Exercise 2

Argentina Company reported the following accounts on December 31, 2020:

Cash on hand
Petty cash fund 1,000,000
Security Bank current account 50,000
PNB current account 2,000,000
BDO current account (overdraft) 1,500,000
BSP treasury bill — 120 days BPI ( 200,000)
time deposit — 90 days 3,000,000
Bond Sinking Fund 2,000,000
2,500,000

 The cash on hand included a customer postdated check

of P150,000 and postal money order of P50,000.

* The petty cash fund included unreplenished petty cash

vouchers for P10,000 and an employee check for P5,000
dated January 31, 2021.

 The BPI time deposit is set aside for acquisition of land

to be made in early January 2021.

 The bond sinking fund is set aside for payment of bond

payable due December 31, 2021.

Required:

1. Prepare adjusting entries on December 31, 2020.

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

3. Explain the presentation of the items excluded from cash

and cash equivalents.