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    Chapter 2 - Cash and Cash Equivalents

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    Jerome_Jade
    The document discusses cash and cash equivalents accounting for multiple companies. It addresses presentation of cash and cash equivalents on the statement of financial position, treatment of restricted versus unrestricted amounts, foreign currency translation, and accounting for petty cash funds including replenishment and discrepancies.

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    Chapter 2 - Cash and Cash Equivalents

    Uploaded by

    Jerome_Jade
    109 views2 pages
    The document discusses cash and cash equivalents accounting for multiple companies. It addresses presentation of cash and cash equivalents on the statement of financial position, treatment of restricted versus unrestricted amounts, foreign currency translation, and accounting for petty cash funds including replenishment and discrepancies.

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    © © All Rights Reserved

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    The document discusses cash and cash equivalents accounting for multiple companies. It addresses presentation of cash and cash equivalents on the statement of financial position, treatment of restricted versus unrestricted amounts, foreign currency translation, and accounting for petty cash funds including replenishment and discrepancies.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    109 views2 pages

    Chapter 2 - Cash and Cash Equivalents

    Uploaded by

    Jerome_Jade
    The document discusses cash and cash equivalents accounting for multiple companies. It addresses presentation of cash and cash equivalents on the statement of financial position, treatment of restricted versus unrestricted amounts, foreign currency translation, and accounting for petty cash funds including replenishment and discrepancies.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Cash

    1. The records of SML Co. on December 31, 20x1 show the following:
    Checks drawn but not yet issued to payees P120,000
    Customers’ checks dated January 15, 20x2 35,000
    Customers’ checks dated December 31, 20x1 40,000
    SML’s check dated January 15, 20x2 already mailed to payee 16,000
    Cash on hand 130,000
    Employees’ checks representing unclaimed salaries, held by the treasurer 14,000
    Petty cash fund (full replenished) 20,000

    Requirement: How much is included as cash on December 31, 20x1?

    Cash Equivalents
    2. Behringer Co. holds the following securities on December 31, 20x1:
    Treasury bill acquired on November 1, 20x1, maturing on January 31, 20x2 P300,000
    Money market placements to RCBC trust, made on December 15, 20x1, maturing 800,000
    on August 31, 20x2
    Redeemable preference shares acquired on December 31, 20x1 and redeemable on 1,600,000
    March 31, 20x2
    Three-month time deposit with UCPB 950,000
    Investment in shares of stock acquired on December 31, 20x1 to be sold in January 450,000
    20x2

    Requirement: How much is presented as cash equivalents?

    FS presentation, Measurement and Deposit in foreign bank


    3. Smile Co. has the following items on December 31, 20x1:
    Cash on hand (peso) P1,800,000
    Cash on hand (USD, translated at P50:$1) 2,900,000
    Revolving fund 200,000
    Contingency fund 80,000
    Cash in bank – BPI 6,000,000
    Cash in bank – Swiss Savings Account (translated P51:CHF1) 1,400,000
    Treasury Bill acquired September 28, 20x1, maturing January 28, 20x2 600,000

    Additional information:
     The current exchange rates on December 31, 20x1 are as follows: (P52:$1 and P49:CHF1).
     The Swiss Savings Account is restricted as to withdrawals.

    Requirement: How much is presented as cash and cash equivalents in Smile Co.’s December 31, 20x1
    statement of financial position?

    Compensating balance and Bank Overdraft


    4. Cloudy Co.’s cash in bank consists of the following:
    Piggy Bank savings account P480,000
    Piggy Bank checking account (20,000)
    Oink Bank checking account 360,000
    Porky Bank savings account #123456789 200,000
    Porky Bank checking account #987654321 (70,000)
    Unused credit line – Bombay Bank 250,000

    Additional information:
     The Piggy Bank savings account includes P40,000 compensating balance that is not legally restricted.
     The Oink Bank checking account includes P100,000 compensating balance that is legally restricted.
     The Porky Bank savings account #123456789 represents a cash bond that is mandated by a law court
    to be held pending the final settlement of an on-going litigation.

    Requirement: What amount of cash in bank is presented in the financial statements?

    Accounting for PCF


    5. An entity established a petty cash fund (PCF) of P30,000 on October 1, 20x1. During the month, P24,260 have
    been disbursed from the PCF, and by the end of the month, the PCF box contains coins and currencies amounting
    to P5,625.
    Requirement: Provide the journal entries including the replenishment of the fund at month-end. Use a
    suspense account to record any discrepancy.

    6. Use the information in #5 above but assume the PCF is not replenished and financial statements are prepared
    at month end. Assume further that all discrepancies in the PCF are chargeable for the petty cash custodian.

    Requirement: Provide the adjusting entry and determine the amount of PCF that will be reported in the
    financial statements.

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