Cash/Bank Recs

Tallent Corporation had the following account balances at December 31, Year 1: Cash on hand and in banks $975,000 Cash legally restricted for additions to plant (expected to be disbursed in Year 3) 600,000 Bank certificates of deposit (due February 1, Year 2, purchased September 1, Year 1) 250,000 In the current assets section of Tallent's December 31, Year 1, balance sheet, what total amount should be reported under the caption "cash and cash equivalents"? $1,225,000 $ 975,000 $1,575,000 $1,825,000

$ 975,000 Cash on hand and in banks in included in "cash and cash equivalents" because it is both unrestricted and readily available. Cash legally restricted for plant additions should be shown in the long-term assets section as an investment.

The following information pertains to Grey Co. on December 31, 20X3: Checkbook balance $12,000 Bank statement balance 16,000 Check drawn on Grey's account, payable to a vendor, dated and recorded 12/31/X3 but not mailed until 1/10/X4 1,800 On Grey's December 31, 20X3 balance sheet, what amount should be reported as cash? $12,000 $13,800 $14,200 $16,000

$13,800 The correct cash balance is the balance per the checkbook ($12,000) plus the $1,800 check written to the vendor, for a total of $13,800.

Smith Co. has a checking account at Small Bank and an interest-bearing savings account at Big Bank. On December 31, Year 1, the bank reconciliations for Smith are as follows: Big Bank Bank balance $150,000 Deposit in transit 5,000 Book balance 155,000 Small Bank Bank balance$ 1,500 Outstanding checks( 8,500) Book balance(7,000) What amount should be classified as cash on Smith's balance sheet at December 31, Year 1? $148,000 $151,000 $155,000

$155,000 This answer is correct because the cash on Smith's balance sheet is equal to the cash in the savings account in Big Bank of $155,000. The negative balance in the checking account at Small Bank would be reclassified as a payable and is reported as a liability on the balance sheet.

In preparing its August 31 bank reconciliation, Apex Corp. has the following information available: Balance per bank statement, August 31 $18,050 Deposit in transit, August 31 3,250 Return of customer's check for insufficient funds, August 3 1600 Outstanding checks, August 31 2,750 Bank service charges for August 100 On August 31 Apex's correct cash balance is $18,550. $17,950. $17,850. $17,550.

$18,550. Balance per bank statement$18,050 Plus deposit in transit3,250 Less outstanding checks(2,750) Equals ending cash balance$18,550

The following bank reconciliation is presented for the Kingston Company for the month of November, Year 1: Balance per bank statement, 11/30/Y1 $18,040 Add: Deposit in transit 4,150 Less: Outstanding checks$6,300 Bank credit recorded in error 20(6,320) Balance per books, 11/30/Y1$15,870 Data for the month of December, Year 1, per bank follows: December deposits$26,100 December disbursements 22,420 Balance, 12/31/Y1 21,720 All items that were outstanding as of November 30, cleared through the bank in December, including the bank credit. In addition, $2,500 in checks were outstanding as of December 31, Year 1. What is the balance of cash per books at December 31, Year 1? $19,220 $19,240 $21,720 $24,220

$19,220 The 12/31/Y1 balance per bank is given ($21,720). The only reconciling item at 12/31/Y1 is outstanding checks ($2,500). Therefore, the correct balance per bank at 12/31/Y1 is $19,220. The correct balance per bank is always the same as the correct balance per books.

Burr Company had the following account balances at December 31, Year 2: Cash in banks$2,250,000 Cash on hand 125,000 Cash legally restricted for additions to plant (expected to be disbursed in Year 3)1,600,000 Cash in banks includes $600,000 of compensating balances against short-term borrowing arrangements. The compensating balances are not legally restricted as to withdrawal by Burr. In the current assets section of Burr's December 31, Year 2, balance sheet, total cash should be reported at $1,775,000. $2,250,000. $2,375,000. $3,975,000.

$2,375,000. Cash on hand ($125,000) and cash in banks ($2,250,000) are both reported as cash in the current asset section of the balance sheet because they are both unrestricted and readily available for use.

