Problem 1-1

1. Prepare adjusting entries on December 31, 2022.

Money market instrument

Short-term investment 2 000 000
Cash 2 000 000

Sinking fund for bond payable

Sinking fund 1 500 000
Cash 1 500 000

Customer check outstanding for 18 months

Accounts receivable 200 000
Cash 200 000

Undelivered check
Cash 250 000
Accounts payable 250 000

Postdated check recorded as payment

Cash 100 000
Accounts payable 100 000

Collection on 01/15/2023 recorded on 12/31/22

Accounts receivable 450 000
Cash 450 000

2. Compute the total amount of cash and cash equivalents that should be reported on
December 31, 2022.

Cash in bank 3 000 000

Time deposit-30 days 1 000 000
Saving deposit 500 000
Petty cash fund 50 000
Customer check outstanding for 18 months (200 000)
Undelivered check 250 000
Postdated check recorded as payment 100 000
Collection 01/15/23 recorded on 12/31/22 (450 000)
Total Cash and Cash Equivalent 4 250 000

3. Explain the presentation of the items excluded from cash and cash equivalent.
● The money market is excluded from cash and cash equivalents because it is
classified as current asset and its due date will be on June 30, 2023 which is six
 months from December 31,2022. In general rule, it can only be acquired if it is
covered within the 3 months or less from the date of purchase.
● The sinking fund is excluded from cash and cash equivalents because it is
classified as non current asset and its due date will be on June 30, 2024 which is
more than a year, which means it does not tail to the three month rule.

Problem 1-2
1. Prepare adjusting entries on December 31, 2022.

BPO current account

2. Compute the total amount of cash and cash equivalents.

Problem 1-3
1. Prepare adjusting entries on December 31, 2022.

2. Compute the total cash on December 32,2022.

Problem 1-4
1. Compute the total cash and cash equivalents.

2. Prepare adjusting entries on December 31,2022.

Problem 1-5
● Prepare journal entries to record the transactions under the fluctuating fund system and
imprest fund system.
●
Journal Entries:
Fluctuating Fund System

Zealous Company
Journal Entries

Jan. 2 Petty Cash fund 10,000

Cash in bank 10,000
The entity established a petty cash fund of P10,000.

Jan 2-31 Postage 1,500

Supplies 5,500
 Transportation 1,200
Miscellaneous expense 800
Petty cash fund 9,000
Petty cash expenses amounted to P9,000.

Feb. 1 Petty cash fund 5,000

Cash in bank 5,000
The fund is replenished and increased by 5,000.

Problem 1-6
● Prepare journal entries to record the transactions under the fluctuating fund system and
imprest fund system.

Problem 1-7
● Prepare journal entries to record the transactions under the imprest fund system and
fluctuating fund system.

Problem 1-8
● Prepare journal entries to record the transactions.

Problem 1-9
1. Prepare journal entries to record the transactions.
2. How much is the petty cash on January 31, 2023 before the replenishment?

Problem 1-10
Cash in checking account 350 000
Cash in money market account 750 000
Treasury bill,purchased November 1,2022
Maturing January 31,2023 (3 500 000)
Time deposit purchased December 1,2022 4 000 000
Total Cash and Cash Equivalent 4 600 000

Therefore the answer is C.

Problem 1-11
Asked: Cash?

Cash on hand 500 000

Demand deposit 4 000 000
Petty cash fund 50 000
Traveler check 200 000
Manager check 100 000
Money order 150 000
 Total Cash 5 000 000

Therefore the answer is D.

Problem 1-12
Checking account at Metrobank 3 000 000
Foreign bank account unrestricted and in
equivalent pesos 2 500 000
Petty cash fund, expense receipts P40 000 50 000
Treasury bills 1 200 000
Value added tax account 1 500 000
Total Cash and Cash Equivalent 8 210 000

Therefore the answer is C.

Problem 1-13
Checkbook balance 4 000 000
Check drawn on Thor’s account, payable to supplier,
dated and recorded on December 31,2022 but not
mailed until January 31,2023 500 000
Total Cash under Current Assets 4 500 000

Therefore the answer is A.

