N.U.

– Intermediate Accounting 1

Instruction: Provide detailed computations of your answers.

1. Lipton Company shows the following account balances in their financial records as of December 31,
2022.
Checking account at Morgan Bank P (20,000)
Checking account at Land Bank 500,000
Payroll account – National Bank 100,000
Foreign bank account – restricted 750,000
Postage stamps 22,000
Employees’ postdated checks 30,000
I.O.U. from president ‘s brother 75,000
Traveler’s check 50,000
No- sufficient funds check 18,000
No-sufficient fund (P16,000 in currency & expenses
receipts for P84,000) 100,000
Cashier’s checks 36,000

Question 1: What is the correct balance to be reported in the statement of financial position or Lipton
Company on December 31, 2022?
a. P582,000 b. P686,000 c. P702,000 d. P 704,000
Question 2: What is the correct cash balance to be reported in the statement of financial position of
Lipton Company on December 31, 2022 assuming the bank overdraft is repayable on
demand and it’s integral to the entity’s cash management?
a. P682,000 b. P686,000 c. P702,000 d. P704,000

2. The cash account in the current asset section f the balance sheet for Heater Company showed a
balance of P555,000. It was found to include the following items:
Petty cash fund (P1,000 is in the form of paid vouchers) P 5,000
Checking account balance, per bank statement
(A P25,000 check is still outstanding) 255,000
Undeposited receipts, including a post-dated check for P5,000 120,000
Bond sinking fund – cash 100,000
Currencies and coins awaiting deposit 55,000
Check drawn by manager, returned by bank marked NSF 20,000

What is the correct cash balance for Heater Company’s statement of financial position?
a. P404,000 b. P429,000 c. P430,000 d. P529,000

3. Delta Corporation has supplied you with the following list of its bank accounts and cash at
December 31, 2021.
Checking account (compensating balance of P 15,000
with no restriction 48,000
Savings account, 2% 30,000
Certificate of deposit, 6 months, 10% due Apr. 20, 2022 60,000
Money market (30-day certificate), current rate, 9.75% 40,000
Payroll account 20,000
Certificate of deposit, 3 months, 10% due Feb. 15, 2022 75,000
Petty cash 1,500
Total P 274,500

What should be the balance to be reported as “Cash and Cash Equivalents” in the December 31,
2021 statement of financial position of Delta Corporation?
a. P139,500 b. P199,500 c. P214,500 d. P274,500

4. Angelic Corporation had the following account balances at December 31, 2021:
Cash on hand and in banks P 975,000
Cash restricted for additions to plant (expected
to be disbursed in 2023 600,000
Bank certificates of deposit (due Jan. 16, 2022) 250,000

In the current assets section of Angelic’s December 31, 2021 statement of financial position. What
is the total amount that should be reported under the caption “cash and cash equivalents”?
a. P975,000 b. P1,225,000 c. P1,575,000 d. P1,825,000
Answers:

1.
Q1. c.
Solution:
Checking Account at Land Bank 500,000
Payroll Account-National Bank 100,000
Traveler’s Check 50,000
Petty Cash Fund 16,000
Cashier’s Check 36,000
Cash Balance P702,000
Q2. a.
Solution:
Checking Account at Morgan Bank (20,000)
Checking Account at Land Bank 500,000
Payroll Account-National Bank 100,000
Traveler’s Check 50,000
Petty Cash Fund 16,000
Cashier’s Check 36,000
Cash Balance P682,000

2. a.
Solution:
Petty Cash Fund 4,000
Checking Account Balance 230,000
Currencies &Coins 115,000
Cash Balance P404,000

3. c.
Solution:
Checking Account 48,000
Savings Account 30,000
Money Market 40,000
Payroll Account 20,000
Certificate of Deposit 75,000
Petty Cash Fund 1,500
Total Cash & Cash Equivalent P214,000

4. b.
Solution:
Cash on Hand & Cash in Bank 975,000
Bank Certificate of Deposit 250,000
Total Cash & Cash Equivalent P1,225,000