5 CASH AND CASH EQUIVALENTS

Technical Knowledge
• To understand the concept of cash.
• To understand the concept of cash equivalent.
• To identify items considered cash.
• To identify items considered cash equivalent.
• To understand the imprest system of internal control.
• To know the accounting for petty cash fund.

A. Definition of Cash
From the point of view of a layman, "cash" simply means money. Money is the standard
medium of exchange in business transactions. It refers to the currency and coins which
are in circulation and legal tender.

However, in the accounting parlance, the term "cash" has a s[special and broader
meaning. It connotes more than money.

As contemplated in accounting, cash includes "money and any other negotiable

instrument that is payable in money and acceptable by the bank for deposit and
immediate credit"

Accordingly, cash includes checks, bank drafts and money orders because these are
acceptable by the bank for deposit or immediate encashment.

B. Unrestricted Cash
There is no specific standard dealing with "cash". The only guidance provides that
an entity shall classify an asset as current when the asset is cash or cash equivalent
unless it is restricted from being exchanged or used to settle a liability for at least
twelve months after the end of the reporting period. Accordingly, to be reported as
"cash" an item must be unrestricted in use.

The following cash items are included I "cash":

a. Cash on hand - This includes undeposited cash collections and other cash items
awaiting deposit such as customers' checks, cashier's or manager's checks, travellers
checks, bank drafts and money orders.

b. Cash in bank - This includes demand deposit or checking account and savings deposit
which are unrestricted as to withdrawal.

c. Cash fund - fund set aside for current purposes such as petty cash fund, payroll fund,
and dividend fund.
C. Cash Equivalent
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 rate. Also stated that only highly liquid investments that
are acquired three months before maturity can qualify as cash equivalent.
Examples:
a. Three-month treasury bill
b. Three month time deposit
c. Three month money market instrument or commercial paper

Note that what is important is the date of purchase which should be three months or less
before maturity.

D. Measurement of Cash
Cash is measured at face value. Cash in foreign currency is measured at the current
exchange rate.

If a bank or financial institution holding funds of an entity is in bankruptcy or financial

difficulty, cash should be written down to estimated realizable value if the amount
recoverable is estimated to be lower than the face value.

E. Financial Statement Presentation

The caption "cash and cash equivalent" should be shown as the first item among the
current assets. This caption includes all cash items, such as cash on hand, cash in bank,
petty cash fund, and cash equivalents which are unrestricted in use for current operations.

F. Investment of Excess Cash

Excess cash may be invested in time deposits, money market instruments and treasury
bills for the purposes of earning interest income.

These investments should be classified as follows:

a. If the term is three months or less, they are classified as cash and cash equivalent
b. If the term is more than three months but within one year, they are classified as
short-term financial assets or temporary investment and presented as current assets
c. If the term is more than one-year, such investments are classified as noncurrent
or long-term investments.

G. Foreign Currency
Cash in foreign currency should be translated to local currency using the current exchange
rate. Deposits in foreign countries which are not subject to any foreign exchange restriction
are included in cash, otherwise, if restricted should be classified separately among non-
current assets and the restriction should be clearly disclosed or indicated.

H. Cash Fund for a Certain Purpose

 If the cash fund is set aside for use in current operations or for the payment of current
obligation, it is current asset and included as part of cash and cash equivalent. Examples:
petty cash fund, payroll fund, travel fund, interest fund, dividend fund, tax fund.

Cash fund set aside for noncurrent purpose or payment of noncurrent obligation is shown as
long-term investment. Examples: sinking fund, preference share redemption fund,
contingent fund, insurance fund,.

The classification of a cash fund as current or noncurrent should parallel the classification of
related liability.

For example, a sinking fund that is set aside to pay a bond payable shall be classified as
current asset when the bond payable is already due within one year after the end of reporting
period. However, a cash fund set aside for the acquisition of a noncurrent asset should be
classified as noncurrent regardless of the year of disbursement.

I. Bank Overdraft
When the cash in bank account has a credit balance, it is said to be an overdraft. The
credit balance in the cash in bank account results from the issuance of checks in excess of
the deposits.

A bank overdraft is classified as a current liability and should not be offset against other bank
accounts with debit balances.

