2007 04 06 163146 Chapter 7 1 
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.
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.
$ 2,325,000
Cash balance of $925,000. Only the checking account balance should be reported as cash. The certificates of deposit should be reported as a temporary investment, the cash advance to subsidiary should be reported as accounts receivable, and the utility deposit should be identified as a receivable from the gas company.
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.
$ 601,650
Cash balance is $584,650 = $600,000 - $17,000 + $300 + $1,350
Note: The Cash held in a bond sinking fund is restricted. Bonds are usually a noncurrent asset.
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.
$ 599,800
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.
$ 85,000
5Checking 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.
$ 880,900
Cash balance is $700,900 = $700,000 + $900
Cash restricted for future plant expansion of $500,000 should be
(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.
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.
$ 2,325,000
Cash balance of $925,000. Only the checking account balance should be reported as cash. The certificates of deposit should be reported as a temporary investment, the cash advance to subsidiary should be reported as accounts receivable, and the utility deposit should be identified as a receivable from the gas company.
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.
$ 601,650
Cash balance is $584,650 = $600,000 - $17,000 + $300 + $1,350
Note: The Cash held in a bond sinking fund is restricted. Bonds are usually a noncurrent asset.
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.
$ 599,800
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.
$ 85,000
5Checking 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.
$ 880,900
Cash balance is $700,900 = $700,000 + $900
Cash restricted for future plant expansion of $500,000 should be