Accounting for Cash and Cash Equivalents

For Practice Solving

1. XYZ Company reported total cash and cash equivalents of P3,650,000 on December 31, 2020. The
following items are included in its cash and cash equivalents.
 Investment securities of P200,000, these investments are actively traded in the market.
 XYZ Company has agreed to maintain a cash balance of P100,000 in one of its banks (this
amount is not legally restricted as to withdrawal).
 Investment securities of P500,000. These securities are commercial paper. The term of
the papers is six months, and they were purchased on November 1 at which time they had
three months to go until they mature.
How much is the correct amount of cash and cash equivalents that XYZ Company should report in its
December 31, 2020 statement of financial position?
A. P3,650,000
B. P3,450,000
C. P4,850,000
D. P3,950,000

3,650,000 – 200,000 = 3,450,000

2. XYZ Company reported a cash balance of P3,310,476 on December 31, 2020. The amount consists of
the following:
 Petty cash fund (including expense receipts for P 2,340)- P10,000
 Checking account in BDO (outstanding checks at Dec. 31, P26,780)- P286,230
 Cash on hand, including a customer’s check of P4,750 dated January 15, 2021- P38,246
 Cash in bank, General account, net of P12,000 bank overdraft in another bank’s account-
P284,000
 Cash in bank, payroll account, net of P 8,500 check dated December 26, but undelivered
as of December 31, 2020- P225,000
 Sinking fund cash- P1,567,000
 Short-term treasury bills- P120,000
 Cash surrender value of life insurance- P780,000
At what amount should cash and cash equivalents of XYZ reported at December 31, 2020?
A. P2,403,386
B. P976,886
C. P945,356
D. P814,356

10,000 – 2,340 + 286,230 + 33,496 + 296,000 + 233,500 + 120,000 = 976,886

3. XYZ Company reported a total cash and cash equivalent of P6,500,000 on December 31, 2019, which
includes the following information:
 Two certificates of deposit, each totaling P600,000. These certificates of deposit have a
maturity of 120 days
 A check that is dated January 12, 2020 in the amount of P150,000
 A commeXYZial paper of P2,500,000 which is due in 120 days
 Currency and coins on hand amounted to P10,500
XYZ Company has agreed to maintain a cash balance of P500,000 in one of its banks at all times and
it is not available for withdrawal and to ensure future credit availability (this amount was included in the
above balance). How much is the correct amount of cash and cash equivalents that XYZ Company
should report in its December 31, 2019 statement of financial position?
A. P6,500,000
B. P2,650,000
C. P2,150,000
D. P2,139,500

4. On December 31, 2019, XYZ Company had the following cash balances:

 Cash in bank- P2,500,000

 Petty Cash fund (all funds were reimbursed on 12/31/2019)- P150,000
 Time deposit (start date: December 1, 2019 and due February 14, 2020)- P350,000
Cash in bank included P900,000 of compensating balance against short-term borrowing arrangement on
December 31, 2019. The compensating balance is legally restricted as to withdrawal. In the December
31, 2019, statement of financial position, what total amount should be reported as cash and cash
equivalents?
A. P3,000,000
B. P2,650,000
C. P2,100,000
D. P1,750,000

2,500,000 – 900,000 +150,000 + 350,000 = 2,100,000

5. A cash account in the morning of January 2, 2020 showed the following items in the petty cash of XYZ
Corporation: Currencies and coins counted- P2,512; Company check for replenishment- P18,000;
Approved and paid petty cash vouchers- P2,900; Employees’ IOUs- P36,000. The petty cash fund was
established for an amount of P60,000. What is the correct amount of petty cash on the balance sheet
as of December 31, 2020?
A. P2,512
B. P18,000
C. P20,512
D. P60,000

6. XYZ Inc. reported petty cash fund which comprised the following: Coins and currencies P3,300; Paid
vouchers: Transportation- P600, Gasoline- P400, Office supplies- P500, Postage stamps- P300, Due from
employees- P1,200; NSF managers check- P1,000; Checks drawn by the order of the custodian- P2,700.
What is the correct amount of petty cash fund for financial statement presentation purposes?
A. P10,000
 B. P7,000
C. P6,000
D. P 9,000