However, when an entity maintains two or more accounts in one bank and one account
results in an overdraft, such overdraft can be offset against the other bank account with a
debit balance in order to show "cash, net of overdraft".

J. Compensating Balance
A compensating balance generally takes the form of minimum checking or demand
deposit account balance that must be maintained in connection with a borrowing
arrangement with a bank.

For example, an entity borrows $5,000,000 from a bank and agrees to maintain a 10%
or $500,000 minimum compensating balance in a demand deposit account.

In effect, this arrangement results in the reduction of the amount borrowed because the
compensating balance provides a source of fund to the bank as partial compensation for the
loan extended.

If the deposit is not legally restricted as to withdrawal by the borrower because of an informal
compensating balance agreement, the compensating balance is part of cash.

If the deposit is legally restricted because of a formal compensating balance agreement,

the compensating balance is classified separately as "cash held as compensating balance"
under current assets if the related loan is short-term.

If the related loan is long-term, the compensating balance is classified as noncurrent

 investment.

K. Undelivered or Unreleased Check

An undelivered or unreleased check is one that is merely drawn and recorded but not given
to the payee before the end of the reporting period.

Accordingly, and adjusting entry is required to restore the cash balance:

Cash xx
Accounts payable or other appropriate account xx

L. Postdated Check Delivered

A postdated check delivered is a check drawn, recorded and already given to the payee but
it bears a date subsequent to the end of reporting period.

The original entry recording the postdated check shall be reversed :

Cash xx
Accounts payable or other appropriate account xx

M. Stale check
A stale check is a check not encashed by the payee within a relatively long period of time.

In banking practice, a check becomes stale if not encased within six months from the time
of issuance.

If the amount of stale check is immaterial, it is simply accounted for as miscellaneous

income as follows:

Cash xx
Miscellaneous income xx

However, if the amount is material and liability is expected to continue, the cash is restored
and the liability is again set up. The journal entry is as follows:

Cash xx
Accounts payable or other appropriate account xx

N. Window Dressing
Window dressing is a practice of opening the books of accounts beyond the close of the
reporting period for the purpose of showing a better financial position and performance.
Examples:

a. By recording as of the last day of the reporting period collections made subsequent to
the close of the period.
b. By recording as of the last day of the reporting period payments of accounts made
 subsequent to the close of the period.

Such practices are unacceptable and entries made to window dress must be reversed
to correct the statements.
O. Lapping
Lapping is a practice used for concealing a cash shortage. This consist of misappropriating
a collection from one customer and concealing this defalcation by applying a subsequent
collection made from another customer

Lapping adalah suatu jenis penggelapan yang dilakukan dengan cara penundaan pembukuan atas penagih
rekening tagihan untuk menyembunyikan adanya kekurangan uang tunai.

Auditor dapat mengungkapkan jenis penggelapan ini dengan cara membandingkan nama, jumlah, dan tang
dalam tembusan advice penyetoran dengan transaksi penerimaan tunai dalam jurnal penerimaan yang berk
Oleh karena prosedur pengungkapan lapping tersebut akan memakan banyak waktu, maka pemeriksa haru
apabila keadaan menunjukkan adanya kecenderungan terjadi penggelapan sebagai akibat dari sistem yang

P. Kitting
Kitting is another device used to conceal a cash shortage. Kitting is possible when an entity
maintains current accounts in different banks. Kitting is usually employed at the end of the
month.

Kitting occurs when a check is drawn against a first bank and depositing the same check
in a second bank to cover the shortage in the latter bank. No entry is made for both the
drawing and deposit of the check.

Kiting adalah penyalahgunaan penerimaan kas yang dilakukan secara sengaja untuk sementara waktu atau
Dalam prakteknya, kiting digunakan untuk menyembunyikan defisit ataupun menggelapkan alur aliran arus
seperti melakukan transfer uang dari satu pihak ke pihak lain.
Contoh kiting : penarikan dana di satu bank, yang akan disimpan di bank lain, kemudian ditarik lagi dan aka

Q. Accounting for Cash Shortage or Overage

When a cash count shows cash which is less than the balance per book, there is cash
shortage to be recorded as follows:

Cash short or over xx

Cash xx

Hence, if the cashier or cash custodian is held responsible for the cash shortage, the
adjustment should be:

Due from cashier/cash custodian xx

Cash short or over xx

However, if reasonable efforts fail to disclosed the cause of the shortage, the adjustment
will be:

Loss from cash shortage xx

 Cash short or over xx

If the amount of cash shortage is not material, it can be debited to miscellaneous expense.

