F3 M1 Cash and Cash Equivalents

Question 1

The following pertains to Grey Co. at Dec 31 Year 1:
Checkbook balance $12,000
Bank statement balance $16,000
Check drawn on Grey’s account, payable to a vendor, dated and recorded 12/31/Y1 but not mailed until 1/10/Y2
On Grey’s December 31 Year 1 balance sheet, what amount should be reported as cash?

Answer 1

$13,800
Since the check is not disbursed as of Dec 31 year 1 it should be added back to the checkbook balance in determining the 12/31/Y1 cash balance.

Question 2

Which of these would be included in cash and cash equivalents?
Cash in checking account
Cash in bond sinking fund account
Post-dated check from customer dated one month from balance sheet date
Petty cash
Commercial paper (matures in 2 months)
Certified of deposit (matures in six months)

Answer 2

Cash in checking account
Petty cash
Commercial paper (2 month maturity)

Question 3

A cash equivalent matures within __ months of the purchase date.

Answer 3

3 months

Question 4

A negative balance (overdraft) in a bank account should be reported on the balance sheet as a ____.

Answer 4

Current liability

Question 5

Hilltop Co.’s monthly bank statement shows a balance of $54,200. Reconciliation of the statement with the company books reveals the following information:
Bank service charge $10
Insufficient funds check $650
Checks outstanding $1,500
Deposits in transit $350
Check deposited by Hilltop and cleared by the bank for $125 but improperly recorded by hilltop as $152
What is the net cash balance after the reconciliation?
A. $53,050
B. $52,363
C. $53,023
D. $53,077

Answer 5

A

The bank service charge, NSF check, and recording error are only reconciling items.