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Chapter 7 – Cash and Receivables.pptx - Chapter 7 Learning...

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Chapter 7– Learning ObjectivesYou should be able to1.Identify elements of cash2.Identify the types of receivables3.Explain accounting for trade discounts, cash discounts,sales returns and allowances4.Account for bad debts using both a balance sheetapproach and an income statement approach5.Account for dispositions of accounts receivable, includingcollection, pledging as collateral, and factoring (selling)6.Extract and interpret information on receivables from thefinancial statements
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Chapter 9 / Exercise 1
Accounting
Reeve/Warren
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Cash & Cash EquivalentsBroadens the definition of cash to include short-term,highly liquid investments that are both1.readily convertible into known amounts of cash withoutpenalty2.so near their maturity when acquired that they presentlittle risk of changes in value due to changes in interestrates (90 days or less)
Examples of Cash & Cash Equivalents1.Coin and currency on hand (including petty cash)2.Checking accounts3.Savings accounts4.Money market funds (with checking writing)5.Deposits held as compensating balances that are NOTlegally restricted6.Negotiable papera.Bank checks, money orders, traveler’s checks, bankdrafts, cashier checksb.Commercial paper, Treasury Bills and CD’s havingoriginal maturities of 90 days or less
E7-2 (Determining Cash Balances)1.Checking account balance$925,000Certificate of Deposit$1,400,000Cash Advance to subsidiary$980,000Utility deposit paid to gas company$180
E7-2 (Determining Cash Balances)1.Checking account balance$925,000Certificate of Deposit$1,400,000InvestmentCash Advance to subsidiary$980,000ReceivableUtility deposit paid to gas company$180Receivable2.Checking account balance$600,000Overdraft in account at same bank $17,000Cash held in bond sinking fund$200,000Petty cash fund$300Coins and currency on hand$1,350
E7-2 (Determining Cash Balances)1.Checking account balance$925,000Certificate of Deposit$1,400,000InvestmentCash Advance to subsidiary$980,000ReceivableUtility deposit paid to gas company$180Receivable2.Checking account balance$600,000Overdraft in account at same bank $17,000Cash held in bond sinking fund$200,000RestrictedPetty cash fund$300Coins and currency on hand$1,350If bonds are LT, report sinking fund as LT
E7-2 (Determining Cash Balances)1. Checking account balance $925,000Certificate of Deposit $1,400,000InvestmentCash Advance to subsidiary $980,000ReceivableUtility deposit paid to gas company$180Receivable2. Checking account balance $600,000Overdraft in account at same bank $17,000Cash held in bond sinking fund $200,000RestrictedPetty cash fund $300Coins and currency on hand$1,3503.Checking account balance $590,000Postdated check from customer $11,000Cash restricted as compensating bal. $100,000Certified check from customer $9,800Postage stamps $620
E7-2 (Determining Cash Balances)1. Checking account balance $925,000Certificate of Deposit $1,400,000InvestmentCash Advance to subsidiary $980,000ReceivableUtility deposit paid to gas company$180Receivable2. Checking account balance $600,000Overdraft in account at same bank $17,000Cash held in bond sinking fund $200,000RestrictedPetty cash fund $300Coins and currency on hand$1,3503.Checking account balance $590,000Postdated check from customer $11,000

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Accounting
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Chapter 9 / Exercise 1
Accounting
Reeve/Warren
Expert Verified

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