The following are held by Smite Co.: Cash in checking account$20,000 Cash in bond sinking fund account 30,000 Postdated check from customer dated one month from balance sheet date 250 Petty cash 200 Commercial paper (matures in two months)7,000 Certificate of deposit (matures in six months)5,000 What amount should be reported as cash and cash equivalents on Smite's balance sheet? $57,200 $32,200 $27,450 $27,200

$27,200 The cash balance is $20,200: the sum of the checking account balance and the petty cash. Because it has a maturity of less than three months, the only cash equivalent is the $7,000 of commercial paper. The final sum of these two accounts is $27,200.

Alton Co. had a cash balance of $32,300 recorded in its general ledger at the end of the month, prior to receiving its bank statement. Reconciliation of the bank statement reveals the following information: Bank service charge: $15 Check deposited and returned for insufficient funds check: $120 Deposit recorded in the general ledger as $258 but should be $285 Checks outstanding: $1,800 After reconciling its bank statement, what amount should Alton report as its cash account balance? $30,338 $30,392 $32,138 $32,192

$32,192 The reconciliation should be as follows: Book balance$32,300 Less bank fees(15) Less NSF check(120) Plus deposit transposition error (285 - 258)27 Corrected book balance $32,192

Ral Corp.'s checkbook balance on December 31, Year 2, was $5,000. In addition, Ral held the following items in its safe on that date: Check payable to Ral Corp., dated January 2, Year 3, in payment of a sale made in December Year 2, not included in December 31 checkbook balance $2,000 Check payable to Ral Corp., deposited December 15 and included in December 31 checkbook balance but returned by bank on December 30 stamped "NSF." The check was redeposited on January 2, Year 3, and cleared on January 9 500 Check drawn on Ral Corp.'s account, payable to a vendor, dated and recorded in Ral's books on December 31 but not mailed until January 10, Year 3 300 The proper amount to be shown as Cash on Ral's balance sheet at December Year 2, is $4,800. $5,300. $6,500. $6,800.

$4,800. As a result of these adjustments, the correct cash balance is $4,800 ($5,000 − $500 + $300).

Hilltop Co.'s monthly bank statement shows a balance of $54,200. Reconciliation of the statement with company books reveals the following information: Bank service charge $10 Insufficient funds check 650 Checks outstanding 1,500 Deposits in transit 350 Check deposited by Hilltop and cleared by the bank for $125 but improperly recorded by Hilltop as $152 What is the net cash balance after the reconciliation? $52,363 $53,023 $53,050 $53,077

$53,050 The reconciling items that need to be adjusted to the bank balance are: checks outstanding (−1,500) and deposit in transit (+350). The net cash after the reconciliation is: Bank balance $54,200 − 1,500 + 350 = $53,050.

On October 31, Dingo, Inc. had cash accounts at three different banks. One account balance is segregated solely for a November 15 payment into a bond sinking fund. A second account, used for branch operations, is overdrawn. The third account, used for regular corporate operations, has a positive balance. How should these accounts be reported in Dingo's October 31 classified balance sheet? -The segregated account should be reported as a noncurrent asset, the regular account should be reported as a current asset, and the overdraft should be reported as a current liability. -The segregated and regular accounts should be reported as current assets, and the overdraft should be reported as a current liability. -The segregated account should be reported as a noncurrent asset, and the regular account should be reported as a current asset net of the overdraft. -The segregated and regular accounts should be reported as current assets net of the overdraft.

-The segregated account should be reported as a noncurrent asset, the regular account should be reported as a current asset, and the overdraft should be reported as a current liability. The accounts are with different banks. Thus, the accounts cannot be offset against one another. The overdraft is a liability because the bank honored a check or withdrawal causing the account to be negative. The firm owes the bank this amount. The regular corporate account is part of the cash account, a current asset. The segregated account is a long-term investment. The cash in this asset is set aside for a specific purpose. There is no intent to use the cash for ordinary operating purposes.

A bank reconciliation with the headings "Balance per Books" and "Balance per Bank" lists three adjustments under the former and four adjustments under the latter. The company makes separate adjusting entries for each item in the reconciliation that requires an adjustment. How many adjusting entries are recorded? 3 4 7 0

3 Only amounts adjusting the balance per books require an adjusting entry because only those amounts explain why the firm's recorded cash balance is not the same as the true cash balance. Common adjustments of this type include bank service charges, notes collected, and interest. The firm cannot alter the bank balance.

