In: Accounting
1. The controller of the Red Wing Corporation is in the process
of preparing the company’s...
1. The controller of the Red Wing Corporation is in the process
of preparing the company’s 2021 financial statements. She is trying
to determine the correct balance of cash and cash equivalents to be
reported as a current asset in the balance sheet. The following
items are being considered:
- Balances in the company’s accounts at the First National Bank;
checking $15,000, savings $23,600.
- Undeposited customer checks of $6,700.
- Currency and coins on hand of $730.
- Savings account at the East Bay Bank with a balance of
$550,000. This account is being used to accumulate cash for future
plant expansion (in 2023).
- $50,000 in a checking account at the East Bay Bank. The balance
in the account represents a 20% compensating balance for a $250,000
loan with the bank. Red Wing may not withdraw the funds until the
loan is due in 2024.
- U.S. Treasury bills; 2-month maturity bills totaling $30,000,
and 7-month bills totaling $35,000.
Required:
1. Determine the correct balance of cash and
cash equivalents to be reported in the current asset section of the
2021 balance sheet.
|
|
Cash and cash equivalents
includes: |
a. |
Balance in checking account |
|
|
Balance in savings account |
|
b. |
Undeposited customer
checks |
|
c. |
Currency and coins on hand |
|
d. |
Balance in savings account |
|
e. |
Balance in checking
account |
|
f. |
U.S.
treasury bills |
|
|
Total |
|
|
2. Parker Inc. has the following cash balances:
|
|
First Bank: |
$ |
290,000 |
|
Second
Bank: |
|
(30,000 |
) |
Third Bank: |
|
39,000 |
|
Fourth
Bank: |
|
(15,000 |
) |
|
Required:
1. Prepare the current assets and current
liabilities section of Parker’s 2021 balance sheet, assuming Parker
reports under U.S. GAAP. (If there is no effect select
"None" from the dropdown.)
|
|
Parker’s 2021 Balance Sheet
(Partial) |
Current
Assets: |
|
|
|
Current
Liabilities: |
|
|
|
|
2. Prepare the current assets and current
liabilities section of Parker’s 2021 balance sheet, assuming Parker
reports under IFRS. (If there is no effect select "None"
from the dropdown.)
|
|
Parker’s 2021 Balance Sheet
(Partial) |
Current
Assets: |
|
|
|
Current
Liabilities: |
|
|
|
|