QUIZ 1: CASH

PART I. TRUE OR FALSE: Identify if the statements are true or false. Choose the letter
that represents the correct combination of answers.

a. Both statements are true. c. Only statement II is true.

b. Only statement I is true. d. Both statements are false.

1. Statement 1: The company deposited the customer’s payment to the bank. The book
recorded it, hence the bank should credit it as well. TRUE
Statement 2: Cash items are unrestricted and immediately available for use in current
operations and for payment of longterm liability. FALSE
2. Statement 1: Overstatement of CR, which is an errors last month corrected this
month, shall be adjusted by deducting the amount in the beginning
balance and adding the amount to the receipt. FALSE
Statement 2: Cash in closed banks or banks having financial difficulty or in
bankruptcy – reclassified as receivable and should be written down to
its recoverable amount. TRUE
3. Statement 1: The company discovered that it had erroneously charge P15,000 but it
should be a receipt in the book record. The company should correct this
error by adding back the P15,000 to correct the error. FALSE
Statement 2: Undelivered checks shall be included in the outstanding checks. FALSE
4. Statement 1: NSF check is a debit memo and should be adjusted by the bank.
FALSe
Statement 2: Cash Equivalents are considered Cash. FALSE
5. Statement 1: Understatement of CD, which is an erro this month not yet corrected,
shall be adjusted by adding the amount to the disbursement and
deducting the amount to the ending balance. TRUE
Statement 2: Credit memo are charges made by the bank but not yet recorded to the
book. FALSE
6. Statement 1: Fund for acquisition of PPE to be disbursed within 1 years chall be
classified as Cash. FALSE
Statement 2: Under imprest system of cash control all cash receipts are deposited
intact and all cash payments should be made by means of checks.
TRUE
7. Statement 1: By default, pension fund shall be classified as Cash. FALSE
Statement 2: In all cases, the cash balance per book and bank should always equal.
FALSE
8. Statement 1: Short-term highly liquid investments that are readily convertible into
cash and is acquired three months before maturity. TRUE
Statement 2: Under the fluctuating system, no adjusting entry is necessary for the
unreplenished vouchers. TRUE
9. Statement 1: Bond Sinking Fund to be disbursed within 1 year shall be classified as
Cash. TRUE
Statement 2: Treasury note & bond are by default classified as Cash unless
otherwise stated by the problem. FALSE
10. Statement 1: Under the imprest system, MEMO entry shall only be prepared for the
payment of expenses with respect to petty cash fund. TRUE
Statement 2: If the problem is silent, compensating balance is assumed to be not
legally restricted. TRUE
PART II. MULTIPLE CHOICE PROBLEM: Choose the letter that correspond your answer.
PROBLEM 1
Niel Murla Company provided the following information for the month of December:
Balance per bank statement 2,800,000
Deposit in transit 195,000
Checkbook printing charge 5,000
Time deposit – 3 months 25,000
Error made by Murla in recording a check issued in December 35,000
NSF checks 110,000
Treasury bonds – 2 years 100,000
Outstanding checks 100,000
Note collected by bank including P 15,000 interest 215,000
Cash on hand at year-end 175,000

1.) What amount of cash should be reported?

1) 2,930,000 b. 3,095,000 c. 2,895,000 d. 3,195,000 e. None of the choices

PROBLEM 2
The cash account shows a balance of P 450,000 before reconciliation. The bank statement does
not include a deposit of P 23,000 made on the last day of the month. The bank statement shows
a collection by the bank of P 9,400 and a customer’s check for P 3,200 was returned because it
was NSF. A customer’s check for P 4,500 was recorded on the books at P 5,400, and a check
written for P 790 was recorded as P 970.

2.) The adjusted balance in the cash account was

a. 455,120 b. 455, 480 c. 457,280 d. 478,480 e. None of the choices

3.) The unadjusted bank balance was

a. 432,120 b. 432, 480 c. 434,280 d. 455,480 e. None of the choices

PROBLEM 3
Divine Company prepared the following bank reconciliation on December 31, 2016:
Balance per bank statement P2,800,000
Add: Deposit in Transit 195,000
Checkbook printing 5,000
charge
Error made by Divine
in recording check 35,000
issued in Dec
 NSF Check 110,000 345,000
Total 3,145,000
Less: Outstanding check 100,000
Note collected by
bank including 215,000 315,000
P15,000 interest
Balance per book P2,830,000

The entity had a cash on hand P500,000 and petty cash fund P50,000 on December 31, 2016.

4.) What amount should be reported as cash in bank on December 31, 2016?
a. 2,930,000 b. 3,095,000 c. 2,895,000 d. 3,130,000 e. None of the choices
5.) What total amount of cash should be reported on December 31, 2016?
a. 3,395,000 b. 3,350,000 c. 3,445,000 d. 3,380,000 e. None of the choices

PROBLEM 4
The following date pertains to PRTC Corporation at December 31, 2015:

