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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Brief Exercise 4-36 Cash Reporting

Richter Industries has the following items:

Currency $27,500

Customer checks that have not deposited 850

U.S. government bonds that originally maturing in 3 months 11,000

U.S. government bonds that originally maturing in 12 months 14,000

Cash in saving and checking 50,000

Certificates of deposits that originally maturing in 18 months 47,000

Required:

How much should Richter report as cash and equivalents on its balance sheet?

To determine

Concept Introduction:

Cash and Cash Equivalents:

Cash is the category that includes currency, coins, and deposits in bank accounts. Cash Equivalent is the category which includes short term and highly liquid assets which are readily convertible into cash. Liquidity is the term used for company’s ability of payoff its liabilities.

To Calculate:

The amount of cash and Cash Equivalent.

Explanation

The amount of cash and Cash Equivalent is calculated as follows:

Currency $27,500

Customer’s checks  $850

Government Bonds (3months) $11,...

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