ASSESSMENT TASK 1 -1

1. Tranvia Company revealed the following information on December 31, 2020:

Cash in checking account 350,000
Cash in money market account 750,000
Treasury bill, purchased November 1, 2020
maturing January 31, 2021 3,500,000
Time deposit purchased December 1, 2020
maturing March 31, 2021 4,000,000

What amount should be reported as cash and cash equivalents on December 31, 2020?

4,600,000

Solution:
Cash in checking account 350,000
Cash in money market account 750,000
Treasury bill, purchased Nov. 1 2018 maturity 31, 2019 3,500,000
4,600,000

2. Affable Company provided the following information at year-end comprising the cash
account:
Cash in bank – demand deposit 5,000,000
Cash on hand 400,000
Postage stamps unused 5,000
Certificate of time deposit 1,500,000
Money order 50,000
Manager check 100,000
Traveler check 1,000,000
Postdated customer check 500,000

What total amount should be reported as cash at year end?

6,550,000

Solution:
Cash in bank 5,000,000
Cash on hand 400,000
Money Order 50,000
Manager check 100,000
Travel Check 1,000,000
6,550,000

3. Thor Company provided the following data on December 31, 2020:

 Checkbook balance 4,000,000
Bank statement balance 5,000,000
Check drawn on Thor’s account, payable to supplier,
dated and recorded on December 31, 2020 but not
mailed until January 31, 2021 500,000
Cash in sinking fund 2,000,000

On December 31, 2020, what amount should be reported as cash under current
assets?

4,500,000

Solution:
Check Balance 4,000,000
Undelivered Check drawn on Thor's Account 500,000
Adjusted Cash balance 4,500,000

4. On December 31, 2020 Lamentable Company had the following cash balances:

Cash in bank – current account 6,000,000

Petty cash fund – all funds were reimbursed at year end 50,000
Time deposit – three months, due January 15, 2021 2,500,000
Saving deposit 1,000,000

Cash in bank included P400,000 of compensating balance against short term

borrowing arrangement.

The compensating balance is legally restricted as to withdrawal

What total amount should be reported as cash and cash equivalents?

9,150,000

Solution:
Cash in bank – current account 6,000,000
Petty cash fund – all funds were reimbursed at year end 50,000
Time deposit – three months, due January 15, 2021 2,500,000
Saving deposit 1,000,000
(400,000)
9,150,000

5. Baloney Company had the following account balances on December 31, 2020:

Cash in bank 2,250,000

Cash on hand 125,000
Cash restricted for addition to plant in 2021 1,600,000

Cash in bank included P600,000 of compensating balance against short-term

borrowing arrangement.

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 The compensating balance is not legally restricted as to withdrawal.
What total amount should be reported as cash on December 31, 2020? 2,375,000
Solution:
Cash in bank 2,250,000
Cash on hand 125,000
2,375,000

6. In preparing the bank reconciliation for the month of August, Apex Company provided
the following information:

Balance per bank statement 1,805,000

Deposit in transit 325,000
Return of customer check for insufficient fund 60,000
Outstanding checks 275,000
Bank service charge for August 10,000
What is the adjusted cash in bank? 1,855,000
Solution:
Balance per bank 1,805,000
Deposit in transit 325,000
Outstanding checks (275,000)
1,855,000

7. In preparing the bank reconciliation for the month of December, Case Company provided the
following data:

Balance per bank statement 3,800,000

Deposit in transit 520,000
Amount erroneously credited by bank to Case’s account 40,000
Bank service charge for December 5,000
NSF check 50,000
Outstanding checks 675,000
What is the unadjusted cash in bank balance per book? 3,605,000
Solution:
Unadjusted book balance 3,800,000
Bank service charge (5,000)
NSF check (50,000)
3,605,000

8. Sapphire Company provided the following information for the month of December:

Balance per bank statement December 31 2,800,000

Bank service charge for December 12,000
Interest paid by bank to Sapphire Company for December 10,000
Deposits made but not yet recorded by the bank 350,000
Checks written but not yet recorded by the bank 650,000
The entity discovered that it had drawn and erroneously recorded a check for
P46,000 that should have been recorded for P64,000

What is the cash balance per ledger on December 31? 2,520,000

9. Core Company provided the following data for the purpose of reconciling the cash balance per
book with the cash balance per bank statement on December 31:

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 Balance per book 850,000
Balance per bank statement 2,000,000
Outstanding checks, including certified check of P100,000 500,000
Deposit in transit 200,000
December NSF checks, of which P50,000 had
been redeposit and cleared on December 27 150,000
Erroneous credit to Core’s account, representing
proceeds of loan granted to another company 300,000

Proceeds of note collected by bank for Core,

net of service charge of P20,000 750,000

What amount should be reported as cash in bank at year-end? 1,500,000

Balance per bank statement 2,000,000

Deposit transit 200,000
Outstanding check (500-100) (400,000)
Erroneous Credit (300,000)
1,500,000

10. Laconic Company received the bank statement for the month of April which included the
following information:

Bank service charge for April 15,000

Check deposited by Laconic during April was not collectible and has
been marked “NSF” by the bank and returned 40,000
Deposits made but not yet recorded by bank 130,000
Checks written and mailed but not yet recorded by bank 100,000

The entity found a customer check for P35,000 payable to the entity that had not yet
been deposited and had not been recorded.

