Question

Brief Exercise 7-1

Indigo Enterprises owns the following assets at December 31, 2017.

Cash in bank—savings account		72,900		Checking account balance		20,000
Cash on hand		8,860		Postdated checks		940
Cash refund due from IRS		36,500		Certificates of deposit (180-day)		90,770

What amount should be reported as cash?

Cash to be reported

$

Exercise 7-2

Presented below are a number of independent situations.

For each individual situation, determine the amount that should be reported as cash.

1. Checking account balance $925,100; certificate of deposit $1,413,100; cash advance to subsidiary of $991,330; utility deposit paid to gas company $195.

Cash balance

$

2. Checking account balance $505,600; an overdraft in special checking account at same bank as normal checking account of $17,960; cash held in a bond sinking fund $220,800; petty cash fund $400; coins and currency on hand $1,420.

Cash balance

$

3. Checking account balance $636,800; postdated check from customer $10,770; cash restricted due to maintaining compensating balance requirement of $104,900; certified check from customer $9,290; postage stamps on hand $651.

Cash balance

$

4. Checking account balance at bank $45,890; money market balance at mutual fund (has checking privileges) $48,760; NSF check received from customer $869.

Cash balance

$

5. Checking account balance $715,200; cash restricted for future plant expansion $454,600; short-term Treasury bills (which mature in 6 months) $188,370; cash advance received from customer $980 (not included in checking account balance); cash advance of $6,370 to company executive, payable on demand; refundable deposit of $28,490 paid to federal government to guarantee performance on construction contract.

Cash balance

$

Answer 1

Brief Exercise 7-1 What amount should be reported as cash? Cash in bank-savings account $72,900 Cash on hand $8,860 Checking account balance $20,000 Cash to be reported $101.760 Exercise 7-2 1. Cash balance = Checking account balance = $925,100 Checking account balance $505,600 Less Overdraft in special checking account ($17,960) Add Petty Cash fund $400 Add Coins and currency on hand $1,420 Cash balance $489,460 Checking account balance $636,800 Add Certified check from customer $9,290 Cash balance $646,090

Checking account balance $45,890 Add Money market balance at mutual fund $48,760 Cash balance $94,650 Checking account balance $715,200 Add Cash advance received from customer $980 Cash balance $716,180