2,700 + 3,300 = 6,000

7. XYZ Inc. had the following bank reconciliation at March 31, 2020:
 Balance per bank statement, 3/31/20- P37,200
 Deposit in transit- P10,300
 Outstanding checks- P12,600
 Balance per books, 3/31/20- P34,900
Data per bank for the month of April 2020 follow:
 Deposits- P46,700
 Disbursements P49,700
All reconciling items at March 31, 2020 cleared the bank in April. Outstanding checks at April 30, 2020
totaled P6,000. There were no deposits in transit at April 30, 2020. What is the cash balance per books
at April 30, 2020?
A. P28,200
B. P31,900
C. P34,200
D. P38,500

Mar. 31 Receipts Disbursements April 30

Unadjusted bal – bank 37,200 46,700 49,700 34,200
DIT – Mar. 31 10,300 (10,300)
- April 30 NA
Outstanding Checks – Mar 31 (12,600) (12,600)
- April 30 6,000 (6,000)
Correct bal. 34,900 36,400 43,100 28,200

Unadjusted bal. – book 34,900 36,400 43,100 28,200

Correct bal. 34,900 36,400 43,100 28,200

8. ABC Company reported a balance of P258,000 in its Cash account at the end of the month. There
were P120,000 deposits in transit and P90,000 outstanding checks. The bank statement showed a
balance of P300,000, service charges of P36,000 and the proceeds of a note collected by the bank for
the company. The note had a face value of P90,000. The interest on the note collected by the bank was

A. P72,000
B. P54,000
 C. P36,000
D. P18,000

9. The following bank reconciliation is presented for the XYZ Company for the month of September 30,
2020:
Balance per bank statement, 09/30/2020 P324,720
Add: Deposit in transit P74,700
Erroneous bank charge 27,000 101,700
Subtotal P426,420
Less: Outstanding checks 140,760
Balance per books, 09/30/2020 P285,660

Data for the month of October 2020 follow:

Per bank:
October deposits/credits P469,800
October charges/debits 403,560
Balance, October 31, 2020 390,960
All items that were outstanding as of September 30 cleared through the bank in October, including the
erroneous bank charge. In addition, P45,000 checks were outstanding as of October 31, 2020. What is
the amount of cash disbursements per books in October 2020?
A. P262,800
B. P307,800
C. P448,560
D. P499,320

10. Refer to XYZ Company. What is the amount of cash receipts per books in October 2020?
A. P368,100
B. P395,100
C. P422,100
D. P442,800

11. Assume the following facts for Kurt Company: The month-end bank statement shows a balance of
P40,000; outstanding checks total P2,000; a deposit of P8,000 is in transit at month-end; and a check for
P400 was erroneously charged against the account by the bank. What is the correct cash balance at the
end of the month?
A. P33,600
B. P34,400
C. P45,600
D. P46,400
12. The following selected data were taken from the bank statement and cash records of Voltes V for
the months of November and December 2020.
• December receipts recorded in the books amounted to P482,750 and checks written during
the same period were P405,500.
• November bank service charges of P2,000 were recorded in the books in December.
• A debit memo for a customer’s NSF check for P5,800 is included in the December bank
statement.
• Outstanding checks at November 30 and December 31 were P63,000 and P75,500,
respectively.
How much is the unadjusted cash disbursements per bank statement during the month of December?
A. P402,700
B. P415,200
C. P398,800
D. P400,700

Nov. 30 Receipts Disbursements Dec 30

Unadjusted bal – bank 396,800
OC – Nov 31
- Dec 30
Outstanding Checks – Nov 30 (63,000) (63,000)
- Dec 31 75,500 (75,500)
Correct bal. 409,300

Unadjusted bal. – book 482,750 405,500

Bank Service Charge – Nov. (2,000) (2,000)
DM – NSF – Dec. 5,800 (5,800)
Correct bal. 409,300

13. The following information was included in the bank reconciliation for Grab Company for June:
Checks and charges recorded by bank in June (including a June service charge of P900), P185,000;
Service Charge made by bank in May and recorded on the books in June, P500; Total of credits to cash in
all journals during June, P205,500; Customer's NSF check returned as a bank charge in June (no entry
made on books), P3,100; Customer's NSF check returned in May and redeposited in June (no entry made
on books in either May or June), P2,500; Outstanding checks at June 30, P85,500 and deposit in transit
at June 30, P6,000.
What were the total outstanding checks at the beginning of June?
A. P58,500
B. P62,000
C. P61,500
D. P65,000

OC, Beg. 61,500

Add: Checks issued by the company (205,500 – 500) 205,000
Total 266,500
Less: Checks cleared by the bank (185,000 – 900 – 3,100) 181,000
Outstanding checks, end. 85,500