(Determine Cash Balance)
Presented below are a number of independent situations.
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.
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.
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
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.
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.
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.