Question

A new accountant at Larkspur, Inc. is trying to identify which of the amounts shown below should be reported as the current asset “Cash and cash equivalents” in the year-end balance sheet, as of April 30, 2022.
1. $52 of currency and coin in a locked box used for incidental cash transactions.
2. A $10,200 U.S. Treasury bill, due May 31, 2022.
3. $255 of April-dated checks that Larkspur has received from customers but not yet deposited.
4. An $78 check received from a customer in payment of its April account, but postdated to May 1.
5. $3,360 in the company’s checking account.
6. $6,350 in its savings account.
7. $52 of prepaid postage in its postage meter.
8. A $22 IOU from the company receptionist.

(a) What balance should Larkspur report as its “Cash and cash equivalents” balance at April 30, 2022?

Answer 1

Answer:

Cash and cash equivalents = $20,217

Explanation:

                          Larkspur Company

                    Cash and Cash Equivalent

Transaction No.      Particulars                           $          

1.                        Petty Cash Fund                          52

2.                       Treasury Bill                          10,200

3.                       Deposit-In-Transit                      255

                         Cash-in-Bank:

5.                       Checking account                   3,360

6.                       Savings account                      6,350

Total Cash & Cash Equivalent                        20,217

Transaction #4. Since it did not post during April, therefore, it could not be a cash item.

Transaction #7. It is an expense.

Transaction #8. IOU is a receivable.