Problem 1-14
Cash in bank-current asset 1 800 000
Petty cash fund- all fund were reimbursed at year ended 50 000
Time deposit-due February 1 2023 250 000
Compensating balance (600 000)
Total Cash and Cash Equivalent 1 500 000

Therefore the answer is A.

Problem 1-15
Cash in bank 2 250 000
Cash on hand 125 000
Total Cash under Current Assets 2 375 000

Therefore the answer is B.

Problem 1-16
Petty cash fund 50 000
Current account-First Bank 4 100 000
 Money market placement-Third Bank 1 000 000
Total Cash and Cash Equivalent 5 150 000

Therefore the answer is B.

Problem 1-17
Undeposited collections 600 000
Cash in bank-BPO checking account 4 000 000
Cash in bank-BDO fund for payroll 1 000 000
Cash in bank-BDO time deposit, 90 days 2 000 000
Cash in bank-BDO value added tax account 450 000
Total Cash and Cash Equivalent 8 050 000

Therefore the answer is D.

Problem 1-18
Checkbook balance 5 000 000
Check payable to Ral, deposited Dec 15 500,000
and included in Dec 31 checkbook balance but
returned by bank on Dec 30 stamped “NSF.” The
check was redeposited on Jan 2, 2020 and cleared
on Jan 9,2020 (500 000)
Check drawn on Ral's account, payable 300,000
to a vendor, dated and recorded in Ral's books on
Dec 31, 2019 but not mailed until Jan 10, 2020 300 000
Total Cash on December 31, 2022 4 800 000

Therefore the answer is A.

Problem 1-19
Coin, currency, saving account, and checking account 3 400 000
Government treasury bills 2 000 000
Commercial paper 1 500 000
Total Cash and Cash Equivalent 6 900 000

Therefore the answer is A.

Problem 1-20 (NOT YET SURE CZ WALA SA CHOICES AND ANS NAKO)
Petty cash fund 50 000
Expense vouchers (5 000)
Employee IOU (5 000)
Cash on hand 500 000
 Check payable (100 000)
Cash in bank- current account 3 800 000
Cash in bank-payroll account 1 200 000
Time deposit 1 000 000
Total Cash and Cash Equivalent 6 440 00

Therefore the answer is .

Problem 1-21
Cash on hand 200 000
Security Bank current account 5 000 000
Security Bank current account delivered 100 000
Manila Bank current account no.1 4 000 000
Manila Bank current account no.2 (bank overdraft) (500 000)
United Bank time deposit, 90 days 2 000 000
Treasury bills 1 000 000
Total Cash and Cash Equivalent 11 800 000

Therefore the answer is A.

Problem 1-22
1.
Checkbook balance 4 000 000
Undeposited collection 400 000
Postdated customer check (200 000)
Adjusted Cash in Bank 4 200 000

Therefore the answer is B.

2.
Cash in bank 4 200 000
Undeposited collection 400 000
Petty cash fund 45 000
Cash 4 645 000

Therefore the answer is A.

Problem 1-23
Coins and currency 22,000
Check drawn payable to the order of Ann Cruz,
petty cash custodian, representing her salary 15,000
Total Petty Cash Fund 37,000

Therefore the answer is C.

Problem 1-24
Coins and currency 2 000
Check drawn to the order of petty cash custodian 4 000
Total Petty Cash Fund 6,000

Therefore the answer is C.

Problem 1-25
1. D.
2. B
3. A
4. B
5. D
6. C
7. B
8. D
9. A
10. C

Problem 1-26
1. A.
2. A.
3. C.
4. B.
5. D.

