Illustration of Cash and Cash Equivalents PDF

Preview

Summary

FAITH COLLEGESCONCEPTCash and Cash EquivalentsIllustration I (Cash Equivalents) ABC Co. holds the following short term investments as of December 31, 2019: 1-year Treasury bill maturing on March 30, 2020 acquired on July 1, 2019. 1 year Treasury bill maturing on March 30, 2020 acquired on December 3...

Description

FAITH COLLEGES CONCEPT

Cash and Cash Equivalents Illustration I (Cash Equivalents) ABC Co. holds the following short term investments as of December 31, 2019: 1. 1-year Treasury bill maturing on March 30, 2020 acquired on July 1, 2019. 2. 1 year Treasury bill maturing on March 30, 2020 acquired on December 31, 2019 Which of the following investments may qualify as cash equivalents? Illustration II (Cash balance) The books of ABC Co. show the following balances at December 31, 2019: Cash on Hand P100,000 Cash in bank – current account P350,000 Cash in bank – peso savings account P2,000,000 Cash in bank – dollar deposit (unrestricted) $100,000 Cash in bank – dollar deposit (restricted) $20,000 Cash in money market account P250,000 6-month time deposit $60,000 Treasury bill – purchased 12/1/2019, maturing 2/28/2020 P800,000 Treasury bond – purchased 3/1/2019, maturing 2/28/2020 P500,000 Treasury note P200,000 Unused credit line P2,000,000 Redeemable preference shares, purchased 12/1/2019, Due on 3/1/2020 P370,000 Treasury shares, purchased 12/15/2019, to be reissue On 3/5/2020 P50,000 Sinking fund P200,000 Additional information 1. Cash on hand includes a P20,000 check payable to ABC Co. dated January 10, 2020. 2. During December 2019, checks amounting to P60,000 and P40,000 were drawn against cash in bank current account in payment of accounts payable. The P60,000 check is dated January 15, 2020. The P40,000 check is dated December 31, 2019 but was delivered to the payee only January 18, 2020. 3. The Cash in bank – peso savings deposit includes a deposit in escrow in the amount of P340,000 and a compensating balance amounting to P250,000, which is legally restricted. 4. The Cash in bank – dollar deposit (unrestricted) account includes interest of $2,000, net of tax, directly credited to ABC Co.’s account. The exchange rate at year end is $1 is to P40. Compute for the amount of cash and cash equivalents to be reported in the 2019 financial statements. Illustration: Bank Overdraft The cash balance of ABC Co. comprises the following: Cash on hand P100,000 Cash in bank – savings BPI 200,000 Cash in bank – current BPI (80,000) Cash in bank – deposit in escrow – Metrobank 100,000 Cash in bank – current – Metrobank (20,000) Cash in bank – current – BDO (30,000) Total P270,000 Additional Information 1. Cash on hand includes undeposited collections of P20,000 2. The cash in bank savings maintained in BPI includes a P50,000 compensating balance which is not restricted. Compute for the amount of cash to be reported in the financial statements. Illustration: Petty Cash Fund On September 1, 2019 the BOD of ABC Co. passed a resolution for the establishment of a P10,000 petty cash fund. Single disbursement amounting to less than P2,000 will be made through this fund. Those amounting to P2,000 or more will be made through checks. The following were the transactions during the period Sept. 1 2019 Established P10,000 petty cash fund Sept.1 – 21, 2019 Disbursement are made for the following: Groceries for use of employees in the pantry P1,400 Transportation of messenger boy 500 Snacks during the meetings and conferences 1,000 Gasoline for company vehicles 3,000

Page 1 of 2...