Blackstar Corp. is a company retailing high-end subdivision house and lots.

As of December 31, 2022, the following

Accounts
Cash on Hand
BPI Checking Account #1
BPI Checking Account #2
BPI Savings Account
BDO Savings Account
Petty Cash Fund
Unused Office Supplies Fund
Depreciation Fund
Sinking Fund
Escrow Fund
6-month treasury bills from BSP, maturing at March 1, 2023
10-year treasury notes from BSP, maturing at March 31, 2023
Check from customer dated January 3, 2023
Check from customer dated December 28, 2022
TOTAL

Additional information regarding these items are as follows:

1. BPI checking account #1 is set aside for purchase of house and lots to be sold by Blackstar Corp.
2. BDO Savings Account is used for receipt of all cash payments to Blackstar Corp. Blackstar also accepts advance p
32.5% of the total amount in BDO Savings Account pertains to advances from customers received throughout the y
that 37.5% of these advance payments were satisfied and delivered by the Blackstar Corp. by the end of the year.
3. The depreciation fund is to be used for replacement of defective machineries. Blackstar is planning to use the 2/

March 1, 2023 33.50%

June 15, 2023 16.29%
January 25, 2024 28.37%
April 19, 2025 21.84%

4. Blackstar lost a litigation with a client regarding unsatisfactory delivery of a household unit. The court mandated
10,509,010. The court also mandate Blackstar to deliver the agreed amount to the client not later than 2nd quarte
5. The treasury bills and notes were purchased on the end of 3rd quarter and 4th quarter, 2020, respectively.
6. Blackstar set aside a sinking fund for a huge loan payable. Based on the payment terms of the loan, for the first 4
P25,552,315.00 each quarter. The remaining portion of the sinking fund will be settled annually for the next 5 year

Requirements:
For year-end 2022:
1. Compute for the total amount of cash.
2. Compute for the total amount of cash equivalent.
3. Compute for the total amount of current asset.
4. Compute for the total amount of non-current asset.
5. Compute for the total unearned revenue.

Additional Information Explanation:

1. BPI checking account #1 will still be part of cash because the fund is to be used for current operations (or curren
*Take note: Even though house & lot or buildings are normally treated as non-current asset, we have to look at the
On this situation, the house & lot were not used for production but rather directly sold to customers, in which to b

2. The information only affects the classification of unearned revenue as to the total sales. To see the effect, let's jo

To record all cash collection:

Cash 365,011,311.00
Sales

To recognize the unearned revenue:

Sales 74,142,922.55
Unearned Revenue

3. Here we recognize the current portion of the fund set aside as part of cash.
REMEMBER: the classification of the fund set aside shall coincide with the classification of the liability being set up
In short, any portion of a long-term liability that is due to mature or portion of fund that is to be used within a year
date of reporting period shall be classified as part of cash.

March 1, 2023 33.50%

June 15, 2023 16.29%
January 25, 2024 28.37%
April 19, 2025 21.84%

Computation:

March 1, 2023 =11,974,521.00 x 2/3 x 33.5%

June 15, 2023 =11,974,521.00 x 2/3 x 16.29%

Depreciaton Fund (Current Portion)

4. Here, the escrow fund is set to be released by 2nd quarter, 2023 (June 30, 2023) which is less than 1 year from t
Thus, the classification of the fund is cash.

5. The treasury bills and notes were both purchased with a maturity date of more than 1 year on the date of purch
6. Here we recognize the current maturing portions of the loan payable in which the sinking fund is set for.
Current portion:
Sinking Fund payment for 2023
Payment for each quarter 25,552,315.00
Number of quarter 4

Total payment for 2023 (current portion of sinking fund) 102,209,260.00

Non-current portion of sinking fund 113,741,040.00
s of December 31, 2022, the following items are included as follows:

Amount
2,369,510.00
95,323,120.00
59,213,201.00
158,276,972.00
365,011,311.00
100,000.00
25,000.00
11,974,521.00
215,950,300.00
10,509,010.00
8,909,626.00
71,125,001.00
9,003,165.00
68,950,160.00
1,076,740,897.00

old by Blackstar Corp.

Corp. Blackstar also accepts advance payments from their customers.
m customers received throughout the year. Further investigation showed
ackstar Corp. by the end of the year.
ies. Blackstar is planning to use the 2/3 of the fund as follows:

a household unit. The court mandated an escrow fund to be set aside for the client amounting to
to the client not later than 2nd quarter of 2023.
d 4th quarter, 2020, respectively.
yment terms of the loan, for the first 4 quarters of 2023, the company settle an amount of
be settled annually for the next 5 years, at equal payments, after the initial settlements on 2023.
used for current operations (or current asset, which is inventory)
n-current asset, we have to look at the nature on the use of these kinds of asset.
rectly sold to customers, in which to be considered as inventory.

he total sales. To see the effect, let's journalize:

365,011,311.00

74,142,922.55

assification of the liability being set upon.