Where the cash count shows cash which is more than the balance per book, there is a
cash overage to be recognized as follows:

Cash xx
Cash short or over xx

The cash overage is treated as miscellaneous income if there is no claim on the same. The
journal entry is

Cash short or over xx

Miscellaneous income xx

But where the cash overage is properly found to be the money of the cashier, the journal
entry is:

Cash short or over xx

Payable to cashier xx
R. Imprest System
The imprest system is a system of control of cash which requires that all cash receipts
should be deposited intact and all cash disbursements should be made by means of checks.

S. Petty Cash Fund

The petty cash fund is money set aside to pay small expenses which cannot be paid
conveniently by means of check.

Two methods of handling the petty cash, namely:

a. Imprest fund system

b. Fluctuating fund system

The imprest fund system is the one usually followed in handling petty cash transactions.

Illustration: Imprest fund system

2017

Nov. 10. The entity established an imprest fund, $10,000.

Petty cash fund 10,000

Cash in bank 10,000

Nov. 11-25 Paid expenses out of the fund.

No formal entries are made. The petty cashier generally requires a signed
cash voucher for such payments and simply prepares memorandum entries
in the petty cash journal.

Nov. 29. Replenished the fund. The petty cash items include the following:

Currency and coins 2,000

Supplies 5,000
Telephone 1,800
Postage 1,200
Entry:
Supplies 5,000
Telephone 1,800
Postage 1,200
Cash in bank 8,000

Dec. 31. The fund was not replenished.

The fund is composed of the following: currency and coin, $7,000; supplies,
$1,500; postage, $500; miscellaneous expense, $1,000.

Supplies 1,500
Postage 500
Miscellaneous expense 1,000
Petty cash fund 3,000
2018

Jan. 1. The adjustment made on December 31, 2017 is to be reversed.

Petty cash fund 3,000

Supplies 1,500
Postage 500
Miscellaneous expense 1,000

Feb. 1. The fund is replenished and increased to $15,000.

The composition of the fund: currency and coins' $1,000; supplies $4,500,
postage, $3,000; and miscellaneous, $1,500.

Petty cash fund 5,000

Supplies 4,500
Postage 3,000
Miscellaneous expense 1,500
Cash in bank 14,000

Illustration : Fluctuating fund system

The system is called fluctuating fund system because the checks drawn to replenish the
fund do not necessarily equal the petty cash disbursement.

Nov. 10. The entity established a petty cash fund, $10,000.

Petty cash fund 10,000

Cash in bank 10,000

Nov. 11-25 Paid expenses out of the fund, $8,000.

Expenses 8,000
Petty cash fund 8,000

Nov. 29. Issued a check for $10,000 to replenish the fund.

Petty cash fund 10,000

Cash in bank 10,000

At this point, the petty cash balance per book is $12,000.

Dec. 1-30. Expenses paid out of the fund, $9,000

Expenses 9,000
Petty cash fund 9,000
31. Issued a check for $15,000 to replenish the fund.

Petty cash fund 15,000

Cash in bank 15,000
a penundaan pembukuan atas penagihan

embandingkan nama, jumlah, dan tanggal yang tercantum

unai dalam jurnal penerimaan yang berkaitan dengan slip penyetoran.
an banyak waktu, maka pemeriksa harus melakukan prosedur tersebut
elapan sebagai akibat dari sistem yang lemah.

ra sengaja untuk sementara waktu ataupun untuk jangka waktu yang lama / permanen.
ataupun menggelapkan alur aliran arus kas

bank lain, kemudian ditarik lagi dan akan disimpan di bank ketiga dan seterusnya.
 5 LEARNING CHECK
1. Define cash.
cash is a valuable asset in the form of money or a check that is identified as a yardstick for buying and

2. Explain the meaning of unrestricted cash.

Unrestricted cash refers to the value of currency that is not subject to a particular use.
Unlimited cash can be used for any purpose because it is not allocated for any particular use and is ve

3. Define cash equivalent.

Cash equivalents are the total value of cash which includes items similar to cash; cash and cash equiv