Lee Corporation's checkbook balance on December 31, Year 1, was $4,000. In addition, Lee held the following items in its safe on December 31: Check payable to Lee Corporation, dated 1/2/Y2, not included in 12/31 checkbook balance $1,000 Check payable to Lee Corporation, deposited 12/20, and included in 12/31 checkbook balance, but returned by bank on 12/30, stamped "NSF." The check was redeposited 1/2/Y2, and cleared 1/7 200 Postage stamps received from mail-order customers 75 Check drawn on Lee Corporation's account, payable to vendor, dated and recorded 12/31, but not mailed until 1/15/Y2 500 The proper amount to be shown as Cash on Lee's balance sheet at December 31, Year 1, is $3,800. $4,000. $4,300. $4,875.

4,300 Checkbook balance $4,000 Add: Check drawn but not mailed+500 Less: NSF check−200 Corrected cash balance $4,30

________________________ is (are) defined as money or a claim to receive a sum of money, the amount of which is fixed or determinable without reference to future prices of specific goods or services. A Monetary assets B Monetary liabilities C The value in use D The recoverable amount

A. Monetary assets Monetary assets are defined as money or a claim to receive a sum of money, the amount of which is fixed or determinable without reference to future prices of specific goods or services.

Light Co. had the following bank reconciliation at March 31: Balance per bank statement, 3/31 $23,250 Add: Deposit in transi 5,150 28,400 Less: Outstanding checks 6,300 Balance per books, 3/31 $22,100 Additional information from Light's bank statement for the month of April is as follows: Deposits$29,200 Disbursements 24,800 All reconciling items at March 31 cleared through the bank in April. Outstanding checks at April 30 totaled $3,200. What is the amount of cash disbursements per books in April? $21,700 $24,800 $27,900 $28,000

April disbursements per bank statement$24,800 March checks cleared in April statement(6,300) Checks outstanding end of April 3,200 Total cash disbursements in April $21,700

he following information pertains to Park Co. on December 31: Bank statement balance$10,000 Checkbook balance 14,000 Deposit in transit 5,000 Outstanding checks1,000 In Park's December 31 balance sheet, cash should be reported as $9,000. $10,000. $14,000. $15,000.

As a check, take the ending balance per the bank + deposits in transit − outstanding checks; $10,000 + $5,000 − $1,000 = $14,000.

In preparing its bank reconciliation for the month of March, Year 2, Derby Company has available the following information: Balance per bank statement, 3/31/Y2 $36,050 Deposit in transit, 3/31/Y2 6,250 Outstanding checks, 3/31/Y2 5,750 Credit erroneously recorded by bank in Derby's account, 3/12/Y2 250 Bank service charges for March 50 What should be the correct balance of cash at March 31, Year 2? $35,250 $36,250 $36,300 $36,550

Balance per bank$36,050 Add: Deposit in transit 6,250 $42,300 Deduct: Outstanding checks $5,750 Bank error250 (6,000) Correct balance$36,300

Poe, Inc. had the following bank reconciliation at March 31 Balance per bank statement, March 31$46,500 Add deposit in transit 10,300 56,800 Less outstanding checks 12,600 Balance per books, March 31 $44,200 Data per bank for the month of April follow: Deposits$58,400 Disbursements 49,700 All reconciling items at March 31 cleared the bank in April. Outstanding checks at April 30 totaled $7,000. There were no deposits in transit at April 30. What is the cash balance per books at April 30? $48,200 $52,900 $55,200 $45,900

Balance per books, 3/31 $44,200 Deposits per bank, April$58,400 Less deposit in transit, 3/31(10,300) Equals deposits made by firm in April 48,100 Checks clearing bank in April$49,700 Less outstanding checks, 3/31(12,600) Plus outstanding checks, 4/30 7,000 Equals checks written by firm in April(44,100) Balance per books, 4/30 $48,200

