NGAN TIAN, Sophia Dominique R.

Chapter 2 Cash and Cash Equivalents

Theory
Multiple Choice
D - Money and any 1. Cash includes:
instrument that is
immediately payable in
money and acceptable by
the bank for deposit and
immediate credit

C - Can be freely used in 2. To be reported as “cash and cash equivalents”, the cash
current operations equivalent must be

C - Undelivered checks 3. Which of the following should be presented as cash in

the statement of financial position?

C - Cash deposited with 4. Which of the following cannot be shown as part of cash
utility company in the current assets section of the statement of financial
position?

C - Are part of the payor’s 5. Unreleased checks

cash balance

D - Postdated checks 6. Which of the following should not be considered cash?

C - Cash equivalents include 7. Which of the following is incorrect with regard to the
interest that is to be received valuation of cash and cash equivalents?

C - Valued at current 8. Deposits in foreign countries that are also subject to

exchange rates and certain foreign exchange restrictions should be
presented as noncurrent
assets

A - Certificates of deposit 9. Which of the following should be considered cash

equivalents?

D - None of these 10. Travel advances should be reported as

Problem Solving
EXCEL FILE
Exercise 2-1

Currencies and coins 45,000

Checking account balance 185,000
Undeposited receipts 160,000
Postdated checks (35,000) 125,000
Savings account balance 250,000
Total cash 605,000

Exercise 2-2
Cashier's check 46,000
Bank draft 40,000
Traveler's check 40,000
Undeposited checks 220,000
Check lacking signature (100,000) 120,000
Money order 50,000
Petty cash fund 4,000
Checking account - Unibank 450,000
Checking account - Unibank 325,000
Total cash 1,075,000

Exercise 2-3
Cash in checking account 100,000
Unpresented check (26,000) 74,000
Treasury bill 600,000
Total cash and cash
equivalents 674,000

Exercise 2-4

Cash and cash equivalents,

unadjusted 5,465,000
Certificates of deposit (650,000)
Postdated checks received (225,000)
Cash reserved for plant
expansion (1,200,000)
Commercial paer due in 100
days (1,000,000)
Unreplenished vouchers (2,500)
Compensating balance, legally
restricted (450,000)
Cash and cash equivalents,
adjusted 1,937,500

Exercise 2-5

Cash, unadjusted 900,000

Note receivable (150,000)
Postdated check received (45,000)
NSF check (60,000)
Unreplenished vouchers (2,500)
Unreleased check (145,000)
Cash, adjusted 497,500
Exercise 2-6

Checkbook balance 1,200,000

Unreleased check 300,000
NSF check redeposited and
cleared 50,000
Postdated check received (150,000)
Correct cash balance 1,400,000

Exercise 2-7

Cash on hand 650,000

Stale check (60,000)
Postdated check (30,000) 560,000

Cash in bank 450,000

Bank overdraft 40,000 490,000

Petty cash 18,000

Unreplenished receipts (12,500)
Correct cash balance 1,050,000

Exercise 2-8

Checking account 1,200,000

Savings account 1,500,000
Cash on hand 10,000
Correct cash balance 2,710,000

Exercise 2-9
Checkbook balance 1,750,000
Postdated check (70,000)
Unreleased check 300,000
Corect cash balance 1,980,000

Exercise 2-10
 PISTACHIO CO.
Bank Reconciliation Statement
June 30, 2020

Bank Book
Unadjusted balances 166,100
158,794
Bank service charge
(1,000)
Note collected by bank
49,440
Bank charge on collection (220)
Deposits in transit 135,600
Outstanding checks (85,442)
NSF check (10,128)
Book error 1,200
Book error Check No. 742 (2,880)
Book error Check No. 747 21,052
Adjusted Balances 216,258 216,258