Question

E7-2 (L01) (Determining Cash Balance) Presented below are a number of independent situations. Instructions For each individual situation, determine the amount that should be reported as cash. If the item(s) is not reported as cash, explain the rationale. Exercises 365 1. Checking account balance $925,000; certificate of deposit $1,400,000; cash advance to subsidiary of $980,000; utility deposit paid to gas company $180. 2. Checking account balance $600,000, an overdraft in special checking account at same bank as normal checking account of $17,000 cash held in a bond sinking fund $200,000, petty cash fund $300 coins and currency on hand $1,350. 3. Checking account balance $590,000, postdated check from customer $11,000; cash restricted due to maintaining compen- sating balance requirement of $100,000; certified check from customer $9,800; postage stamps on hand $620. 4. Checking account balance at bank $37,000, money market balance at mutual fund (has checking privileges) $48,000; NSF check received from customer $800. 5. Checking account balance $700,000; cash restricted for future plant expansion $500,000; short-term Treasury bills $180,000; cash advance received from customer $900 (not included in checking account balance); cash advance of $7,000 to company executive, payable on demand; refundable deposit of $26,000 paid to federal government to guarantee performance on construction contract.

Answer 1

Current Asset is a portion of Total Asset .It can be converted in to cash with in one year or short. Current Asset includes Cash and Cash Equevelnce , Inventory etc......

1.

Particulars	Amount
Checking Account Balance	$ 925,000
Certificate of deposit	$ 1,400,000
Cash advance to Subsidiary	$ 980,000
Cash Balance	$ 330,5000

2.

Particulars	Amount
Checking Account Balance	$ 600,000
Bank Overdraft	$ 17,000
Petty Cash Fund	$ 300
Coins and currency on hand	$ 1350
Cash Balance	$ 618,650

3.

Particulars	Amount
Checking Account Balance	$ 590,000
Certified Cheque from Customer	$ 9,800
Postage Stamps on Hand	$ 620
Cash Balance	$ 600,420

4.

Particulars	Amount
Checking Account balance at bank	$ 37,000
Money Market Balance at Mutual Fund	$ 48,000
NSF Check received from customer	$ 800
Cash Balance	$ 85,800

5

Particulars	Amount
Checking Account balance	$ 700,000
Short Term Treasury bills	$ 180,000
Cash advance to exicutives( Payable on demand)	$ 7,000
Cash Balance	$ 887,000