At June 30, Almond Co.'s cash balance was $10,012 before adjustments, while its ending bank statement balance was $10,772. Check number 101 was issued June 2 in the amount of $95, but was erroneously recorded in Almond's general ledger balance as $59. The check was correctly listed in the bank statement at $95. The bank statement also included a credit memo for interest earned in the amount of $35, and a debit memo for monthly service charges in the amount of $50. What was Almond's adjusted cash balance at June 30? $9,598 $9,961 $10,048 $10,462

Cash balance before adjustments 10,012 Less: Error in ledger ($95 − 59)(36) Plus: Interest earned 35 Less: Service charge(50) Corrected balance$9,961

On December 31, a company has the following bank accounts and corresponding cash balances: California Bank Operating - Summit Ridge($400,000) Operating - Bakersville 300,000 Operating - Smithville 50,000 Savings 500,000 Sedona Bank Checking($375,000) How should the company report the above bank account balances in the balance sheet at December 31? Cash of $75,000. Cash of $450,000 and a liability of $375,000. Cash of $850,000 and a liability of $775,000. Cash of $800,000 and a liability of $725,000.

Cash of $450,000 and a liability of $375,000. The net value in the California Bank is $850,000 less $400,000 or $450,000. The $375,000 overdraft in the Sedona Bank is reported as a liability.

At December 31, Year 1, Kale Co. had the following balances in the accounts it maintains at First State Bank: Checking account #101$175,00 Checking account #201(10,000) Money market account 25,000 90-day certificate of deposit, due 2/28/Y2 50,000 180-day certificate of deposit, due 3/15/Y2 80,000 Kale classifies investments with original maturities of three months or less as cash equivalents. In its December 31, Year 1, balance sheet, what amount should Kale report as cash and cash equivalents? $190,000 $200,000 $240,000 $320,000

Checking account #101$175,000 Checking account #201(10,000) Money market account 25,000 90-day CD 50,000 Total cash and cash equivalents$ 240,000

On July 1, Year 1, Cody Company obtained a $2,000,000, 180-day bank loan at an annual rate of 12%. The loan agreement requires Cody to maintain a $400,000 compensating balance in its checking account at the lending bank. Cody would otherwise maintain a balance of only $200,000 in this account. The checking account earns interest at an annual rate of 6%. Based on a 360-day year, the effective interest rate on the borrowing is 12%. 12.67%. 13.33%. 13.5%.

Cody's gross annual interest cost is $240,000 ($2,000,000 × 12%) $12,000 ($200,000 × 6%) $228,000 ($240,000 − $12,000). $1,800,000 ($2,000,000 loan less $200,000 excess compensating balance). is 12.67% ($228,000 / $1,800,000).

Cook Co. had the following balances on December 31, 20X4: Cash in checking account$350,000 Cash in money market account 250,000 U.S. Treasury bill, purchased 12/1/X4, maturing 2/28/X5 800,000 U.S. Treasury bond, purchased 3/1/X4, maturing 2/28/X5 500,000 Cook's policy is to treat as cash equivalents all highly liquid investments with a maturity of three months or less when purchased. What amount should Cook report as cash and cash equivalents in its December 31, 20X4, balance sheet? $600,000 $1,150,000 $1,400,000 $1,900,000

Common examples are Treasury bills, commercial paper, and money market funds. In this case, the cash equivalents are the money market account ($250,000) and the Treasury bill ($800,000). Therefore, total cash and cash equivalents is $1,400,000 ($350,000 + $250,000 + $800,000

Which of the following items would not be included as a component of cash? A Coin and currency on hand, including petty cash funds B Negotiable paper C Money market funds D Time certificates of deposit with original maturities of longer than three months

D Time certificates of deposit with original maturities of longer than three months Time certificates of deposit with original maturities of longer than three months are classified as either temporary or long-term investments depending upon maturity dates and managerial intent. Cash would include: coin and currency on hand, including petty cash funds; negotiable paper; and money market funds.

Star Corp. had the following accounts and balances in its general ledger as of December 31: Petty cash$ 500 XYZ Bank checking account 20,000 Marketable equity security 10,000 Marketable debt security 7,500 ABC Bank depository account 5,000 What amount should Star report as cash and cash equivalents in the balance sheet as of December 31? $25,000 $25,500 $35,000 $42,500

Petty cash$ 500 XYZ Bank checking account 20,000 ABC Bank depository account 5,000 25,500