4. Explain the measurement of cash.

cash is measured at face value and against foreign currency measured at the current exchange rate

5. Explain the financial statement presentation of "cash and cash equivalent"

The text "cash and cash equivalents" should be displayed as the first item among items
current assets. This information includes all cash and cash equivalents items that are not restricted in c
Cash and cash equivalents refer to line items on the balance sheet that report the value of a company'

6. Explain the classification of investments of excess cash in time deposits, money

market instruments and treasury bills.
Excess cash may be invested in time deposits, money market instruments and treasury
bills for the purposes of earning interest income.
a. If the term is three months or less, they are classified as cash and cash equivalent
b. If the term is more than three months but within one year, they are classified as
short-term financial assets or temporary investment and presented as current assets
c. If the term is more than one-year, such investments are classified as noncurrent
or long-term investments.

7. Explain the treatment of foreign currency.

Foreign exchange accounting involves recording transactions in a currency other than a person's funct
when foreign currency transactions are designed to be an economic hedge of net investment in the for

8. Explain the classification of a cash fund.

If the cash fund is set aside for use in current operations or for the payment of current
obligation, it is current asset and included as part of cash and cash equivalent.

Cash fund set aside for noncurrent purpose or payment of noncurrent obligation is shown as
long-term investment.
 should parallel the classification of related liability

9. Explain a bank overdraft.

An overdraft facility linked to your everyday transaction account is an unsecured line of credit designed to co

10. Explain a compensating balance.

A compensating balance is a minimum deposit that must be maintained in a bank account by a borrow
The borrower cannot use the money but is required to disclose it in the borrower's notes attached to its

11. Explain the undelivered check, postdated check delivered and stale check.
An undelivered or unreleased check is one that is merely drawn and recorded but not given
to the payee before the end of the reporting period.

A postdated check delivered is a check drawn, recorded and already given to the payee but
it bears a date subsequent to the end of reporting period.

A stale check is a check not encashed by the payee within a relatively long period of time.

12. Explain the accounting for cash shortage or cash overage.

situation in which the physical amount of cash on hand differs from the book recorded amount of cash.
When a business is involved with over-the-counter cash receipts, occasional errors may occur in makin
The cash shortage or overage is revealed when the physical cash count at the end of the day does no

13. Explain the imprest system of internal control.

The imprest system is a system of control of cash which requires that all cash receipts
should be deposited intact and all cash disbursements should be made by means of checks.

14. What is a petty cash fund?

The petty cash fund is money set aside to pay small expenses which cannot be paid
conveniently by means of check.

15. Explain the two methods of accounting for petty cash fund.
a. Imprest fund system
Fixed Method is a method of petty cash bookkeeping in which the petty cash account is alwa
Every time a cash disbursement occurs, the petty cash holder does not immediately record
b. Fluctuating fund system
Price changes due to the influence of the rate of demand and supply of goods or services
ed as a yardstick for buying and selling

particular use.
for any particular use and is very liquid.

ar to cash; cash and cash equivalents must be current assets.

at the current exchange rate

em among items
items that are not restricted in current operations.
t report the value of a company's assets in cash or readily convertible into cash.

nts and treasury

ash and cash equivalent

they are classified as
resented as current assets
assified as noncurrent

ency other than a person's functional currency

dge of net investment in the foreign entity, and are effective as such.

ment of current

obligation is shown as
cured line of credit designed to cover short-term cash flow shortfalls.

d in a bank account by a borrower.

borrower's notes attached to its financial statements

corded but not given

ven to the payee but

ong period of time.

book recorded amount of cash.

sional errors may occur in making change.
nt at the end of the day does not agree with the cash register tape

ll cash receipts
by means of checks.

annot be paid

h the petty cash account is always a fixed amount.

er does not immediately record it, but only collects evidence of the expenditure transaction

supply of goods or services

5 problems
Problem 5-1 Multiple Choice
1. As contemplated in accounting, cash includes

a. Money only.
b. Money and any negotiable instrument.
c. Any negotiable instrument
d. Money and any negotiable instrument that is payable in money and acceptable
by the bank for deposit and immediate credit.

2. To be reported as "cash" the cash and cash equivalent must be

a. Unrestricted in use for current operations.

b. Available for the purchase of property, plant and equipment.
c. Set aside for the liquidation of long-term debt.
d. Deposited in bank.

