SUBSTANTIVE TESTS OF CASH Exercise 1: CASH COMPOSITION (On December 31, 20x1, Rosie Co’s “cash and cash equivalents account” balance per ledger of 5,700,000 includes: Manager's checks. 70,000 Traveler's checks 100,000 Treasury note 50,000 ‘Treasury shares, purchased on 12/1/20x1, to be reissued on 3/1/20x2 150,000 Escrow deposit 200,000 Bank drafts 20,000 Postal money orders 20,000 Demand deposit 100,000 ‘Treasury bills, purchased December 16, 20x1 due March 15, 20x2 50,000 160-day treasury bill 30,000 ‘Time deposit ~ PCIB, one-year, due March 31, 20x2 180,000 ‘Time deposit- PNB — 90 days 170,000 ‘Time deposit - BPI — 120 days 45,000 Money market instrument ~ due date 2/28/20x2 40,000 Money market instrument ~ due date 6/1/20x2 70,000 Cash in bank - Metrobank, which includes a compensating balance of P50,000 for short-term borrowing arrangement. The compensating balance is not legally restricted as to withdrawal. 1,050,000 Cash in bank -Metrobank (100,000) Cash in bank ~ First bank, which includes a compensating balance (Of P50,000 for long-term borrowing arrangement. The Compensating balance is legally restricted to withdrawal. 450,000 Cash in bank = Second bank (60,000) Cash in bank ~ Security bank, which includes a compensating Balance of P40,000 for short-term borrowing arrangement. ‘The compensating balance is legally restricted as to withdrawal 150,000 Cash in bank ~ Sea bank, which includes a compensating balance of 40,000 for short-term borrowing arrangement, 250,000 Petty cash fund, which includes an unreplenished voucher of P4,000 10,000 Payroll fund 100,000 Travel fund 20,000 Interest fund. 40,000 Tax fund 30,000 Sinking fund 420,000 Preferred redemption fund 100,000Contingent fund 200,000 Insurance fund 500,000 Fund for acquisition of Property, Plant & Equipment expected to be disbursed in 20x2 800,000 IOU from officers 20,000 Customer's post-dated checks 70,000 Customer's checks returned by marked "NSF” 20,000 Redeemable preferred shares ~ acquired 3 months to maturity date 15,000 Unused credit line Revolving fund Visa Card-credit limit Total Required: Compute the cash and cash equivalents that should be shown in the statement of financial position. Indicate as well the classification of other items not included in the previous computation. Exercise 2: One-month bank reconciliation ‘The books of Marie Co. show a cash in bank balance of P79,440 as of July 31, Marie’s bank statement shows a cash balance for the company of P51,800. Additional information that might be useful reconciling the disparity between the two balances follows: ‘2. Adeposit of P16,000 was recorded by the bank on July 5, but it should have been recorded for Ria Company rather than Marie Company. Petty cash of P8,500 was included in the cash balance. Check No. 6152 in payment of electric bill for P5,700 was correctly recorded by the bank bbut was recorded in the cash disbursements journal of Marie as P7,500. |. The bank statement does not show receipts of P12,600 that were deposited on July 31. The bank statement indicated a service charge of P3,000. A check of P7440 was returned marked NSF. The check had been included in the July 23 deposit. As of July 31, the check had not been redeposited. Proceeds from cash sales of P30,600 for July 18 were stolen, The company expects to recover this amount from the insurance company. The cash receipts were recorded in the books, but no entry was made for the loss. Interest of P2,400 accrued on funds that the bank had invested for Marie for month of July. Outstanding checks totaled P28,400 as of July 31. ‘The July 21 deposit included a check for P14, 100 that had been returned on July 15 marked NSF. Marie had made no entry upon return of the check. The redeposit of the check on July 21 was recorded in the cash receipts journal of Marie as a collection on account.Requires 1. Prepare a bank reconciliation as of July 31, 2. Prepare the necessary adjusting journal entries. Exercise 3: Proof of Cash Data concerning the cash records of Lyn Company for the months of September and October 20x1 follow: Unadjusted book balance on September 30 amounted to P2,258,000 Total receipts per book in October, P1,400,000 Total disbursements per book in October, P2,400,000 Unadjusted bank balance on September 30 amounted to P2,100,000 Total credits per bank in October amounted to P1,200,000 Total debits per bank in October amounted to 2,500,000 NSF checks on September 30 amounted to P60,000 while on October 31. amounted to 40,000 h. Collection of accounts receivable not recorded by the company on September 30, P30,000 and P50,000 on October 31 i. Erroneous bank charge on September 30, P10,000 and P18,000 on October 31 j. Erroneous bank credit on September 30, P7,000 and P9,000 on October 31 k. Understatement of check in payment of rent payable on September 30, P90,000 and 120,000 on October 31. |. Deposit in transit on September 30, P130,000 m. Outstanding checks on October 31, P30,000 Required: Based on the above data, answer the following questions: 1. How much is the deposit in transit October 31? How much is the outstanding checks September 30? How much is the adjusted cash in bank balance September 30? How much is the adjusted cash receipts during October? How much is the adjusted cash in bank balance October 31? Provide the adjusting journal entries,