Intermediate accounting by robles empleoch 2 answers

CHAPTER 2 CASH AND CASH EQUIVALENTS PROBLEMS 2.1 Money Company Customers’ check on hand: Alternative computation: The outstanding checks of P15,200 was simply ignored since the given ba

CHAPTER 2 CASH AND CASH EQUIVALENTS

PROBLEMS

2.1 (Money Company)

Customers’ check on hand:

Alternative computation:

The outstanding checks of P15,200 was simply ignored since the given balance of cash is a cash balance per books Short-term treasury bills of P52,000 is reported

as part of trading securities unless there is an indication of a maturity of three months or less in which case, it is included as part of cash and cash equivalents Meanwhile, sinking fund cash of P35,000 is reported as a noncurrent financial asset

2-2 (Cotton Company)

Adjustments:

2-3 (Grain Company)

NSF checks, IOUs and customers’ post dated checks are reported as receivables while postage stamps and travel advances are prepaid expenses Meanwhile, cash in sinking fund is reported as a noncurrent financial asset

2-4 (Rod Company)

Petty cash (10,000 – 1,250) P 8,750

Cash in bank- General (750,000 + 12,500) 762,500 Cash in bank, Payroll (320,000 + 10,000) 330,000

IOU from an employee and customers’ post dated check are receivable items; the bank overdraft in another bank is reported as a current liability (offset can be made only if the accounts are with the same bank); the savings deposit is a non-current item since it is intended for a non-current purpose (for plant expansion)

2-5 (Jessie Company)

Dec 15

Dec 16 –

2-6 (Coral Company)

P5,000.00

Total petty cash vouchers:

4,951.00

49.00

(b) Office Supplies Expense 341.60

Petty Cash Fund 4,329.60

2-7 (Silver Company)

Undelivered check included in the outstanding checks

9,000

Check of Silver Lining charged by bank to Silver Co.’s account

12,000

2-8 (Lily Company)

P275,000 Deposit in transit at August 31 35,000

Note collected by bank in behalf of Lily Company ( 50,000)

Cash receipts per books during August P220,000

Outstanding checks at July 31 ( 60,000)

Service charge by bank ( 1,500)

Cash disbursements per books during August P138,500

Cash receipts per books (see a) 220,000

Cash disbursements per books (see b) ( 138,500)

Unadjusted cash balance per books at August 31 P231,500

or Unadjusted bank statement balance at August 31

(180,000 + 275,000 – 220,000) P235,000

Outstanding checks, August 31 ( 25,000)

Deposits in transit, August 31 35,000

Note collected by bank ( 50,000)

P235,000

or

50,000

Bank service charge for March

( 92.00)

27,637.60

21,637.60

6,000.00

2-10 (VAB, Inc.)

30,000

Add cash disbursements per books:

89,000

Less checks cleared during May:

69,500

Outstanding checks at May 31 P 49,500

2-11 (Lorna Cruz’ Hearing Aid)

Note collected by bank in July recorded

2-12 (Fernando Company)

2-13 (Real Gem Company)

Add checks cleared by bank during December

Erroneous bank credit in November

2-14 (Pearl Corporation)

Outstanding checks at December 31 (see above) (172,000)

2-15 (Lira Company)

2-16 (Pound Company) Per Bank

Per Books

Balances before adjustments P31,948 P17,194

Debit memo for printed checks ( 125)

Deposit of July 31 not yet recorded by bank 4,880

Proceeds of a bank loan, net of P300 interest 5,700 Proceeds from customer’s note, including P100 interest 8,100 Check #1210 for P2,100 erroneously deducted by bank as P1,200 (900)

Stolen check lacking authorized signature deducted by bank in

Customer’s NSF check returned by bank _ (760) Correct cash balance P30,000 P30,000

2-17 (Amethyst Corporation)

( 59,435)

1,600

2-18 (Giordano Corporation)

Giordano Corporation Bank Reconciliation December 31, 2009

Customer’s check for P29,040 erroneously

recorded as P94,020 64,980

2-19 (Leo Company)

2-20 (Bench Company)

Per Bank Per Books Balances before adjustments P892,346.30 P590,884.60 Outstanding checks

(333,788.20) Receipts of 12/31/07 deposited on 1/2/06 53,172.00

Service charges for December ( 225.00) Proceeds of bank loan omitted from company records 97,000.00 Deposit of 12/23/07 omitted from bank statement 28,924.10

Check of Rome Products Co charged by bank for lack of

counter signature (8,737.40) Bank error for a deposit of P31,824 recorded as P31,814 10.00

Check of Birch Company erroneously charged by bank 26,900.00

Proceeds of note collected by bank 20,350.00 Erroneous debit by bank for bank loan paid by company 50,000.00

Bank error for a deposit of P48,071 recorded as P48,171 ( 100.00

Deposit of Birch Company erroneously credited by bank (18,192.00) Adjusted cash balance P699,272.20 P699,272.20

2-21 (Penshoppe Company)

Petty Cash Fund

Cash on hand

Cash in Metrobank

Cash in Allied Bank

Employee advances of P880 is reported as a receivable; unreplenished petty cash vouchers are expenses; and currency in an enveloped marked collections for charity

is a non-company fund Postal money orders of P1,800 is a proper inclusion to cash The savings account deposit in Security Bank is reported as a non-current asset since

it is intended for a non-current purpose

2-22 (ABC Services, Inc.) ABC Services, Inc.

Four-Column Reconciliation November 30-December 31, 2009

Nov 30 DecemberReceipts DisbursemenDecember

ts Dec 31 Balances per bank statement P294,771.0

0 P1,065,620.00 P1,211,405.00 P148,986.00 Receipts not yet deposited

November 30 21,270.00 (21,270.00)

December 31 32,925.00 32,925.00 Outstanding checks

November 30 (40,525.00

) (40,525.00) December 31 35,191.50 (35,191.50) Erroneous charge by bank _(625.00) _625.0

0 Correct balances P275,516.0 P1,077,275.0

0 P1,205,446.50 P147,344.50 Balances per books P270,311.0

0 P1,072,850.00 P1,195,536.50 P147,624.50 Bank service charges

November 30 (295.00) (295.00)

Interest credit by bank

November 30 5,500.00 (5,500.00)

December 31 4,925.00 4,925.00 Uncollectible customer’s check 5,947.00 (5,947.00) NSF returned and redeposited in

Check #137412 for P2,300

recorded as P3,200 in error _(900.00) _900.0

0 Correct balances P275,516.0

0 P1,077,275.00 P1,205,446.50 P147,344.50

MULTIPLE CHOICE QUESTIONS Theory

Problems

MC32 c

55,000 – 52,000 = 3,000

or 3,600 + (336,750-6,000) + (178,000-10,500) = 501,850

or 653,230 – 98,760 + 123,450 = 677,920

583,000+78,000–86,000 + 53,000 – 48,000 = 580,000 payments to trade creditors;

62,000 + 774,000 – 580,000 – 107,000 =149,000

923,500

83,500 = 39,500

50,000 + 9,700 = 59,700