Tranvia Company revealed the following information on December 31, 2020: Cash in checking account 350,000 Cash in money market account 750,000 Treasury bill, purchased November 1, 2020 maturing January 31, 2021 3,500,000 Time deposit purchased December 1, 2020 maturing March 31, 2021 4,000,000 What amount should be reported as cash and cash equivalents on December 31, 2020? 2. Affable Company provided the following information at year-end comprising the cash account: Cash in bank – demand deposit 5,000,000 Cash on hand 400,000 Postage stamps unused 5,000 Certificate of time deposit 1,500,000 Money order 50,000 Manager check 100,000 Traveler check 1,000,000 Postdated customer check 500,000 What total amount should be reported as cash at year end? 3. Thor Company provided the following data on December 31, 2020: Checkbook balance 4,000,000 Bank statement balance 5,000,000 Check drawn on Thor’s account, payable to supplier, dated and recorded on December 31, 2020 but not mailed until January 31, 2021 500,000 Cash in sinking fund 2,000,000 On December 31, 2020, what amount should be reported as cash under current assets? 4. On December 31, 2020 Lamentable Company had the following cash balances: Cash in bank – current account 6,000,000 Petty cash fund – all funds were reimbursed at year end 50,000 Time deposit – three months, due January 15, 2021 2,500,000 Saving deposit 1,000,000 Cash in bank included P400,000 of compensating balance against short term borrowing arrangement. The compensating balance is legally restricted as to withdrawal What total amount should be reported as cash and cash equivalents? 5. Baloney Company had the following account balances on December 31, 2020: Cash in bank 2,250,000 Cash on hand 125,000 Cash restricted for addition to plant in 2021 1,600,000 Cash in bank included P600,000 of compensating balance against short-term borrowing arrangement. The compensating balance is not legally restricted as to withdrawal. What total amount should be reported as cash on December 31, 2020? 6. In preparing the bank reconciliation for the month of August, Apex Company provided the following information: Balance per bank statement 1,805,000 Deposit in transit 325,000 Return of customer check for insufficient fund 60,000 Outstanding checks 275,000 Bank service charge for August 10,000 What is the adjusted cash in bank? 7. In preparing the bank reconciliation for the month of December, Case Company provided the following data: Balance per bank statement 3,800,000 Deposit in transit 520,000 Amount erroneously credited by bank to Case’s account 40,000 Bank service charge for December 5,000 NSF check 50,000 Outstanding checks 675,000 What is the unadjusted cash in bank balance per book? 8. Sapphire Company provided the following information for the month of December: Balance per bank statement December 31 2,800,000 Bank service charge for December 12,000 Interest paid by bank to Sapphire Company for December 10,000 Deposits made but not yet recorded by the bank 350,000 Checks written but not yet recorded by the bank 650,000 The entity discovered that it had drawn and erroneously recorded a check for P46,000 that should have been recorded for P64,000 What is the cash balance per ledger on December 31? 9. Core Company provided the following data for the purpose of reconciling the cash balance per book with the cash balance per bank statement on December 31: Balance per book 850,000 Balance per bank statement 2,000,000 Outstanding checks, including certified check of P100,000 500,000 Deposit in transit 200,000 December NSF checks, of which P50,000 had been redeposited and cleared on December 27 150,000 Erroneous credit to Core’s account, representing proceeds of loan granted to another company 300,000 Proceeds of note collected by bank for Core, net of service charge of P20,000 750,000 What amount should be reported as cash in bank at year-end? 10. Laconic Company received the bank statement for the month of April which included the following information: Bank service charge for April 15,000 Check deposited by Laconic during April was not collectible and has been marked “NSF” by the bank and returned 40,000 Deposits made but not yet recorded by bank 130,000 Checks written and mailed but not yet recorded by bank 100,000 The entity found a customer check for P35,000 payable to the entity that had not yet been deposited and had not been recorded. The general ledger showed a bank account balance of P920,000 What amount should be reported as adjusted cash in bank on April 30? 11. Technically, cash may not include a. Foreign currency b. Money order c. Restricted cash d. Undeposited customer check 12. All of the following can be classified as cash and cash equivalents, except a. Redeemable preference shares due in 60 days b. Commercial papers due for repayment in 90 days c. Equity investments d. A bank overdraft 13. Cash equivalents do not include a. Money market funds b. High grade marketable equity investments c. BSP treasury bills d. Commercial papers
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
1. Tranvia Company revealed the following information on December 31, 2020:
Cash in checking account 350,000
Cash in
Treasury bill, purchased November 1, 2020
maturing January 31, 2021 3,500,000
Time deposit purchased December 1, 2020
maturing March 31, 2021 4,000,000
What amount should be reported as cash and cash equivalents on December 31, 2020?