of fund that is to be used within a year from the

within 1 year treated as Cash

within 1 year treated as Cash
more than 1 year treated as Other Asset - Non-Current
more than 1 year treated as Other Asset - Non-Current

4,521.00 x 2/3 x 33.5% 2,674,309.69

4,521.00 x 2/3 x 16.29% 1,300,432.98

3,974,742.67

2023) which is less than 1 year from the date of reporting period.

more than 1 year on the date of purchase, thus to be classified as Other Asset - Non current.
hich the sinking fund is set for.
Solution:

1. Cash on Hand
BPI Checking Account #1
BPI Checking Account #2
BPI Savings Account
BDO Savings Account
Petty Cash Fund
Unused Office Supplies Fund
Depreciation Fund (Current Portion)
Sinking Fund (Current Portion)
Escrow Fund
Check from customer dated December 28, 2022

TOTAL CASH

2. TOTAL CASH EQUIVALENT

3. TOTAL CURRENT ASSET

Total Cash
Check from customer dated January 3, 2023 (Accounts Receivable)
TOTAL CURRENT ASSET

4. TOTAL NON-CURRENT ASSET

Depreciation Fund (Non-Current Portion)

Sinking Fund (Non-Current Portion)
6-month treasury bills from BSP, maturing at March 1, 2023
10-year treasury notes from BSP, maturing at March 31, 2023
TOTAL NON-CURRENT ASSET

5. UNEARNED REVENUE
(365,011,311.00 x 32.5% x (100% - 37.5%)) =
 2,369,510.00
95,323,120.00
59,213,201.00
158,276,972.00
365,011,311.00
100,000.00
25,000.00
3,974,742.67
102,209,260.00
10,509,010.00
68,950,160.00

865,962,286.67

865,962,286.67
9,003,165.00
874,965,451.67

7,999,778.33
113,741,040.00
8,909,626.00
71,125,001.00
201,775,445.33

74,142,922.00
The bank statement for the checking account of Bryle Solutions Corp. (BSC) showed a December 31, 2022 balance
reconciliation is as follows:

1. Outstanding checks were P140,000.00

2. The December 31, 2022 cash receipts of P59,500 were not deposited in the bank until January 2, 2023.
3. One check written in payment of rent for P24,600.00 was correctly recorded by the bank but was recorded by BS
4. In accordance with prior authorization, the bank withdrew P45,000 directly from the checking account as payme
The interest portion of that payment was P5,000.00. BSC has made no entry to record the automatic payment.
5. Bank service charges of P1,400 were listed on the bank statement.
6. A deposit of P87,500 was recorded by the bank on December 13, but it did not belong to BSC. Further verificatio
credited to the checking account of BCS, Inc.
7. The bank statement included a charge of P12,500 for a customer's NSF check. The check was returned with the b
8. BSC maintains a P20,000 petty cash fund that was appropriately reimbursed at the end of December.
9. According to the instructions from BSC, on December 30, the bank withdrew P1,000,000 from the account and p
in its books on December 31 when it received notice from the bank. Half of the treasury bills mature in two month

REQUIREMENTS:

1. Determine the balance per books.

2. Prepare a bank reconciliation for the BSC checking account at December 31, 2022.
3. Prepare any necessary adjusting journal entries indicated.
4. What amount would BSC report as cash and cash equivalents in the current asset section of the December 31, 2

Solution:

Per Bank

Unadjusted Balances 1,463,212.00

Outstanding checks (140,000.00)
Undeposited Receipts 59,500.00
Error in recording check issued for rental payment
Bank charge for payment of loan and interest
Bank service charges
Deposit of another company (87,500.00)
Customer's NSF check
ADJUSTED BALANCES 1,295,212.00

Adjusting Entry:
Notes Payable - Bank 40,000.00
Interest Expense 5,000.00
Bank Service Charge 1,400.00
Accounts Receivable 12,500.00
Rent Expense
Cash in Bank

TOTAL CASH & CASH EQUIVALENT

Petty Cash Fund 20,000.00

Cash in Bank 1,295,212.00
Treasury bills maturing in 2 months 500,000.00
Total cash & cash equivalent 1,815,212.00
a December 31, 2022 balance of P1,463,212. Information that might be useful in preparing a bank

until January 2, 2023.

e bank but was recorded by BSC as P26,400 disbursement.
he checking account as payment on mortgage note payable.
rd the automatic payment.

long to BSC. Further verification with the bank indicates that the deposit should have been

check was returned with the bank statement and the company will seek payment from the customer.
e end of December.
00,000 from the account and purchased Phlippine Treasury Bills for BSC. BSC recorded the transaction
sury bills mature in two months and the other half in six months.

section of the December 31, 2022 statement of financial position?

Per Book

1,352,312.00 (SQUEEZE) - work back

1,800.00
(45,000.00)
(1,400.00)

(12,500.00)
1,295,212.00
 1,800.00
57,100.00