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Mila [183]
4 years ago
13

Waterway Company has recorded the following items in its financial records. Cash in bank $51,500 Cash in plant expansion fund 11

0,400 Cash on hand 14,500 Highly liquid investments 38,700 Petty cash 550 Receivables from customers 91,100 Stock investments 69,100 The highly liquid investments had maturities of 3 months or less when they were purchased. The stock investments will be sold in the next 6 to 12 months. The plant expansion project will begin in 3 years. (a) What amount should Waterway report as "Cash and cash equivalents" on its balance sheet? Cash and cash equivalents $\
Business
1 answer:
marin [14]4 years ago
4 0

Answer:

$105,250

Explanation:

Cash and cash equivalent are the most liquid asset of the company. In order for an asset to be classified as cash and cash equivalent, the instrument shoud be readily convertible in to cash and there is no significant risk of change in value. Waterway Company's recorded items that can be classified as cash and cash equivalents are as follows;

Cash in bank                       $51,500

Cash on hand                        14,500

Highly liquid investments     38,700

Petty cash                              <u>     550</u>

Total                                   $105,250

<em>*Cash in expansion fund is set aside for future use. Hence, it is not readily available for company's needs.</em>

<em>*Receivables from customer has significant risk of not being collected.</em>

<em>*Stock investments is not readily convertible into cash</em>

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