margieortega Posts: 6, Reputation: 1 New Member   #1 Jun 16, 2008, 05:31 PM

Determining Cash Balance Can someone tell me if I did the following exercise correct? Thanks, Margie E7-2 (Determine 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. 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. Reported Not Reported Checking acct 925,000 1,400,000 short-term investment 980,000 accounts receivable 180 other asset Total 925,000 2,380,180 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. Reported Not Reported Checking acct 600,000 17,000 accounts payable Coins/currency 1,350 Petty cash 300 Total 601,650 17,000 3. Checking account balance $590,000; postdated check from customer $11,000; cash restricted due to maintaining compensating balance requirement of $100,000; certified check from customer $9,800; postage stamps on hand $620. Reported Not Reported Checking acct 590,000 11,000 accounts receivable Compensating bal 100,000 620 stamps on hand Certified check 9,800 Total 699,800 11,620 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. Reported Not Reported Checking acct 37,000 800 accounts receivable Money market 48,000 Total 85,000 800 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. Reported Not Reported Checking acct 700,000 180,000 short term investment Cash advance 900 500,000 long-term Refundable dep 26,000 7,000 accounts receivable Total 726,900 687,000

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