Question

Question 3

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 $928,400; certificate of deposit $1,438,400; cash advance to subsidiary of $983,530; utility deposit paid to gas company $191.

Cash balance

$

2. Checking account balance $501,500; an overdraft in special checking account at same bank as normal checking account of $19,280; cash held in a bond sinking fund $232,800; petty cash fund $350; coins and currency on hand $1,540.

Cash balance

$

3. Checking account balance $618,300; postdated check from customer $9,900; cash restricted due to maintaining compensating balance requirement of $103,800; certified check from customer $10,576; postage stamps on hand $559.

Cash balance

$

4. Checking account balance at bank $45,650; money market balance at mutual fund (has checking privileges) $51,780; NSF check received from customer $755.

Cash balance

$

5. Checking account balance $700,700; cash restricted for future plant expansion $515,200; short-term Treasury bills (which mature in 6 months) $186,470; cash advance received from customer $965 (not included in checking account balance); cash advance of $6,740 to company executive, payable on demand; refundable deposit of $24,520 paid to federal government to guarantee performance on construction contract.

Cash balance

$

Answer 1

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1. Checking account balance $928,400; certificate of deposit $1,438,400; cash advance to subsidiary of $983,530; utility deposit paid to gas company $191.
Answer
The Certificate of Deposits of $ 1,438,400 are to be reported as temporary investment.
The cash advance to subsidiary of $ 983,530 needs to be reported as Accounts Receivable.
The utility deposit of $ 191 should be reported as a receivable from the gas company.
Only the Checking account balance of $928,400 should be reported as cash.
2. Checking account balance $501,500; an overdraft in special checking account at same bank as normal checking account of $19,280; cash held in a bond sinking fund $232,800; petty cash fund $350; coins and currency on hand $1,540.
Answer
The cash held in a bond sinking fund of $232,800 are to be reported separately as non current asset.
All other items are to be reported as cash below:
Checking account balance	$ 501,500.00
Less: Overdraft in special checking account	$    19,280.00
Add: Petty cash fund	$         350.00
Add: Coins and currency on hand	$      1,540.00
Cash Balance	$ 484,110.00
3. Checking account balance $618,300; postdated check from customer $9,900; cash restricted due to maintaining compensating balance requirement of $103,800; certified check from customer $10,576; postage stamps on hand $559.
Answer
Postdated check of $ 9,900 cannot be realized until deposited. So it is to be recorded separately.
Cash restricted due to maintaining compensating balance requirement of $103,800 should be recorded separately.
Postage stamps on hand of $559 is a prepaid expense.
All other items are to be reported as cash below:
Checking account balance	$ 618,300.00
Certified check from customer	$    10,576.00
Cash Balance	$ 628,876.00
4. Checking account balance at bank $45,650; money market balance at mutual fund (has checking privileges) $51,780; NSF check received from customer $755.
Answer
NSF check received from customer of $755 will be recorded as receivable.
All other items are to be reported as cash below:
Checking account balance	$    45,650.00
Money market balance at mutual fund	$    51,780.00
Cash Balance	$   97,430.00
5. Checking account balance $700,700; cash restricted for future plant expansion $515,200; short-term Treasury bills (which mature in 6 months) $186,470; cash advance received from customer $965 (not included in checking account balance);
cash advance of $6,740 to company executive, payable on demand; refundable deposit of $24,520 paid to federal government to guarantee performance on construction contract.
Answer
Cash restricted for future plant expansion of $ 515,200 needs to be reported as a noncurrent asset.
Short-term treasury bills of $186,470 needs to be reported as a temporary investment as these will be matured in 6 months.
Cash advance of $ 6,740 to company executive needs to be reported as a receivable.
Refundable deposit of $ 24,520 paid to federal government needs to be reported as a receivable.
All other items are to be reported as cash below:
Checking account balance	$ 700,700.00
The cash advance received from a customer (as it is not included in checking account balance)	$         965.00
Cash Balance	$ 701,665.00