3. The amount reported as "cash: should normally exclude

a. Postdated check payable to the company.

b. Cash in payroll account.
c. Undelivered checks written and signed by the company.
d. Petty cash.

4. Cash equivalents are

a. Short-term and highly liquid investments that are readily convertible into cash.
b. Short-term and highly liquid investments that are readily convertible into cash
with remaining maturity of three months.
c. Short-term and highly liquid investments that are readily convertible into cash
and acquired three months before maturity.
d. Short-term and highly liquid marketable equity securities.

5. If the end of the reporting period is December 31, 2017, which of the following
cannot qualify as cash equivalent?

a. Three-month treasury bill due March 15, 2018.

b. Six-month treasury note due March 15, 2018.
c. Three-year treasury note purchased on December 31, 2017 and due March 15,
2018.
d. One-month money market placement.

6. Which is false concerning valuation of cash and cash equivalents?

a. Cash is valued at face value.

b. Cash in foreign currency is valued at the current exchange rate.
 c. If a bank of financial institution holding the funds of the company is in bankruptcy
or financial difficulty, cash should be written down to estimated realizable value.
d. Cash equivalents should be valued at maturity value meaning face value plus
interest.

7. If material, deposits in foreign bank which are subject to foreign exchange restriction
should classified

a. Separately as current asset, with appropriate disclosure.

b. Separately as noncurrent asset with appropriate disclosure.
c. Be written off as an extraordinary loss.
d. As part of cash and cash equivalent.

8. Bank overdraft

a. Is a debit balance in a cash in bank amount.

b. Is offset against demand deposit account in another bank.
c. Which cannot be offset is classified as current liability.
d. Which cannot be offset is classified as noncurrent liability.

9. A compensating balance

a. must be included in cash and cash equivalent.

b. Which is legally restricted and related to a long-term loan is classified as
current asset.
c. Which is legally restricted and related to a short-term loan is classified as
current asset.
d. Which is not legally restricted as to withdrawal is classified separately
separately as current asset.

10. Which means " that the check has been merely drawn and recorded but not given
to the payee at the end of the reporting period"?

a. Undelivered check
b. Postdated check delivered
c. Stale check
d. Outstanding check

11. The internal control features that is specific to petty cash is

a. Separation of duties.
b. Assignment of responsibility
c. Proper authorization
d. Imprest system

12. What is the major purpose of an imprest petty cash fund?

a. To effectively plans cash inflows and outflows.

b. To ease the payment of cash to vendors.
c. To determine the honesty of the petty cashier.
d. To effectively control cash disbursements
 13. The petty cash fund account under the imprest system is debited

a. Only when the fund is created.

b. When the fund is created and every time it is replenished.
c. When the fund is created and when the size of the fund is increased.
d. When the fund is created and when the fund is decreased.

14. What happens when a petty cash is in use?

a. Expenses paid with petty cash are recorded when the fund is replenished.
b. Most small amounts are paid from cash receipts before they are deposited.
c. Petty cash is debited when the fund is replenished.
d. Petty cash is credited when the fund is replenished.

15. In reimbursing the petty cash fund, which of the following is true?

a. Cash is debited
b. Petty cash is debited
c. Petty cash is credited
d. Expenses accounts are debited

Problem 5-2
The cash account in Roxan Company's ledger on December 31, 2017 showed a
balance of $5,250,000 which included the following:

Petty cash fund $ 50,000

Undeposited receipts, including post dated check of $200,000 1,300,000
Cash in bank 2,500,000
Cash in sinking fund investment 1,000,000
Vouchers paid out of collections, not yet recorded bond 250,000
IOU's signed by employees 150,000
$ 5,250,000
Required:
At what amount should Roxan Company reports as cash on December 31, 2017
statement of financial position?

