Question

WileyPLUS Problem 7-8 Cullumber Corporation had the following balances in its accounting records at August 31, 2018: Restricted cash for bank as a compensating balance Cheque dated September 15, 2018 from Alters Inc. U.S. bank account with an equivalent balance of $13,100 Canadian Savings account balance Customer cheque dated January 28, 2018 Treasury bill (60 day terms) Bank overdraft in chequing account $38,700 5,400 13,100 27,200 1,700 22,800 9,000 (a) What amount should Cullumber report as cash and cash equivalents at August 31? Cash and cash equivalents

Answer 1

Calculate the amount C report as cash and cash equivalents at August 31 as follows: Amount Description U.S. Bank account with an equivalent balance of $13,100 Canadian Saving Account Balance Treasury Bill (60 day terms) Cash and cash equivalents at August 31 $13,100 $27,200 $22,800 $63,100 However as per IFRS, the amount of bank overdraft can be deducted from cash and cash equivalents that will reduce balance by 9,000. Cash and cash equivalents as per IFRS will be $54,100. Cash and cash equivalents are short term commitments that can be easily converted into a known cash amount. Post-dated cheques and restricted cash are not included in cash and cash equivalent. Moreover, the cheque received on January 28, 2018 and not yet deposited might be stale cheque as 180 days have passed since January 28, 2018. Thus, it has not been included.