CASH AND CASH EQUIVALENTS

Illustration 1: The following information has been extracted from the accounting records of the LAUS
COMPANY at December 31, 2018:

a. Cash on hand (see note below) P230,000

b. Impukan Bank savings account (the required
minimum Monthly Average Daily Balance is P10,000) 9,500
c. 364-day Treasury bills purchased March 1, 2018 400,000
d. Petty cash fund (see note below) 20,000
e. Tipid Bank current account (see note below) 160,000
f. Time deposit placements:
DATE TERM AMOUNT
December 15, 2018 30 days 30,000
October 31, 2018 90 days 40,000
November 30, 2018 180 days 25,000

g. Employee travel advances 7,000

h. Cash in bond sinking fund 500,000
i. Customer's note receivable 45,000
j. Postage stamps 2,400

The following are included in cash on hand:

 A customer check for P43,000 returned by the bank December 28, 2018. It was redeposited and
cleared the bank on January 2, 2019
 A customer check for P75,000 dated January 3, 2019, received December 27, 2018
 PHLPost money orders received from customers, P300,000.

The petty cash fund consists of the following:

Currency and coins P13,500
IOUs from officers and employees 3,000
Unreplenished petty cash disbursements 1,500
Currency in envelope with the notation:
"We were Bang Quays coworkers. Words may
not be adequate to express how sorry we feel.
Please accept our heartfelt sympathies on the
loss of your loved one." 1,500
P20.000
The following information pertains to Tipid Bank current account:
 A check for P 13,000 was dated and recorded on December 29, 2018, but was delivered to
payee on January 5, 2019.
 A check for P5,000 dated January 10, 2019, payable to a supplier was recorded and released to
payee on December 19, 2018. Tipid Bank requires current account depositors to maintain a
monthly average daily balance of P50,000.

REQUIRED: CASH AND CASH EQUIVALENTS BALANCE ON DECEMBER 31, 2018

Cash on hand (P230,000 - P43,000 – P75,000) P112,000

Impukan Savings Account 9,500
Petty Cash Fund 13,500
Tipid Bank Current Account (P160,000 + P13,000 + P5,000) 178,000
Time deposit: 30 days and 90 days (P30,000 + P40,000) 70,000
TOTAL CASH AND CASH EQUIVALENTS P383,000

⃰ If the account holder does not meet the minimum required amount by banks, the latter may
charge a certain amount on the balance.
⃰ For Tipid Bank, P13,000 was added since it was undelivered as of the end of the reporting
period. The P5,000 was also added since it is dated after the end of the reporting period
meaning, it can only be encashed on or after January 10, 2019
⃰ Other items are not considered as they are beyond the definition of cash and cash equivalents.

PETTY CASH FUND

Illustration 2: The auditor for SAMANTHA, INC. examined the petty cash fund immediately after the close
of business, July 31, 2018, the end of the company's natural business year. The petty cash custodian
presented the following during the count:
Currency P1,650
Petty Cash Vouchers:
Postage 420
Office Supplies expense 900
Transportation expense 340
Computer Repairs 800
Advances to office staff 1,500
A check drawn by Samantha, Inc. payable to petty cash custodian 7,200
An employee’s check, returned by bank (NSF) 1,000
Envelope containing P1,890 for a gist to a retiring employee 1,890
Postage Stamps 300
TOTAL P16,000
REQUIRED: OVERAGE/ SHORTAGE AND ADJUSTED PCF AT JULY 31, 2018
Currency P1,650
PC Vouchers (refer to highlighted amounts) 3,960
Replenishment check 7,200
NSF Check 1,000
Petty Cash Accounted 13,810
Custodian’s accountability (per ledger) 16,000
SHORTAGE 2,190
*Note that the envelope with P1,890 is excluded since it is not business-related. This might have been
proceeds from collection from employees.
*Postage stamps are treated as prepaid supplies.

