Question

CALCULATOR PRINTER VERSION BACK NEXT Practice Exercise 7-01 a The controller for Sunland Co. is attempting to determine the amount of cash to be reported on its December 31, 2017, balance sheet. The following information is provided. Sunland received a post-dated check from a customer. The check is dated January 1, 2018, in the amount of $25,000 The company has a certificate of deposit of $126,000. The CD matures 120 days after its November 1, 2017 date of origination. Sunland Co. holds a commercial savings account of $424,000 and a commercial checking account balance of $1,400,000 at First National Bank of Alexander. In addition, a bank overdraft of $70,000 existed at year-end in a separate account that the company uses to deposit cash receipts at First National Bank of Alexander. A separate cash fund in the amount of $1,525,000 is set aside for the expansion of the company's New Jersey factory On December 21, 2017, Sunland Co. purchased $720,000 of commercial paper from Voight, Inc. The commercial paper matures January 14, 2018 Currency and coin on hand amounted to $10,506. 7. A money market fund account held at Rogers, Inc. (a mutual fund organization) permits Sunland Co. to write checks on the full account balance, which was $930,000 at December 31, 2017 Sunland Co. has agreed to maintain a cash balance of $260,000 at all times at First National Bank of Alexander to ensure future credit availability. The balance in Sunland Co.'s petty cash fund is $600. 10. During December 2017, Sunland Co. made travel advances to employees totaling $31,000 for executive travel that will occur during the first quarter of 2018. The employees will not reimburse the company for the advance, but are required to spend the funds on company-related travel and to submit receipts. 11. The company received an L.O.U. from Stiller LLP, a company customer, on December 12, 2017, in the amount of $24,000 9. (a) Compute the amount of cash to be reported on Sunland Co.'s balance sheet at December 31, 2017. Cash reported on December 31, 2017, balance sheets Click if you would like to Show Work for this question: Open Show Work Please save your WhiteBoard work as an image and send to your instructor outside of Wiley PLUS.

Answer 1

No.1) This is a post-dated check; therefore, not to be recorded as cash.

No.2) Cash = - 126,000; since there is outflow of cash

No.3) Cash = 424,000 + 1,400,000 – 70,000 = 1,754,000

No.4) Cash = - 1,525,000; since the cash is set aside

No.5) Cash = - 720,000; since it is purchased

No.6) Cash = 10,506

No.7) Cash = - 930,000; since the check is written by the company

No.8) it doesn’t establish any transaction; therefore, there is no entry.

No.9) petty cash is not normal cash balance.

No.10) Cash = - 31,000; since the advance is made.

No.11) Cash = 24,000

By aggregating as below:

Cash = - 126,000 + 1,754,000 – 1,525,000 – 720,000 + 10,506 – 930,000 – 31,000 + 24,000

            = - 1,543,494 (Answer)