Question

The controller for Clint Eastwood Co. is attempting to determine the amount of cash to be reported on its December 31, 2017 balance sheet. The following is provided.1. Commercial savings account of $600,000 and a commercial checking account balance of $900,000 are held at First National Bank of Yojimbo.2. Money market fund account held at Volonte Co. (a mutual fund organization) permits Eastwood to write checks on this balance, $5,000,000.3. Travel advances of $180,000 for executive travel for the first quarter of next year (employee to reimburse through salary reduction)4. A separate cash fund in the amount of $1,500,000 is restricted for the retirement of long-term debt.5. Petty cash fund of $1,0006. An I.O.U. from Marianne Koch, a company customer, in the amount of $190,0007. A bank overdraft of $110,000 has occurred at one of the banks the company uses to deposit its cash receipts. At the present time, the company has no deposits at this bank8. The comp[any has two certificates of deposits, each totaling $500,000. These CDs have a maturity of 120 days.9. Eastwood received a check that is dated January 12, 2018, in the amount of $125,000.10. Eastwood has agreed to maintain a cash balance of $500,000 at all times at First National Bank of Yojimbo to ensure future credit availability.11. Eastwood has purchased $2,100,00 of commercial paper of Sergio Leone Co. which is due in 60 days12. Currency and coins on hand amounted to $7,700Required:a) Compute the amount of cash to be reported on Eastwood's Co balance sheet at December 31,2017.b) Indicate the proper reporting for items that are not reported as cash on the December 31,2017 balance sheet.

Answer 1

Answer:

Explanation:

Cash:

Commercial savings account - 600,000

Commercial checking account balance - 900,000

Money market fund account - 5,000,000

Petty cash fund - 1,000

Commercial paper- 21,000,000

Currency and coins on hand 7,700

Total cash to be reported 8,608,700

b)

Travel advances of $180,000 for executive travel for the first quarter of next year - Accounts receivable

Cash fund in the amount of $1,500,000 restricted for the retirement of long-term debt - Non-current asset

An I.O.U. from Marianne Koch, a company customer, in the amount of $190,000 - Accounts Receivable

Bank overdraft of $110,000 - Current liablity

CDs $500,000 - Temporary investments

Post dated check in the amount of $125,000 - Accounts receivable

Answer 2

Answer:

a) Cash to be reported by Eastwood = $6,618,700

b) Indication of items :

  3- Travel allowance (reimbursed) $180,000 Accounts Receivable

  4- Cash Restricted for long term debt $1,500,000 Other Assets( non-current asset)

 6) Company customer $190,000 Accounts receivable

 8) Certificates of deposits(500000*2) $1,000,000 Certificate of Asset(current asset)

 9) Outstanding check $125,000 Accounts receivable

 11) Commercial paper $2,100,000  Commercial paper (current asset)

Explanation:

a) Amount Cash to be reported

1) Savings Account                           $600,000

Checking Account                           $900,000

Total First National Bank                                  $1,500,000

2) Money market                                                $5,000,000

5) Petty Cash                                                      $         1,000

7) Bank overdraft                                               -$     110,000

12) Currency and Coins on hand                       $         7,700

TOTAL CASH                                                                             $6,618,700