2. Affable Company provided the following information at year-end comprising the cash
account:
Cash in bank – demand deposit 5,000,000
Cash on hand 400,000
Postage stamps unused 5,000
Certificate of time deposit 1,500,000
Money order 50,000
Manager check 100,000
Traveler check 1,000,000
Postdated customer check 500,000
What total amount should be reported as cash at year end?
3. Thor Company provided the following data on December 31, 2020:
Checkbook balance 4,000,000
Bank statement balance 5,000,000
Check drawn on Thor’s account, payable to supplier,
dated and recorded on December 31, 2020 but not
mailed until January 31, 2021 500,000
Cash in sinking fund 2,000,000
On December 31, 2020, what amount should be reported as cash under current
assets?
4. On December 31, 2020 Lamentable Company had the following cash balances:
Cash in bank – current account 6,000,000
Petty cash fund – all funds were reimbursed at year end 50,000
Time deposit – three months, due January 15, 2021 2,500,000
Saving deposit 1,000,000
Cash in bank included P400,000 of compensating balance against short term
borrowing arrangement.
The compensating balance is legally restricted as to withdrawal
What total amount should be reported as cash and cash equivalents?
5. Baloney Company had the following account balances on December 31, 2020:
Cash in bank 2,250,000
Cash on hand 125,000
Cash restricted for addition to plant in 2021 1,600,000
Cash in bank included P600,000 of compensating balance against short-term
borrowing arrangement.
The compensating balance is not legally restricted as to withdrawal.
What total amount should be reported as cash on December 31, 2020?
6. In preparing the bank reconciliation for the month of August, Apex Company
provided the following information:
Balance per bank statement 1,805,000
Deposit in transit 325,000
Return of customer check for insufficient fund 60,000
Outstanding checks 275,000
Bank service charge for August 10,000
What is the adjusted cash in bank?
7. In preparing the bank reconciliation for the month of December, Case Company
provided the following data:
Balance per bank statement 3,800,000
Deposit in transit 520,000
Amount erroneously credited by bank to Case’s account 40,000
Bank service charge for December 5,000
NSF check 50,000
Outstanding checks 675,000
What is the unadjusted cash in bank balance per book?
8. Sapphire Company provided the following information for the month of December:
Balance per bank statement December 31 2,800,000
Bank service charge for December 12,000
Interest paid by bank to Sapphire Company for December 10,000
Deposits made but not yet recorded by the bank 350,000
Checks written but not yet recorded by the bank 650,000
The entity discovered that it had drawn and erroneously recorded a check for
P46,000 that should have been recorded for P64,000
What is the cash balance per ledger on December 31?
9. Core Company provided the following data for the purpose of reconciling the cash
balance per book with the cash balance per bank statement on December 31:
Balance per book 850,000
Balance per bank statement 2,000,000
Outstanding checks, including certified check of P100,000 500,000
Deposit in transit 200,000
December NSF checks, of which P50,000 had
been redeposited and cleared on December 27 150,000
Erroneous credit to Core’s account, representing
proceeds of loan granted to another company 300,000
Proceeds of note collected by bank for Core,
net of service charge of P20,000 750,000
What amount should be reported as cash in bank at year-end?
10. Laconic Company received the bank statement for the month of April which
included the following information:
Bank service charge for April 15,000
Check deposited by Laconic during April was not collectible
and has been marked “NSF” by the bank and returned 40,000
Deposits made but not yet recorded by bank 130,000
Checks written and mailed but not yet recorded by bank 100,000
The entity found a customer check for P35,000 payable to the entity that had not
yet been deposited and had not been recorded.
The general ledger showed a bank account balance of P920,000
What amount should be reported as adjusted cash in bank on April 30?
11. Technically, cash may not include
a. Foreign currency
b. Money order
c. Restricted cash
d. Undeposited customer check
12. All of the following can be classified as cash and cash equivalents, except
a. Redeemable
b. Commercial papers due for repayment in 90 days
c. Equity investments
d. A bank overdraft
13. Cash equivalents do not include
a. Money market funds
b. High grade marketable equity investments
c. BSP treasury bills
d. Commercial papers
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