Question

The controller for Clint Indigo Co. is attempting to determine the amount of cash to be reported on its December 31, 2020, balance sheet. The following information is provided. 1. Commercial savings account of $617400 and a commercial checking account balance of $891,200 are held at First National Bank of Yojimbo. 2. Money market fund account held at Volonte Co. (a mutual fund organization) permits Indigo to write checks on this balance, $5,217,600. 3. Travel advances of $197.300 for executive travel for the first quarter of next year (employee to reimburse through salary reduction) 4. A separate cash fund in the amount of $1.492,100 is restricted for the retirement of long-term debt. 5. Petty cash fund of $1.480. 6. An L.O.U. from Marianne Koch, a company customer, in the amount of $165,200. 7. A bank overdraft of $112,900 has occurred at one of the banks the company uses to deposit its cash receipts. At the present time, the company has no deposits at this bank 8. The company has two certificates of deposit, each totaling $661,800. These CDs have a maturity of 120 days. 9. Indigo has received a check that is dated January 12, 2021, in the amount of $135,070. 10. Indigo has agreed to maintain a cash balance of $490,000 at all times at First National Bank of Yojimbo to ensure future credit availability 11. Indigo has purchased $1.962,300 of commercial paper of Sergio Leone Co. which is due in 60 days. 12. Currency and coin on hand amounted to $8.251. (a) Compute the amount of casland cash equivalents to be reported on Indigo Co's balance sheet at December 31, 2020 The amount of Cash and Cash Equivalents reported on December 31, 2020 S

Answer 1

S no.	Includes	Reason
1	617400+891200 = 1508600	Balance at Bank is a part of Cash
2	5217600	Money market funds are a short terms fund that are highly liquid and readily convertible in to cash
3	0	Travel advances paid to employees which is recovered by way of salary reduction is not cash readily available
4	0	Restricted funds is not a part of cash
5	1480	Petty cash fund is a part of cash
6	0	IOU is a negotiable document which is not equivalent to cash
7	0	Bank overdraft is a cash borrowed when having insufficient funds in account thus it is a liability
8	0	maturity period is greater than   90 days (3 months)
9	0	Recoverability of future dated check is not certain or cannot be determined
10	0	Minimum balance is not a part of cash
11	1962300	commercial paper with maturity period of90 days is to be included
12	8251	cash in hand
Total	8,698,231

cash and cash equivalent = $ 8,698,231