The December 31, 2016 trial balance of Lukas Company includes the following accounts:
Cash on hand 500,000
Petty cash fund 20,000
Security Bank current account 1,000,000
PNB Current account No. 1 400,000
PNB Current account No. 2 (50,000)
BSP treasury bill - 60 days 3,000,000
BPI time deposit - 30 days 2,000,000
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The cash on hand includes a customer postdated check of
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P100,000 and postal money order of P40,000.
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The petty cash fund includes unreplenished petty cash vouchers for P2,000 and an
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employee check for P3,000 dated January 31, 2010.
A check for P200,000 was drawn against Security Bank account, dated January 15, 2017,
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delivered to the payee and recorded December 31, 2016.
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The BPI time deposit is set aside for acquisition of land to be used as a factory site.
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1. Cash on hand
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Cash on hand 500,000
Less: post-dated check 100,000
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Correct cash on hand 400 000
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2. Petty cash fund
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Petty cash fund 20,000
Less: unreplenished petty cash vouchers 2,000
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employee check 3,000
Correct petty cash fund 15 000
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3. Cash and cash equivalent
Cash on hand 400,000
Petty cash fund 15,000
Security Bank current account 1 200 000
PNB current account 350 000
BSP treasury bill - 60 days 3 000 000
Total cash and cash equivalents 4,965,000
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The following statements pertain to the cash short or over account. Which statement is true?
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Select one:
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a. The entry to account for daily cash sales for which a small amount of cash shortage existed would
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include a debit to cash short or over account
b. It would be impossible to have cash shortage or overage if employees were paid in cash rather
than by check
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c. A credit balance in a cash short or over account should be considered a liability because the short
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changed customer will demand return of this amount
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d. If the cash short or over account has a debit balance at the end of the period it must be debited to
an expense account
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A material credit balance in the 'cash in bank' account
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Select one:
a. May be offset against a demand deposit account maintained in another bank
b. Is treated as an error
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c. Is netted against cash and a net cash amount is reported
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d. Is treated as a current liability
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Bank reconciliation are normally prepared on a monthly basis to identify adjustments needed in the
depositor's records and to identify bank errors. Adjustments on the part of the depositor should be
recorded for_______.
Select one:
a. Bank errors, outstanding checks and deposits in transit
b. All items except bank errors, outstanding checks and deposits in transit
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c. Book errors, bank errors, deposits in transit and outstanding checks
d. Outstanding checks and deposits in transit
Bank overdrafts that are repayable on demand and the bank balance often fluctuates from positive
to overdrawn shall be classified as
Select one:
a. Investing activities
b. Operating activities
c. Financing activities
d. Component of cash and cash equivalents
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