Professional Documents
Culture Documents
Leonor, Inc. has agreed to maintain P10,000 compensating balance in its unrestricted current account in
accordance with the loan covenant.
REQUIRED: How much should Leonor, Inc. report as cash and cash equivalents in its December 31, 2003,
balance sheet?
REQUIRED: What amount would be reported as Cash and Cash Equivalents on the balance sheet on
December 31, 2003?
REQUIRED:
1. Determine the principal amount of the loan.
2. Determine the effective interest rate on the loan.
PROBLEM 4 (Petty Cash Fund)
On January 1, 2003, JERVITA COMPANY established a petty cash fund of P2,000. On December 31, 2003,
the petty cash fund was examined and found to have receipts and documents for miscellaneous general
expenses amounting to P1.820. In addition, there was cash amounting to P220.
REQUIRED:
1. What is the amount of petty cash shortage or overage?
2. What entry would be required to adjust the petty cash fund on December 1, 2003?
Currency P 650
Petty Cash Vouchers:
Postage 420
Office Supplies Expense 900
Transportation Expense 140
Computer Repairs 400
Advances to Office Staff 700
A check drawn by Harry, Inc., payable to the petty cash custodian 3,050
Postage Stamps 300
An Employee’s Check, returned by bank, marked NSF 1,000
An envelope containing currency of P440 for a gift for a retiring employee ___440
P 8,000
The general ledger shows an imprest petty cash fund balance of P 8,000
REQUIRED:
1. How much is the petty cash fund shortage or overage?
2. What adjusting entry should be made as of July 31, 2003?
3. What is the adjusted balance of the petty cash fund at July 31, 2003?
SOLUTIONS: Cash and Cash Equivalent
Note: Because the compensating balance is not legally restricted, the amount is part of cash.
3. Currency P 650
Replenishment 3,050
Petty Cash Fund at 7/31/2003 P 3,700