Problem 5-3
The following information pertains to Avery Company on December 31, 2017:

Correct cash balance in general checking account with First Bank $ 5,000,000
Overdraft in special checking account with Second Bank current liabilit (500,000)
Cash accumulated in a special fund that will be used for
plant expansion investment 2,000,000
Cash surrender value asuransi investment 100,000
Change fund uang tukar 50,000
Currency and coins in petty cash fund (the company has not replenish
the fund to the imprest amount of $20,000) 15,000

Required:
What is the total amount that Avery Company should report as "cash" in the current
assets section of the statement of financial position on December 31, 2017?
Problem 5-4
The petty cash fund for Axel Company on December 31, 2017 is composed of the
following:

Currencies $ 4,000
Coins 1,000
Petty cash vouchers:
Gasoline 2,500
Supplies adjusting 1,500
IOU's 3,000
A check drawn by Axel Company to the order of N. Vidal, petty cash
custodian, representing her salary 6,000
A sheet of paper with the names of several employees together with a
contribution for a wedding gift. Attached to the sheet of paper
is a currency of 2,000

The petty cash general ledger account has an imprest balance of $20,000.

Required:
What is the correct petty cash balance on December 31, 2017?

Problem 5-5
On December 31, 2017, the cash account of Terry Company has a debit balance of
$3,500,000. An analysis of the cash account shows the following details:

Undeposited collections $ 60,000

Cash in bank-RPB checking account 500,000
Cash in bank- MB (overdraft) (50,000)
Undeposited NSF check received from customer, dated
December 31, 2016 15,000
Undeposited check received from customer, dated January 15, 2017 25,000
Cash in bank-RPB (fund for payroll) 150,000
Cash in bank-RPB (savings deposit) 100,000
Cash in bank-RPB (money market instrument, 90 days) 2,000,000
Cash in foreign bank (restricted) 100,000
IOU's from officers 30,000
Sinking fund cash 450,000
Listed stock held as temporary investment 120,000
$ 3,500,000

Required:
a. Compute the cash and cash equivalent that should be shown in the statement of
financial position at December 31, 2017?

b. Prepare one adjustment to correct the cash account.

Problem 5-6
The cash account of Kelly Company on December 31, 2017 include the following:

Cash on hand $ 500,000

Petty cash fund 20,000
Cash in bank 2,000,000
$ 2,520,000

Cash on hand includes:

a. Customer check of $40,000 returned by bank on December 26, 2017 due to insufficient
fund but subsequently redeposited and cleared by bank January 5, 2018.

b. Customer check of $60,000 dated January 15, 2017 received December 22, 2017.

c. Postal money order received from customers, $50,000.

Petty cash fund consist of the following items:

Currency and coins $ 1,000
Employees' vales 3,000
Currency in envelop marked "collections for New Year
party 2,000
Check drawn by Kelly Company payable to petty cashier 14,000
$ 20,000

Included among the checks drawn by Kelly Company against its current account and
recorded in December 2017 are:

a. Check written and dated December 22, 2017 and delivered to payee on January 5, 2018
$100,000.

b. Check written December 26, 2017 and dated January 31, 2018 delivered to payee on
December 26, 2017, $150,000.

Required:
Compute for the correct :
a. Cash on hand.
b. Petty cash fund.
c. Cash in bank
d. Prepare the adjusting entries on December 31, 2017.

Problem 5-7
As part of internal control, Blackberry Company established a petty cash fund. The following
are the transactions in connection with the petty cash:

1. Established a petty cash fund of $10,000 on January 2 of the current year:

2. Petty cash expenses-January 1-31 are:

Postage $ 1,500
Supplies 5,500
Transportation 1,200
Miscellaneous 800
3. The fund is replenished on February 1 and increased by $5,000.

Required:
Give all the journal entries to record the above transactions assuming the system used is:
a. Fluctuating fund system
b. Fluctuating fund system

Problem 5-8
On December 31, 2017 Timer Company had the following cash balances:

Cash in bank $ 5,000,000

Petty cash fund 50,000
Time deposit, one year, due March 1, 2018 1,000,000
Savings deposit 500,000

A check of $100,000 dated January 15, 2018 in payment of accounts payable was recorded
and mailed on December 28, 2017.

Required:
In the current assets section of December 31, 2017 statement of financial position, what
amount should be reported as "cash and cash equivalent".?

Problem 5-9
The cash balance of Collin Company consists of the following on December 31, 2017:

Cash on hand, including customer postdated check of $100,000 $ 2,500,000

Cash in bank, net of bank overdraft of $500,000 in a separate bank 3,000,000
Petty cash, including IOU from employee of $10,000 50,000
Saving deposit 2,000,000

Required:
Compute for the correct cash balance.

