Professional Documents
Culture Documents
Cash & Cash Equivalents
Cash & Cash Equivalents
Chapter 2
Cash and Cash Equivalents
1. The amount reported as "Cash" on a company's statement of financial position normally should
exclude
a. postdated checks that are payable to the company.
b. cash in a payroll account.
c. undelivered checks written and signed by the company.
d. petty cash.
6. On January 1, 2002, Kyle Corporation established a petty cash fund of ₱400. On December 31,
2002, the petty cash fund was examined and found to have receipts and documents for
miscellaneous expenses amounting to ₱364. In addition, there was cash amounting to ₱44. What
entry would be required to record replenishment of the petty cash fund on December 31, 2002?
7. On December 31, 2009, West Company had the following cash balances:
Tran’s policy is to treat as cash equivalents all highly liquid investments with a maturity of three
months or less when purchased. What amount should Trans report as cash and cash equivalents in
its December 31, 2009, balance sheet (statement of financial position)?
a. P110,000
b. P385,000
c. P460,000
d. P860,000
Additional information:
Cash on hand includes undeposited collections of P60,000.
The cash in bank – savings maintained at BPI includes a P150,000 compensating balance which is
not restricted.
10. As of December 31, 20x1, the petty cash fund of TUMULT COMMOTION Co. with a general
leger balance of P15,000 comprises the following:
Coins and currencies P 2,550
Petty cash vouchers:
Gasoline for delivery equipment P3,000
Medical supplies for employees 2,040 5,040
IOU’s:
Advances to employees 2,220
A sheet of paper with names of several employees
together with contribution to bereaved employee,
attached is a currency of 2,400
Checks:
Check drawn to the order of the petty cash custodian 3,000
Personal check drawn by the petty cash custodian 2,400
The entry to record the replenishment of the petty cash fund includes
a. A debit to cash short/overage account of P2,190 and a credit to cash on hand of P9,450.
b. A credit to cash short/overage account of P810 and a credit to cash of P12,450.
c. A debit to cash short/overage account of P810 and a credit to petty cash fund of P12,450.
d. A debit to cash short/overage account of P2,190 and a credit to cash in bank of P9,450.
“There is a time for everything, and a season for every activity under the heavens;” (Ecclesiastes 3:1)
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SOLUTIONS:
7. D (1,800,000 + 50,000) = 1,850,000
8. C (35,000 + 75,000 + 350,000) = 460,000
9. A (300,000 + 600,000 – 240,000) = 660,000
10. D (2,550 + 5,040 + 2,220 + 3,000) = 12,810 per count – 15,000 accountability = (2,190) shortage