Question

The controller of the Red Wing Corporation is in the process of preparing the company's 2018 financial statements. She is trying to determine the correct balance of cash and cash equivalents to be reported as a current asset in the balance sheet. The following items are being considered:

a. Balances in the company's accounts at the First National Bank: checking $14,700, savings $23,300.

b. Undeposited customer checks of $6,400

c. Currency and coins on hand of $700.

d. Savings account at the East Bay Bank with a balance of $520,000. This account is being used to accumulate cash for future plant expansion (in 2020).

e. $44,000 in a checking account at the East Bay Bank. The balance in the account represents a 20% compensating balance for a $220,000 loan with the bank. Red Wing may not withdraw funds until the loan is due in 2021.

f. U.S. Treasury bills; 2-month maturity bills totaling $27,000, and 7-month bills totaling $32,000.

Required:

1. Determine the correct balance of cash and cash equivalents to be reported in the current asset section of the 2018 balance sheet

Cash and cash equivalents includes:

a. Balance in checking account ____________

Balance in savings account _____________

c. Currency and coins on hand ______________

d. Balance in savings account ______________

e. Balance in checking account _______________

f. U.S. treasury bills _______________

Total _______________

Answer 1

Cash and cash equivalents includes:
Balance in checking account	14700
Balance in savings account	23300
Undeposited customer checks	6400
Currency and coins on hand	700
Balance in savings account	0
Balance in checking account	0
U.S. treasury bills (with 2-month maturity)	27000
Total	72100