused stamps 1,200
An envelope containing contributions of
employees for the death of a fellow
employee (contents intact) 30,000

The petty cash fund was established for an amount of Php100,000.

1. What is the correct amount of petty cash fund at December, 2016?

2. What is the amount of cash shortage or overage?

Problem 20

The following account balances are shown in the accounting records of Camil
Company:

January 1, 2016 December 31, 2016

Cash Php 124,000
Accounts receivable 134,000 Php 182,000
Merchandise inventory 172,000 156,000
Accounts payable 106,000 96,000

Sales for 2016 amounted to Php1,596,000 while cost of goods sold was Php1,166,000.
Cash operating expenses amounted to Php214,000. All sales and purchases were
made on credit.

Assuming that there were no other relevant transactions , what is the cash balance at
December 31, 2016?
Additional Exercises.

A. Data concerning the cash records of Mabuhay Company for the month of November
and December 3, 2017 are shown below:

November 30 December 31
Book balance 56,000 ?
Book debits 319,000
Book credits 282,000
Bank balance 150,000 204,000
Bank debits ?
Bank credits 273,000
Notes collected by bank 22,500 30,000
Bank service charge 200 1,000
NSF checks 8,800 14,000
Overstatement of check in payment of
salaries 19,000 12,000
Deposits in transit 60,000 112,500
Outstanding checks 97,500 178,500
Deposit of Matuhay Company
erroneously credited to Mabuhay Co.’s 24,000 18,000
account
Requirements:
Compute for the following by preparing a proof of cash.
a. Unadjusted book balance
b. Unadjusted bank disbursements in December.
c. Adjusted cash balance as of November 30.
d. Adjusted cash receipts in December.
e. Adjusted cash disbursements in December .
f. Adjusted cash balance as of December 31.

B. Computation of Deposits in Transit and Outstanding Checks

Taken from Mabuhay Company are the following:

Balance per bank statement, October 31 P 46,000
Balance per bank statement, November 30 38,000
Total credits per bank statement, November 15,000
Balance per books, October 31 37,000
Total credits per books, November 52,000
Balance per books, November 30 16,000

Collection of note directly credited to Mabuhay’s

account in October 5,000
Proceeds of loan directly credited to Mabuhay’s
account in November – not yet recorded
in the books 3,000
NSF checks returned in October 9,000
NSF checks returned in November – not yet
recorded in the books 2,000

Check received from a customer amounting to

P2,000 was recorded in the books in October as 20,000
Check issued to a supplier amounting to P1,000
was recorded in the books in November as 10,000
Collections in November for P13,000 was
recorded as 3,000

Checks properly drawn for P19,000 was recorded

 by the bank in October as 1,900
Deposit amounting to P15,000 was recorded by
the bank in November as 1,500

Deposits in transit – October 31 8,000

Outstanding checks – October 31 21,900

Requirements:
a. Compute for the deposits in transit and outstanding checks as of November 30.
b. Prepare the bank reconciliation for the month ended November 30.