The general ledger showed a bank account balance of P920,000

What amount should be reported as adjusted cash in bank on April 30? 900,000
Solution:
Bank Balance 920,000
Undeposit Checks 35,000
Bank Service charge (15,000)
NSF Check (40,000)
900,000

Items 11 to 13 are based on the following information:

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 Pearl Company maintains a checking account at the City Bank. The bank provides a bank
statement along with canceled checks on the last day of each month. The July bank
statement included the following information:

Balance, July 1 550,000

Deposits 1,800,000
Cheeks processed 1,400,000
Service charge 30,000
NSF check 120,000
Monthly loan payment deducted by bank from account 100,000

Deposits outstanding totaled P100,000 and all checks written by the depositor were
processed by the bank except for check of P150,000.

A P200,000 July deposit from a credit customer was recorded as P20,000 debit cash and
credit accounts receivable.

A check correctly recorded by the entity as P 30,000 disbursement was incorrectly

processed by the bank as P300,000 disbursement.

11. What is the balance per bank on July 31? 700,000

Per bank balance 550,000
Deposit 1,800,000
Check processed 1,400,000

Service charge (30,000)

NSF check (120,000)
Monthly loan payment deducted by bank from account (100,000)
700,000

12. What amount should be reported as cash in bank on July 31? 920,000
Book Bank
Unadjusted balance , July 31 700,000
Deposit Outstanding (Deposit in transit) 100,000
Outstanding check (150,000)
Service Charge (30,000)
NSF Check (120,000)
Monthly loan payment deducted by bank from account (100,000
Bank debt error ( 200,000 correct – 20,000 error) 180,000
Bank debt error ( 300,000 error – 30,000 correct) 270,000
Adjusted balance, July 31 920,000

13. What is the cash in bank balance per ledger on July 31? 990,000
Book Bank
Unadjusted balance, July 31 990,000 700,000

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Items 14 to 16 are based on the following information:

Humanizer Company provided the following information:

Balance per bank statement — May 31 2,600,000
Deposits outstanding 300,000
Checks outstanding ( 100,000)
Correct bank balance — May 31 2,800,000

Balance per book — May 31 2,810,000

Bank service charge ( 10,000)
Correct book balance — May 31 2,800,000

June data are as follows: Bank Book

Checks recorded 2,200,000 2,500,000

Deposits recorded 1,600,000 1,800,000
Service charges recorded 50,000
Note collected by bank, P500,000 plus interest 550,000
NSF check returned with June 30 statement 100,000
Balances 2,400,000 2,100,000

14. What is the amount of outstanding checks on June 30?

Checks recorded by book in June 2,500,000
Checks recorded by bank in June 2,200,000
Checks of May paid by bank in June (100,000) (2,100,000)
Outstanding checks at June 30 400,000

15. What is the amount of deposits in transit on June 30?

Deposits/receipts recorded by book in June 1,800,000
Deposits recorded by bank in June 1,600,000
Deposit in transit in May recorded by bank in June (300,000) (1,300,000)
Deposit in transit at June 30 500,000

16. What is the adjusted cash in bank on June 30?

Unadjusted 2,400,000
Deposit in transit on June 30 500,000
Outstanding Check at Jun 30 (400,000)
Adjusted Bank balance 2,500,000

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Items 17 to 20 are based on the following information:
Cool Company prepared the following bank reconciliation for the month of November:

Balance per bank statement, November 30 3,600,000

Add: Deposit in transit 800,000
4,400,000
Less: Outstanding checks 1,200,000
Bank credit recorded in error 200,000 1,400,000
Balance per book, November 30 3,000,000

Data per bank statement for the month of December:

December deposits, including note receivable
collected of P 1,000,000 for Cool Company 5,500,000
December disbursements, including NSF check
P350,000 and service charge P50,000 4,400,000

All items that were outstanding on November 30 cleared through the bank in December, including
the bank credit.

In addition, checks of P500,000 were outstanding and deposits of P700,000 were in transit on
December 31.

