DOMALAON, Lorie Jae E.

HW # 1
ACT 123 April 25, 2017

EASY
1. Summit Company reported the following information at the current
year-end:
Share investments of P 1,000,000 that very actively traded in the
stock market.
Government treasury bills of P 2,000,000 with a 10-year term but
purchased on December 31 at which time they had two months
to go until maturity.
Cash of P3,400,000 in the form of coin, currency, saving account
and checking account.
Commercial papers of P 1,500,000 with term of nine months but
purchased on December 31 at which time they had three months
to go until maturity.
What total amount should be reported as Cash Equivalents? P 3,500,000
SOLUTION:

Government T-bills 2,000,000

Commercial papers 1,500,000
Total Cash Equivalents P 3,500,000

2. On December 31,2014, Kath Company has the following information concerning its cash
and cash equivalents and some other items:

Coins and currency.............................P50,000

Checks received from customers........ 600,000
Certificate deposit, term:12m ....... 800,000
Petty cash fund. 4,000
Postage stamps 600
Bank A ,checking account balance.....2,100,000
Post-dated check, custom........... 10,000
Money order from customer ......... 15,000
Cash in savings account..... 100,000
Bank draft from customer........ 40,000
Utility deposit to gas company,
refundable.............................................. 5,000
Cash advance received
fromcustomer.............. 8,000
NSF check, C. Company...................... 20,000
Cash advance to company executive,
collectible upon demand... 200,000
Bank B, checking account,
overdraft.............................................. 20,000
IOUs from employees......................... 12,000
DOMALAON, Lorie Jae E. HW # 1
ACT 123 April 25, 2017
What amount of cash and cash equivalent should Agenda Company report in its December 31,
2014 statement of financial position? P 2,909,000

SOLUTION:
Coins and currency P 5,000
Checks from customers 650,000
Petty cash fund 4,000
Checking account- A 2,100,000
Money order 15,000
Savings account 100,000
Bank draft 40,000
Total 2,909,000

3. Summer Company reported petty cash fund which comprised the

following:
Coins and currency 3,000
Paid vouchers:
Travel expenses 700
Gasoline 400
Office Supplies 500
Postage Stamps 200
Due from employees 1,200 3,000
Managers check returned by bank marked NSF 1,000
Check drawn by entity to the order of PC Custodian 700

What is the correct amount of petty cash fund for statement presentation
purposes? P 3,7000

SOLUTION:
Coins and currency 3,000
Check drawn by entity to the order of PC Custodian 700
Total amount of petty cash 3,700

MODERATE
4. Del Company reported checkbook balance on December 31, 2016 at P
4,000,000.
A customer checks amounting to P 200,000 dated January 2,
2017 was included in the December 31, 2016 checkbook
balance.
Another customer checks for P 500,000 deposited on December
22, 2016 was included in the checkbook balance but returned by
DOMALAON, Lorie Jae E. HW # 1
ACT 123 April 25, 2017
the bank for insufficiency of fund. This check was re-deposited on
December 26, 2016 and cleared two days later.
A P 400,000 check payable to supplier dated and recorded on
December 30, 2016 was mailed on January 16, 2017.
A petty cash fund of P 50,000 comprised the following on
December 31, 2016:
o Coins and currencies 5,000
o Petty cash vouchers 43,000
o Return value of 20 cases of soft drinks 2,000
50,000
A check of P 43,000 was drawn on December 31, 2016 payable
to Petty Cash.
What total amount should be reported as cash on December 31, 2016? P
4,248,000
SOLUTION:
Checkbook balance 4,000,000
Postdated customer checks (200,000)
Undelivered check payable to supplier 400,000
Adjusted cash in bank 4,200,000
Petty cash:
Coins and currencies 5,000
Replenishment check 43,000 48,000
TOTAL 4,248,000

HARD

5. Real Company had the following transactions through out the year 2014 which is its first
year of operations:

Sales (90% collected in its 1st year) P1,500,000

Bad debt written off 60,000
Disbursement for cost and expenses 1,200,000
Disbursement for income taxes 90,000
Purchases of fixed assets 400,000
Depreciation on fixed assets 80,000
Proceeds from issuance of ordinary assets 500,000
Proceeds from shot-term borrowings 100,000
Payments on short-term borrowings 50,000

What is the cash balance at December 31, 2014?

A) P150,000 B) P170,000
C) P210,000 D) P280,000

SOLUTION:
DOMALAON, Lorie Jae E. HW # 1
ACT 123 April 25, 2017
Total cash receipts:
Collection from credit sales 1,350,000
Proceeds from ordinary share 500,000
Proceeds from short-term borrowings 100,000
Less: Total Disbursements:
For cost and expenses (1,200,000)
For income taxes (90,000)
For purchases of fixed assets (400,000)
Payments of short-term borrowings (50,000)
Cash balance, December 31 P210,000