Cash and Accounts Receivable - Practice Questions
Determine how to report cash and related items
1. A company has the following cash balances: A company has the following items at year-end:
Large bank $ 127,000 cash in bank: $30,000
Small bank $ 17,000 petty cash: $500
Continental bank $ (42,000) short-term paper with maturity of two months: $7,000
Petty cash $ 450 postdated checks: $2,000
3-month treasury bill $ 60,000
What amount should be reported as cash and cash equivalents in the
CD maturing in 18 months $ 100,000
balance sheet?
What is the amount of cash and cash equivalents that should be reported?
$37,500
$204,450
2. A company has the following items at year-end: A company has the following items at year-end:
cash in bank – checking account of $18,500 cash in bank: $35,000
cash on hand of $500 petty cash: $300
post-dated checks received totaling $3,500 short-term paper with maturity of 120 days: $5,500
certificates of deposit totaling $124,000 postdated checks: $1,400
How much should be reported as cash in the balance sheet? How much should be reported as cash in the balance sheet?
$19,000 $35,300
3. A company has cash in the bank of $20,000, restricted cash in a separate A company has cash in the bank of $10,000, restricted cash in a separate
account of $3,000, and a bank overdraft in an account at another bank of account of $1,000, and a bank overdraft of $3,000 in the same bank that
$1,000. houses the $10,000 in cash.
How much should the company report in cash? What amount should this company report as cash in the balance sheet?
$20,000 $7,000
4. A company has the following items:
, Cash $ 10,000
Petty cash $ 100
Short-term paper due in 3
$ 1,500
months
Postdated customer check $ 2,000
Bank overdraft $ 50
How much should the company report as cash equivalents?
$11,600
5. All the following may be included under the heading of "cash" except In which account are post-dated checks received classified?
a. currency. a. receivables.
b. money market funds. b. prepaid expenses.
c. checking account balance. c. cash.
d. savings account balance. d. payables.
6. Under which section of the balance sheet is "cash restricted for plant A bank overdraft from a different bank should be
expansion" reported? a. reported as a deduction from the current asset section.
a. current assets. b. reported as a deduction from cash.
b. noncurrent assets. c. netted against cash and a net cash amount reported.
c. current liabilities. d. reported as a current liability.
d. stockholders' equity.
7. A bank overdraft from a separate account of the same bank should be What is restricted cash segregated on the balance sheet
a. reported as a deduction from the current asset section. a. a nonmaterial amount set aside for a specific purpose.
b. reported as a deduction from cash. b. a material amount set aside for a specific purpose.
c. netted against cash and a net cash amount reported. c. a nonmaterial amount set aside for a nonspecific purpose.
d. reported as a current liability. d. a material amount set aside for a nonspecific purpose.
Explaining accounting issues related to valuation of accounts receivable
8. A company receives a three-year, $20,000, zero-interest-bearing note that has A company receives a $7,000, noninterest-bearing note for the sale of
a present value of $16,500. inventory. The market rate at the time of the sale is 8%. The note is due in
full at the end of three years. Assuming an annual interest rate of 8% for
What is the journal entry to record this transaction? DR: NR 20000 CR. Cash three years is appropriate, the present value of the principal is $7,000 ×
16500 CR Disc on NR 3500 0.79383 = $5,557. Assuming an annual interest rate of 3% for eight years is
appropriate, the present value of the principal is $7,000 × 0.78941 = $5,527.
What is the journal entry to record this sale? DR: NR 7000 CR: Cash 5557 CR
Determine how to report cash and related items
1. A company has the following cash balances: A company has the following items at year-end:
Large bank $ 127,000 cash in bank: $30,000
Small bank $ 17,000 petty cash: $500
Continental bank $ (42,000) short-term paper with maturity of two months: $7,000
Petty cash $ 450 postdated checks: $2,000
3-month treasury bill $ 60,000
What amount should be reported as cash and cash equivalents in the
CD maturing in 18 months $ 100,000
balance sheet?
What is the amount of cash and cash equivalents that should be reported?
$37,500
$204,450
2. A company has the following items at year-end: A company has the following items at year-end:
cash in bank – checking account of $18,500 cash in bank: $35,000
cash on hand of $500 petty cash: $300
post-dated checks received totaling $3,500 short-term paper with maturity of 120 days: $5,500
certificates of deposit totaling $124,000 postdated checks: $1,400
How much should be reported as cash in the balance sheet? How much should be reported as cash in the balance sheet?
$19,000 $35,300
3. A company has cash in the bank of $20,000, restricted cash in a separate A company has cash in the bank of $10,000, restricted cash in a separate
account of $3,000, and a bank overdraft in an account at another bank of account of $1,000, and a bank overdraft of $3,000 in the same bank that
$1,000. houses the $10,000 in cash.
How much should the company report in cash? What amount should this company report as cash in the balance sheet?
$20,000 $7,000
4. A company has the following items:
, Cash $ 10,000
Petty cash $ 100
Short-term paper due in 3
$ 1,500
months
Postdated customer check $ 2,000
Bank overdraft $ 50
How much should the company report as cash equivalents?
$11,600
5. All the following may be included under the heading of "cash" except In which account are post-dated checks received classified?
a. currency. a. receivables.
b. money market funds. b. prepaid expenses.
c. checking account balance. c. cash.
d. savings account balance. d. payables.
6. Under which section of the balance sheet is "cash restricted for plant A bank overdraft from a different bank should be
expansion" reported? a. reported as a deduction from the current asset section.
a. current assets. b. reported as a deduction from cash.
b. noncurrent assets. c. netted against cash and a net cash amount reported.
c. current liabilities. d. reported as a current liability.
d. stockholders' equity.
7. A bank overdraft from a separate account of the same bank should be What is restricted cash segregated on the balance sheet
a. reported as a deduction from the current asset section. a. a nonmaterial amount set aside for a specific purpose.
b. reported as a deduction from cash. b. a material amount set aside for a specific purpose.
c. netted against cash and a net cash amount reported. c. a nonmaterial amount set aside for a nonspecific purpose.
d. reported as a current liability. d. a material amount set aside for a nonspecific purpose.
Explaining accounting issues related to valuation of accounts receivable
8. A company receives a three-year, $20,000, zero-interest-bearing note that has A company receives a $7,000, noninterest-bearing note for the sale of
a present value of $16,500. inventory. The market rate at the time of the sale is 8%. The note is due in
full at the end of three years. Assuming an annual interest rate of 8% for
What is the journal entry to record this transaction? DR: NR 20000 CR. Cash three years is appropriate, the present value of the principal is $7,000 ×
16500 CR Disc on NR 3500 0.79383 = $5,557. Assuming an annual interest rate of 3% for eight years is
appropriate, the present value of the principal is $7,000 × 0.78941 = $5,527.
What is the journal entry to record this sale? DR: NR 7000 CR: Cash 5557 CR