Current account at Metro Bank P1,800,000

Current account at Metro Bank (100,000)
Current account at BDO (120,000)--
Payroll account 500,000
Foreign bank account ( in equivalent pesos) 800,000
Savings deposit in closed bank 150,000--
Postage stamp 1,000--
Employee’s post-dated checks 4,000--
IOU from employees 10,000--
Bond Sinking Fund- to be disbursed this 2016. 1,000,000
Traveler’s checks 50,000
Money order 30,000
Petty cash fund ( P4,000 in currency and 10,000
expense receipt for P6,000)
Pension fund 2,000,000--
DAIF check of customer 15,000--
Customer check dated 1/1/16 80,000--
Time deposit- 30 days 200,000
Money market placement (due 6/30/16) 500,000--
Treasury bills, due 3/31/16 (purchased 12/31/15) 200,000
Treasury bills, due 1/31/16 (purchased 2/1/15) 300,000--
6.) Determine the Cash to be reported on the entity’s December 31, 2015 statement of Financial
Position.

a. 3,964,000 b. 3,084,000 c. 4,184,000 d. 4,084,000 e. None of the choices

7.) Determine the Cash Equivalents to be reported on the entity’s December, 31 2015 statement
of Financial Position.

a. 1,200,000 b. 900,000 c. 400,000 d. 700,000 e. None of the choices

PROBLEM 5
1P Excellent Company had the following account balances on December 31, 2016:
Petty Cash fund P50,000
Cash in Bank – Current account 4,000,000
Cash in Bank – Payroll account 1,200,000
Cash in Bank – Sinking fund 2,000,000
Cash on Hand 500,000
Cash in Bank – restricted account for 1,500,000
plant addition and expected to be
disbursed in 2017
Treasury bills 1,000,000

The petty cash fund included unreplenished December 2016 petty cash expense voucher P5,
000 and employee IOU P5, 000.

The cash on hand included a P100,000 customer check payable to 1P Excellent Company
dated January 15, 2017.

8.) What total amount should be reported as cash and cash equivalents on December 31, 2016?

a. 6,650,000 b. 6,640,000 c. 6,750,000 d. 8,750,000 e. None of the choices

PROBLEM 6
Maganda Company provided the following bank reconciliation on May 31:
Balance per Bank Statement 2,100,000
Deposit Outstanding 300,000
Check Outstanding (50,000)
Correct Cash Balance 2,350,000
Balance per Book 2,360,000
Bank Service Charge (10,000)
Correct Cash Balance 2,350,000
Data for the month of June:
Bank Book
Checks recorded 2,300,000 2,400,000
Deposits recorded 1,700,000 1,800,000
Collection by Bank, P500,000 note
plus Interest 550,000
NSF Check Returned 100,000
Balances 1,950,000 1,750,000

9.) What is the amount of Deposit in Transit on June 30?

a. 400,000 b. 100,000 c. 200,000 d. 0 e. None of the choices
10.) What amount should be reported as Adjusted Cash in Bank on June 30?
a. 1,760,000 b. 2,200,000 c. 1,950,000 d. 2,250,000 e. None of the choices
ANSWER KEY:
PART I. TRUE OR FALSE:
1) B
2) C
3) D
4) D
5) B
6) C
7) D
8) A
9) B
10) A
PART II. MULTIPLE CHOICE PROBLEM:
11) E
12) B
13) B
14) C
15) C
16) D
17) C
18) B
19) A
20) B

SOLUTIONS:
PROBLEM 1
BOOK BANK
2,800,000
DIT 195,000
Checkbook Printing -5,000
NSF checks -110,000
Outstanding checks -100,000
Book Error 35,000
Note collected by bank including P 15,000 interest 215,000
Adjusted Balance 2,895,000
Cash on Hand 175,000
Cash 3,070,000
PROBLEM 2
BOOK BANK
Unadjusted Balance 450,000 432,480
DIT 23,000
Collection 9,400
NSF -3,200
Book Error- overstatement of Receipt -900
Book Error- overstatement of Disbursement 180
455,480 455,480

PROBLEM 3
BOOK BANK
Unadjusted Balance 2,830,000 2,800,000
Deposit in Transit 195,000
Checkbook printing charge -5,000
Error made by Divine in recording check issued in Dec -35,000
NSF Check -110,000
Outstanding check -100,000
Note collected by bank including P15,000 interest 215,000
Adjusted Balance 2,895,000 2,895,000
cash on hand 500,000
petty cash fund 50,000
Cash 3,445,000

PROBLEM 4 CASH CE
Current account at Metro Bank (1,800 - 100) 1,700,000
Payroll account 500,000
Foreign bank account ( in equivalent pesos) 800,000
Bond Sinking Fund- to be disbursed this 2016 1,000,000
Traveler’s checks 50,000
Money order 30,000
Petty cash fund 4,000
Time deposit- 30 days 200,000
Treasury bills, due 3/31/16 (purchased 12/31/15) 200,000
TOTAL 4,084,000 400,000
PROBLEM 5
Petty Cash fund (5,000 - 10,000) 40,000
Cash in Bank – Current account 4,000,000
Cash in Bank – Payroll account 1,200,000
Cash on Hand (500,000 -100,000) 400,000
Treasury Bills 1,000,000
TOTAL 6,640,000

PROBLEM 6
DIT, Beg 300,000
Deposits recorded by book 1,800,000
Deposits recorded by bank -1,700,000
DIT, End 400,000

OC, Beg 50,000

Checks recorded by book 2,400,000
Checks recorded by bank -2,300,000
OC, End 150,000

BOOK BANK
Unadjusted Balance 1,750,000 1,950,000
DIT 400,000
OC -150,000
COLLECTION 550,000
NSF -100,000
Adjusted Balance 2,200,000 2,200,000