17. What is the adjusted cash in bank on December 31? 4,900,000

Balance per bank statement, Now. 30 3,600,000
Add: Deposits 5,500,000
Total 9,100,000
Less: Disbursement 4,400000
Balance per bank statement, Dec. 31 4,700,000

Balance per bank statement, Dec 31 4,700,000

Add: Deposits in transit, Dec. 31 700,000
Total 5,400,000
Less: Outstanding Checks Dec. 31 500,000
Adjusted cash balance 4,900,000

17. What is the balance of cash per ledger on December 31? 4,300,000

18. What is the amount of cash receipts per book in December? 4,400,000
Bank Receipts in December 5,500,000
Note collected during December (1,000,000)
Deposit in Transit
November (800,000)
December 700,000
Cash Receipts per book, December 4,400,000

19. What is the amount of cash disbursements per book in December? 3,500,000
Bank Disbursements in December 4,400,000

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December debit memos
NSF Check 350,000
Service Charge 50,000 (400,000)
November bank reconciling items:
Outstanding Checks 1,200,000
Erroneous bank credit 200,000 (1,400,000)
Outstanding Checks, December 500,000
Cash Disbursements per book, December 3,100,000

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ASSESSMENT TASK 1 – 2

D 1.Which of the following should not be considered cash?

a. Petty cash fund
b. Money order
c. Coin and currency
d. IOU

B 2. Which of the following is usually considered cash?

a. Certificate of deposit
b. Checking account
c. Money market certificate
d. Postdated check

A 3. Which of the following should not be included in cash?

a. Travel cash advance
b. Certified check
c. Personal check
d. Manager check

B 4. All of the following may be included in cash, except

a. Currency
b. Money market instrument
c. Checking account balance
d. Saving account balance

C 5. Technically, cash may not include

a. Foreign currency
b. Money order
c. Restricted cash
d. Undeposited customer check

C 6. All of the following can be classified as cash and cash equivalents, except
a. Redeemable preference shares due in 60 days
b. Commercial papers due for repayment in 90 days
c. Equity investments
d. A bank overdraft

B 7. Cash equivalents do not include

a. Money market funds
b. High grade marketable equity investments
c. BSP treasury bills
d. Commercial papers

D 8. The internal control feature specific to petty cash is

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

B 9. A cash over and short account

a. Is not generally accepted.

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 b. Is debited when the petty cash fund proves out over.
c. Is debited when the petty cash fund proves out short.
d. Is a contra account to cash

B 10. Petty cash fund is

a. Separately classified as current asset
b. Money kept on hand for making minor disbursements of coin and currency rather than by
writing checks
c. Set aside for the payment of payroll
d. Restricted cash

D 11. A bank reconciliation is

a. A financial statement that lists all of the bank account balances of an entity.
b. A merger of two banks that previously were competitors.
c. A statement sent by the bank to depositor on a monthly basis.
d. A schedule that accounts for the differences between cash balance shown on the bank
statement and the cash balance shown on the general ledger.

A 12. Which of the following items must be added to the cash balance per ledger in preparing
a bank reconciliation which ends with adjusted cash balance?
a. Note receivable collected by bank in favor of the depositor and credited to the
account of the depositor
b. NSF customer check
c. Service charge
d. Erroneous bank debit

C 13. Which of the following would be added to the balance per bank statement to arrive
at the correct cash balance?
a. Outstanding check
b. Bank service charge
c. Deposit in transit
d. A customer mote collected by the bank on behalf of the depositor
e.

B 14. Which of the following must be deducted from the bank statement balance in preparing
a bank reconciliation which ends with adjusted cash balance?
a. Deposit in transit
b. Outstanding check
c. Reduction of loan charged to the account of the depositor
d. Certified check

C 15. If the balance shown in the bank statement is less than the correct cash balance and
neither the entity nor the bank has made any errors, there must be
a. Deposits credited by the bank but not yet recorded by the depositor
b. Outstanding checks
c. Deposits in transit
d. Bank charges not yet recorded by the depositor

A 16. If the cash balance shown in the accounting record is less than the correct cash balance
and neither the entity nor the bank has made any errors, there must be deposit
a. Deposits credited by the bank but not yet recorded by the depositor
b. Deposits in transit

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 c. Outstanding checks
d. Bank charges not yet recorded by the depositor

B 17. Bank reconciliations are normally prepared on a monthly basis to identify

adjustments needed in the depositor's records and to identify bank errors. Adjustments on
the part of the depositor should be recorded for
a. Bank errors, outstanding checks and deposits in transit.
b. All items except bank errors, outstanding checks and deposits in transit.
c. Book errors, bank errors, deposits in transit and outstanding checks.
d. Outstanding checks and deposits in transit.

D 18. Bank statements provide information about all of the following, except
a. Checks cleared during the period
b. NSF checks
c. Bank charges for the period
d. Errors made-by the depositor

C 19. Which statement in relation to a certified check is not true?

a. A certified check is a liability of the bank certifying it.
b. A certified check will be accepted by many persons who would not otherwise
accept a personal check.
c. A certified check is one drawn by a bank upon itself.
d. A certified check should not be included in the outstanding checks.

A 20. Which statement in relation to bank reconciliation is true?

a. Bank service charge will cause the cash balance per ledger to be higher than
that reported by the bank, all other things being equal.
b. Credit memos will cause the cash balance per ledger to be higher than that
reported by the bank, all other things being equal.
c. Outstanding checks will cause the cash balance per ledger to be greater than
the balance reported by the bank, all other things being equal.
d. The cash amount reported in the statement of financial position must be the
balance reported in the bank statement.

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