Schmukler Company cash balance: Given bank accounts (Bank A overdrawn checking (65,000); Bank B payroll 200,000; Bank B VAT 150,000) and items on hand (Employee NSF check 8,000; postage stamps 4,000; IOU from president 50,000; traveler’s check 25,000; customer check undeposited for lack of countersignature 30,000; money order 60,000; petty cash fund 20,000 with expense receipts 10,000), what “cash” balance should be reported on the statement of financial position?

What you are trying to count as “cash”

On the statement of financial position, “cash” normally includes currency on hand and demand deposits that are available for use. Items that are really receivables (like NSF checks and IOUs) or supplies (like stamps) are excluded.

Classify each item

Include in cash

• Payroll account, Bank B: $200{,}000$ (bank deposit)
• VAT account, Bank B: $150{,}000$ (bank deposit)
• Traveler’s check: $25{,}000$ (cash-like instrument)
• Money order: $60{,}000$ (cash-like instrument)
• Petty cash on hand: fund is $20{,}000$ but receipts are $10{,}000$, so remaining cash is $20{,}000 - 10{,}000 = 10{,}000$

Exclude from cash

• Employee’s NSF check $8{,}000$: recorded as a receivable, not cash
• Postage stamps $4{,}000$: supplies, not cash
• IOU from the president $50{,}000$: receivable
• Customer check lacking countersignature $30{,}000$: not yet negotiable, treat as receivable until it becomes depositable

Handle the bank overdraft correctly

• Overdrawn checking account, Bank A: $(65{,}000)$

Because the overdraft is in a different bank from the positive balances (Bank A vs Bank B), you generally do not offset it against cash. It is shown as a current liability (bank overdraft/payable).

Compute the cash balance to report

Add all includible cash items: $$200{,}000 + 150{,}000 + 25{,}000 + 60{,}000 + 10{,}000 = 445{,}000$$

So, reported Cash = P445,000.