PROF: J.
CAYETANO, CPA, MBA
February 9, 2022
Activity 01: Cash and Cash Equivalents, Petty Cash Funds
1. At December 31, 2022, Mursi Company had the following balances in the accounts it maintains at
First State Bank:
BDO Checking account #101 175,000
BDO Checking account #201 (10,000)
Money market account 25,000
90 – day certificate of deposit 50,000
190-day certificate of deposit 80,000
In its Dec. 31, 2022 statement of financial position, what amount should Mursi report as cash and
cash equivalents?
A. 190,000 B. 200,000 C. 240,000 D. 320,000
2. Macao Imperial had the following balances at December 31, 2022:
Cash in checking account 35,000
Cash in money market account 75,000
Treasury bill, purchased 11/1/22, maturing 1/31/23 350,000
Treasury bill, purchased 12/1/22, maturing 3/31/23 400,000
What amount should Macao Imperial report as cash and cash equivalents in its December 31, 2022
statement of financial position?
A. 110,000 B. 385,000 C. 460,000 D. 860,000
3. Consider the following: Cash in bank – checking account of P13,500, Cash on hand of P500, Post-
dated checks received totaling P3,500, and certificates of deposit totaling P120,000. How much
should be reported as cash in the statement of financial position?
A. 13,500 B. 14,000 C. 137,500 D. 138,000
4. Paragas Corporation’s checkbook balance on December 31, 2021, was P8,000. In addition, Paragas
held the following items in its safe on December 31:
Check payable to Paragas Corporation, dated January 2, 2022, not included on
December 31 checkbook balance 2,000
Check payable to Paragas Corporation, deposited December 20, and included in
December 31 checkbook balance, but returned by bank on December 30, stamped
NSF. The check was redeposited January 2, 2022, and cleared January 7. 500
Check payable to Paragas Corporation, undeposited, dated May 1, 2021, included in
December 31 checkbook balance 950
Check drawn on Paragas Corporation’s account, payable to a vendor, dated and
recorded December 31, but not mailed until January 15, 2022 1,000
Check drawn on Paragas Corporation’s account, payable to a supplier, dated
January 3, 2022, was delivered and recorded on December 30, 2021 850
The proper amount to be shown as cash on Paragas’ balance sheet at December 31, 2021 is
A. 6,400 B. 9,350 C. 8,400 D. 7,350
5. On December 31, 2021, the trial balance of Diego Bantay Company reveals the following account
balances:
Petty cash fund - Finance 40,000
Revolving fund - Operations 20,000
Current account - Citibank 3,000,000
Current account - HSBC (overdraft) (250,000)
Money market placement - JP Morgan 2,000,000
Time deposit - Duetche Bank 2,000,000
Note that the petty cash fund includes unreplenished December 2021 petty cash expense vouchers
for P10,000 and an employee check for P5,000 dated January 31, 2022. There's a check for P45,000
that was drawn against CitiBank current account dated and recorded December 29, 2021 but
delivered to payee on January 15, 2022. And lastly, the Duetche Bank time deposit is set aside for
plant expansion in February 2022. The December 31, 2021 balance sheet should report "cash and
cash equivalents" at
A. 3,090,000 B. 5,090,000 C. 5,095,000 D. 3,060,000
Use the following information for the next two (2) questions:
A surprise count of the petty cash fund of Jing Trading on July 4, 2021 showed the following:
Currencies 5,600
Coins 450
Paid vouchers for:
Office supplies (dated July 2, 2021) 1,750
Newspaper subscription for two weeks (dated June 29, 2021) 300
Loans to employees 3,000
Company check representing replenishment of petty cash fund 3,850
The company’s fiscal year ends of June 30. The petty cash fund was established for an amount of
P15,000.
6. What is the correct amount of petty cash fund at June 30, 2021?
A. 6,050 B. 9,900 C. 11,650 D. 15,000
7. How much is the shortage or overage in the petty cash fund at June 30, 2021?
A. 50 shortage B. 50 overage C. 1,800 shortage D. 1,800 overage
8. The petty cash fund account of Magiting Company showed the following:
Coins and currency 5,500
Paid vouchers:
Transportation 200
Gasoline 150
Office supplies 250
Postage stamps 200 800
Due from employees 1,200
Digging deeper into the records, you realized that there is a Manager's check returned by bank
marked "NSF" for 1,000. There is also a check drawn by company to the order of petty cash
custodian amounting to 3,500. What is the amount of the petty cash fund for balance sheet
purposes?
A. 10,000 B. 9,000 C. 11,000 D. 5,800
9. If a petty cash fund is established in the amount of P250, and contains P150 in cash and P95 in
receipts for disbursements when it is replenished, the journal entry to record replenishment
should include credit (s) to the following account (s):
A. Petty cash, P75 C. Cash, P95; cash short and over, P5
B. Petty cash, P100 D. Cash, P100
10. Bojay Company has a petty cash fund of P2,500. At the end of the month, petty ash includes the
following:
Currency and coins ..................................... ................................................... 150
Vouchers:
Postage..................................... ..................................... ..................................... 600
Travel..................................... ..................................... 750
Donation to charity..................................... ..................................... 1,000
Total..................................... ..................................... ..................................... 2,500
Which of the following is the correct entry to simultaneously reimburse the fund and increase it to
P10,000?
A. Petty Cash.............................1,000 C. Postage.............................600
Cash.............................1,000 Travel.................................750
Donations........................1,000
Cash.............................2,350
B. Petty Cash.............................985 D. Petty Cash........................7,500
Cash.............................985 Postage...............................600
Travel...................................750
Donations..........................1,000
Cash.............................9,850
11. Which of the following is not considered as a cash equivalent?
A. A 3-year treasury note maturing on Jan. 31 of the next year purchased by the entity on Dec. 1
of the current year.
B. A 3-year treasury note maturing on Jan. 31 of the next year purchased by the entity on Oct. 1 of
current year.
C. A 90-day T-bill.
D. A 60-day money market placement.
12. In order to be classified as a cash equivalent, an investment must have a maturity period of:
A. Less than six months C. Six to twelve months
B. Three to six months D. Three months or less
13. Which of the following is generally classified as current liability on the balance sheet?
A. Postdated checks C. Customer NSF checks
B. Bank overdrafts D. Travel advances
14. The internal control feature that is specific to petty cash is
A. Separation of duties C. Proper authorization
B. Assignment of responsibility D. Imprest system
15. Assuming that an entity’s balance sheet date is December 31, 2023, which of the following is not a
cash equivalent?
A. 12-month BSP treasury note due February 15, 2024 (date of purchase: November 31, 2023)
B. 6-month BSP treasury note due January 15, 2024 (date of purchase: October 1, 2023)
C. 3-month BSP treasury bill due March 15, 2024 (date of purchase: December 15, 2023)
D. 1-month market placement
16. Cash denominated in foreign currency shall be translated to Philippine peso using
A. Closing rate B. Average rate C. Historical rate D. Passing rate
17. In reimbursing the petty cash fund, which of the following is true?
A. Cash is debited C. Petty cash is credited
B. Petty cash is debited D. Expense accounts
18. Which of the following is not considered cash for financial reporting purposes?
A. Postdated checks and IOU C. Coin, currency and available funds
B. Petty cash funds and change funds D. Money order, certified checks and personal
checks
