Hello fayfay1988,
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Originally Posted by fayfay1988 ok so i am trying to complete a balance sheet and there is 90,000 for cash but there is additional information that states "Cash included the cash surrender value of life insurance policy 12,400 and a bank overdraft of 1,500 has been deducted"
i do not what to do with that information because i thought that the cash was just 90,000 and it is not! |
The account says we have cash of 90,000.
Part of that 90,000 was 12,400 IF we cash in a policy. That isn’t cash, that is just a POTENTIAL for cash and should NOT be in the cash account.
So we must subtract the 12,400 from the 90,000
Also, we had a bank overdraft of 1,500. That means we took out an extra 1,500 from the bank like a loan. Therefore, we HAVE the cash and should NOT have deducted it. So we must add it back.
So the cash account is:
90,000 – 12,400 + 1,500 = $79,100
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Originally Posted by fayfay1988 Also for inventories do not include goods costing 5,000 shipped out on consignment. Receivables of 5,000 were recorded on these goods and the inventories is 57,000 to begin with! i do not understand what to do with that |
If I ship goods to you on consignment, that is NOT a sale. I still own those goods. Therefore, I must include it in inventory, even though YOU have possession of it.
So I must ADD the 5,000 to my inventory total.
It is also not a receivable, so you should deduct the 5,000 from that as well.
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