Problem 5-10
The December 31, 2017 trial balance of Silvester Company includes the following accounts:

Cash on hand $ 200,000

Petty cash fund 20,000
Bank of Tokyo-current account 5,000,000
PCI Bank-current account 4,000,000
Royal Bank-current account (100,000)
Bank of Commerce-savings account 250,000
Bank of Commerce-time deposit, 90 days 2,000,000

Cash on hand includes the following items:

Customer's check of $35,000 returned by bank December 26, 2017 due to insufficient fund
but subsequently redeposited and cleared by bank on January 10, 2018.
Customers' check for $15,000 dated January 10, 2017, received December 23, 2017.

Petty cash fund consisted of the following items as of December 31, 2017.

Currency and coins $ 5,000

IOU's from officers 2,000
Unreplenished petty cash vouchers 12,000
$ 19,000

Included among the checks drawn by Silvester Company against the Bank of Tokyo-current
account and recorded in December 31, 2017 are the following:

Checks written and dated December 23, 2017 and delivered to payee on January
3, 2018, $25,000.

Check written December 26, 2017, dated January 30, 2018, delivered to payee
on December 28, 2017, $45,000.

The credit balance in Royal Bank-current account represents checks drawn in excess of
the deposit balance which are still outstanding at December 31, 2017.

The savings account deposit in Bank of Commerce has been set aside by the Board of
Directors for acquisition of new equipment. This amount is expected to be disbursed in
the next three months from the end of the reporting period.

Required:
a. Compute for :
1. Cash on hand.
2. Petty cash fund.
3. Bank of Tokyo-current account
4. Cash and cash equivalent

b. Prepare the adjusting entries on December 31, 2017.

 50,000
1,100,000
2,500,000
1,000,000
250,000
150,000
3,650,000

5,000,000
50,000
15,000

5,065,000
 4,000
1,000
6,000 adjusting
2,500
1,500
3,000
7,000
11,000

a b
60,000 A/R 15000
500,000 cash 15000
saving depos 100,000
2,000,000

2,660,000
a Cash on hand 500,000
check returned 40000
customers check dated january 15 60000
cash on hand 400,000

b currencies and coins 1,000

check drawn by kelly payable to petty cash cashir 14000

petty cash fund 15,000

c cash in bank
a. Check written and dated December 22, 2017 and delivered to payee on January 5, 2018
b. check payable on january
cash in bank

Udjusting

a A/R 40000
60000
cash on hand 100000

b cash shortage 20000

1000
14000
3000
2000
Receivable from employ 3000
petty cash fund 5000

c cash in bank 250000

A/P 100000
150000

a. Fluctuating fund system b. Fluctuating fund system

petty cash 10000 petty cash fund 10000
cash in bank 10000 cash in bank

potage 1,500
potage 1,500 petty cash
supplies 5,500
transportasion 1,200 supplies 5,500
Miscellaneous 800 petty cash
 cash in bank 9,000 transportasion 1,200
petty cash
petty cash fund 5000 Miscellaneous 800
cash in bank 5000 petty cash

petty cash fund 5000

cash in bank

5,550,000

2,400,000
3,000,000
40,000
2,000,000
7,440,000

Adjusting
1. Cash on hand. A/R
unadjusted cash on hand 200000
issufient fund 35000
post dated check receive 15000 A/R
adjusted cash on hand 150000

2. Petty cash fund. cash shortage

petty cash fund total 19000
IOU's from officers 2,000
Unreplenished petty cash vouchers 12,000 cash in bank tokyo
adjusted petty cash 5,000

3. Bank of Tokyo-current account

bank of tokyo curret account 5,000,000
adjusted bank of tokyo 5,000,000

4. Cash and cash equivalent

Cash on hand 150,000
Petty cash fund 5,000
bank of tokyo 5,000,000
PCI Bank-current account 4,000,000
Royal Bank-current account (100,000)
Bank of Commerce-savings account 250,000
Bank of Commerce-time deposit, 90 days 2,000,000

11,305,000
2,000,000
$100,000
$150,000
2,250,000

10000

1,500

5,500
 1,200

800

5000

Adjusting
35000
cash on hand 35000

15000
cash on hand 15000

cash shortage 1000

petty cash 1000

cash in bank tokyo 25000

A/R 25000