Account 422 Week2

E7-2

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(temporary); cash advance to subsidiary of $980,000(A.R.); utility deposit paid to gas company $180(A.R). The amount that should be reported as cash is the checking account balance of $925,000.

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 (non current) ; petty cash fund $300; coins and currency on hand $1,350. The amount that should be reported as cash would be $618,650.

3. Checking account balance $590,000; postdated check from customer $11,000(receivable); cash restricted due to maintaining compensating balance requirement of $100,000; certified check from customer $9,800; postage stamps on hand $620 (office supplies). The amount that should be reported as cash is $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 (receivable). The amount that should be reported as cash is $85,000.

5. Checking account balance $700,000; cash restricted for future plant expansion $500,000 ( non current); short-term Treasury bills $180,000(temporary); cash advance received from customer $900(liability) (not included in checking account balance); cash advance of $7,000 to company executive(received), payable on demand; refundable deposit of $26,000 paid to federal government to guarantee performance on construction contract(receivable). The $700,900 is the cash that should be reported.

E7-8

(Recording Bad Debts) At the end of 2007 Aramis Company has accounts receivable of $800,000 and an allowance for doubtful accounts of $40,000. On January 16, 2008, Aramis Company determined that its...