ADJUSTED BALANCE = 1,650 + 7,200 = P8,850

PROOF OF CASH
The cash account of Vela Company shows the following:

DATE PARTICULARS DEBIT CREDIT BALANCE

Nov. 30 Balance 115,000
Dec. 2 November Bank Charges 50 114,950
4 November bank credit for notes receivable P10,000 10,000 124,950
15 NSF Check 1,300 123,650
20 Loan Proceeds 48,500 172,150
21 December bank charges 60 172,090
31 Cash receipts per book 707,300 879,390
31 Cash disbursement per book 400,000 479,390

CASH BOOKS
RECEIPTS DISBURSMENTS
DATE OR NO. AMOUNT CHECK NO, AMOUNT
Dec. 1 110-120 11,000 801 2,000
2 121-136 21,300 802 3,000

3 137-150 20,000 803 1,000

4 151-165 56,000 804 3,000
5 166-190 39,000 805 12,000
8 191-210 66,000 806 19,000
9 211-232 88,000 807 26,000
10 233-250 77,000 808 30,000
11 251-275 21,000 809 61,000
 12 276-300 30,000 810 7,000
15 301-309 55,000 811 8,000
16 310-350 8,000 812 16,000
17 351-390 19,000 813 20,000
18 391-420 9,000 814 22,000
19 421-480 17,000 816 36,000
22 481-500 21,000 817 11,000
23 501-525 32,000 818 50,000
23 - - 819 7,000
23 - - 820 4,000
26 526-555 74,000 821 3,000
28 556-611 5,000 822 12,000
28 - 823 13,000
29 612-630 38,000 824 29,000
29 - 825 2,000
29 - 826 11,000
TOTAL 707,300 408,000

BANK STATEMENT
DATE CHECK NO. CHARGES CREDITS BALANCE
Balance forwarded 114,000
Dec. 1 792 2,500 8,500 120,000
2 802 3,000 11,000 128,000

3 - - 21,300 149,300
4 804 3,000 20,000 166,300
5 EC 81,000 81,000 166,300
8 805 12,000 95,000 249,300
9 CM 16 - 12,000 261,300
10 799 7,050 154,000 408,250
11 DM 57 1,300 77,000 483,950
12 808 30,000 21,000 474,950
15 803 1,000 - 473,950
16 809 61,000 85,000 497,950
17 DM 61 60 8,000 505,890
18 813 20,000 19,000 504,890
19 CM 20 - 48,500 553,390
22 815 6,000 - 547,390
23 816 36,000 47,000 558,390
23 811 8,000 - 550,390
23 801 2,000 - 548,390
26 814 22,000 32,000 558,390
28 818 50,000 74,000 582,390
 28 DM 112 120 - 582,270
29 821 3,000 5,000 584,270
29 CM 36 - 12,000 596,270
29 820 4,000 - 592,270
TOTALS 353,030 831,300

Additional Information:
a. DMs 61 and 112 are for service charges
b. EC is error corrected
c. DM 57 is NSF check
d. CM 20 is for loan proceeds, net of P150 interest charges for 90 days
e. CM 16 is for correction of an erroneous November bank charge
f. CM 36 is for customer’s notes collected by bank in December

REQUIRED: PROOF OF CASH

PROOF OF CASH
December 1-31
Nov 30 Receipts Disbursement Dec 31
Balance per bank 114,000 831,300 353,030 592,270
Bank error -81,000 -81,000
Erroneous bank charge 12,000 -12,000
Deposit in Transit
November 30 8,5001 -8,500
December 31 38,000 38,000
Outstanding Checks
November 30 -9,5502 -9,550
December 31 153,0003 -153,000
ADJUSTED BANK BALANCE 124,950 767,800 415,480 477,270

Nov 30 Receipts Disbursement Dec 31

Balance per Books 115,000 765,800 409,410 471,390
Unrecorded Disbursement (Check 815) 6,000 -6,000
Bank Service Charge
November 30 -50 -50
December 31 120 -120
Note collected by bank
November 30 10,000 -10,000
December 31 12,000 12,000
ADJUSTED BANK BALANCE 124,950 767,800 415,480 477,270
1.
Deposit in transit 8,500. Notice that those highlighted in yellow are the matched deposits for the
month of December. Further, deposited amount per bank may be a sum of the receipts per
books.
2.
Outstanding checks 792 and 799 (2,500 + 7,050) = 9,550. Take note that per books, Check
number started at 801 in the month of December
3.
Total of those in red font per Cash per Books