E7-2 (Determine Cash Balance) Presented below are a number ofindependent situations.
Instructions
For each individual situation, determine the amount that should bereported 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; cash advance to subsidiary of
$980,000; utility deposit paid to gas company $180.
2. Checking account balance $500,000; an overdraft in specialchecking 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.
3. Checking account balance $590,000; postdated check from customer$11,000; cash restricted due to
maintaining compensating balance requirement of $100,000; certifiedcheck from customer $9,800;
postage stamps on hand $620.
4. Checking account balance at bank $42,000; money market balanceat mutual fund (has checking
privileges) $48,000; NSF check received from customer $800.
5. Checking account balance $700,000; cash restricted for futureplant 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 ondemand; refundable deposit
of $26,000 paid to federal government to guarantee performance onconstruction contract.
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