Question 1 below are a number of independent situations. For each individual sit

Question

Question 1

below are a number of independent situations. For each individual situation, determine the amount that should be reported as cash. a.. Checking account balance $934,240; certificate of deposit $1,413,100; cash advance to subsidiary of $980,230; utility deposit paid to gas company $199. Cash balance $

b. Checking account balance $511,430; an overdraft in special checking account at same bank as normal checking account of $17,700; cash held in a bond sinking fund $204,070; petty cash fund $349; coins and currency on hand $1,510. Cash balance $

c. Checking account balance $625,670; postdated check from a customer $11,430; cash restricted due to maintaining compensating balance requirement of $113,620; certified check from customer $9,150; postage stamps on hand $709. Cash balance $

d. Checking account balance at bank $43,050; money market balance at mutual fund (has checking privileges) $51,280; NSF check received from customer $841. Cash balance $

e. Checking account balance $707,580; cash restricted for future plant expansion $503,230; short-term Treasury bills $191,600; cash advance received from customer $981 (not included in checking account balance); cash advance of $7,260 to company executive, payable on demand; refundable deposit of $30,000 paid to federal government to guarantee performance on construction contract. Cash balance $

Explanation / Answer

PART A

Cash blance in cheking account is cash in hand. The issue of certificate of deposit leads to inflow of cash. Cash paid to subsidiary leads to outflow of the cash. The utility deposit paid to gas company leads to cash outflow.

PART B

PART C

Checking Account Balance 625670

Certified Check from Customer 9150

Postage Stamps 709

Cash balance 635529

Postdated cheques and restricted cash cannot be considered cash in hand as it cannot be utlized to meet any cash requirements

PART D

Checking account balance 43050

Money market balance at Mutual funds 51280

Cash balance 94330

NSF cheque will not be considered as the account doesnt have sufficient funds to meet cash requirements.

Checking Account Balance 934240     add Certificate of Deposit 1413000     less Cash Advance to subsidiary -980320     less Utility Deposit Paid to Gas Company -199 Final Cash Balance 1366721

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