Problem 1-27
1. D.
2. D..
3. C.
4. C.
5. B.
 CHAPTER 2: BANK RECONCILIATION
Problem 2-12
Answer: a. 1,855,000
Solution:
Balance per bank statement 1,805,000
Add: Deposit in transit 325,000
Less: Outstanding checks 275,000
Adjusted cash-in-bank balance 1,855,000

Problem 2-13
Answer: a. 1,500,000
Solution:
Core Company
Bank Reconciliation Statement
December 31,2022

Balance per bank statement 2,000,000

Add: Deposit in transit 200,000
Less: Outstanding Checks (500,000 - 100,000) 400,000
Less: Erroneous bank credit 300,000
Adjusted cash-in-bank balance 1,500,000

Balance per book 850,000

Less: NSF checks (150,000 - 50,000) 100,000
Less: Proceeds of Note Collected 750,000
Adjusted cash-in-book balance 1,500,000

Problem 2-14
Answer: b. 3,660,000
Solution:
Core Company
Bank Reconciliation Statement
December 31,2022

Balance per bank statement 3,800,000

Add: Deposit in Transit 520,000
Less: Outstanding Checks 675,000
Less: Erroneous bank credit 40,000
Adjusted cash-in-bank balance 3,605,000

Unadjusted book balance (SQUEEZE) 3,660,000

Less: Bank service charge 5,000
Less: NSF check 50,000
Adjusted cash-in-book balance 3,605,000
Unadjusted book balance = Adjusted book balance + (bank service charge + NSF check)
= 3,605,000 + 55,000
Unadjusted book balance = 3,660,000

Problem 2-15
Answer: b. 1,530,000
Solution:
February 28 book balance 1,460,000
Add: Note collected by bank 100,000
Add: Interest earned on note 10,000
Add: Less: NSF check of customer 130,000
Less: Bank service charges (2,000 + 3,000) 5,000
Adjusted cash-in-book balance 1,435,000

Balance per bank statement (SQUEEZE) 1,530,000

Add: Deposit in transit 85,000
Less: Outstanding Checks 200,000
Add: Erroneous Charge 20,000
Adjusted cash-in-bank balance 1,435,000

Balance per bank statement = Adjusted cash-in-bank balance + outstanding checks -

Deposit in transit - Erroneous Charge

Problem 2-16
Answer: a. 900,000
Solution:
Balance per ledger 920,000
Add: Unrecorded customer check 35,000
Less: Bank service charge 15,000
Less: NSF check 40,000
Adjusted cash-in-book balance 900,000
Problem 2-17
Answer: b. 2,520,000
Solution:
Balance per bank statement 2,800,000
Add: Deposit in transit 350,000
Less: Outstanding Checks 650,000
Adjusted cash-in-bank balance 2,500,000

Balance per ledger (SQUEEZE) 2,520,000

Add: Interest income 10,000
Less: Bank service charge 12,000
Less: Book error (64,000 - 46,000) 18,000
Adjusted cash-in-book balance 2,500,000
Balance per ledger = Adjusted cash-in-book balance + Bank service charge + Book error
- Interest income

Problem 2-18
Answer: a. 970,000
Solution:
Balance per bank statement 1,240,000
Add: Deposit in transit 280,000
Less: Outstanding checks 550,000
Adjusted cash-in-bank balance 970,000

Balance per ledger 750,000

Less: Debit memo - service charge 10,000
Add: Credit memo - collection of note by bank for Grass 300,000
Less: Unrecorded check for travel expense 100,000
Add: Book error in recording check (90,000 - 60,000) 30,000
Adjusted cash-in-book balance 970,000

Problem 2-19
Answer: b. 4,571,000
Solution:
Balance per book 4,500,000
Add: Collection by bank 94,000
Less: NSF customer check 32,000
Less: Book error - customer check overstated (54k-45k) 9,000
Add: Book error - check written overstated (97k-79k) 18,000
Adjusted cash-in-book balance 4,571,000
Problem 2-20
1. Answer: a. 9,150,000
Solution:
Balance per bank statement 8,470,000
Add: Deposit in transit 950,000
Less: Outstanding checks 270,000
Adjusted cash-in-bank balance 9,150,000

2. Answer: b. 8,525,000
Solution:
Unadjusted book balance (SQUEEZE) 8,525,000
Add: Note collected by bank for the depositor 935,000
Less: Book error - check written understated (138k-183k) 45,000
Less: Service charge 15,000
Less: NSF check 250,000
Adjusted cash-in-book balance 9,150,000

3. Answer:
Solution: