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1Cash Receivables & Marketable Securities KK Receivables & Marketable Securities 2 CASH A. Definition 1. Cash on the balance sheet is that is & and available to be spent in

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  • Cash, Receivables & Marketable Securities


  • Cash, Receivables & Marketable Securities



    Cash ()

    Marketable Securities ()

    Accounts Receivable ()

    Notes Receivable ()

    Inventories ()

    Prepaid expenses ()

    1. Cash

    Definition, Cash Equivalents, Bank Reconciliation

    2. Marketable Securities


    0~20% Marketable Securities Cost method

    Asset 1

    20~50%Equity Method (), Topic


    3. Accounts Receivable

    Bad Debts Expense ()

    4. Notes Receivable


    5. Inventories

    Pricing Method 12 31 Inventory

    6. Prepaid expenses Non-Factor 3

    1 1 ?

    CPA 1~5 Topic

  • Cash, Receivables & Marketable Securities


    CASH A. Definition

    1. Cash on the balance sheet is that is & and available to be spent in

    2. Be careful of cash you cant Examples: a.


    c. B. Cash Equivalents

    Three-Month Rule: Highly liquid securities with an maturity of _____________________ or less are treated as cash.

    Examples: a.


    c. C. Bank Reconciliation Primary area for exam questions Work space and additional notes:

    money free clearcurrent operationspend in current operation

    security depositcompensating bank balancebond sinking fund

    originalthree month


    CD (Certificate of Deposit)

    ( Treasury Bills ) T-Bills

    CP (Commercial Paper)

  • Cash, Receivables & Marketable Securities


    MULTIPLE-CHOICE QUESTION 1 1. In preparing its August 31, Year 2 bank reconciliation, Apex Corp. had available the following information:

    Balance per bank statement, 8/31 $18,050 Deposit in transit, 8/31 3,250 Return of customers check for insufficient funds, 8/31 600 Outstanding checks, 8/31 2,750 Bank service charges for August 100

    At August 31, Year 2, Apexs correct cash balance is

    a. $18,550 b. $17,950 c. $17,850 d. $17,550 Work Space: Bank Balance, 8/31 $ Deposit in Transit Returned Check Outstanding Checks Service Charges Correct Cash Balance $ Additional notes:

    Independently answer multiple-choice question 2.


  • Cash, Receivables & Marketable Securities


    MULTIPLE-CHOICE QUESTION 2 2. The following information pertains to Grey Co. at December 31, 20X3: Checkbook balance $12,000 Bank statement balance 16,000 Check drawn on Greys account, payable to a vendor, dated and recorded 12/31/X3 but not mailed until 1/10/X4 1,800 On Greys December 31, 20X3 balance sheet, what amount should be reported as cash? a. $12,000 b. $13,800 c. $14,200 d. $16,000


    Cash in checking account $ Held check Cash and cash equivalents $

    Adjusting Journal Entry: Cash Accounts Work space and notes:

    Independently answer multiple-choice questions 3-6.

    12,000+ 1,80013,800



  • Cash, Receivables & Marketable Securities



    3. At October 31st Dingo Inc. had cash accounts at three different banks. One accountbalance is segregated solely for a November 15th payment into a bond sinking fund. A second account, used for branch operations, is overdrawn. The third account, used for regular corporate operations, has a positive balance. How should these accounts be reported in Dingos October 31st classified balance sheet?

    a. The segregated account should be reported as a noncurrent asset, the regular accountshould be reported as a current asset and the overdraft should be reported as a currentliability.

    b. The segregated and regular accounts should be reported as current assets, and theoverdraft should be reported as a current liability.

    c. The segregated account should be reported as a noncurrent asset, and the regularaccount should be reported as a current asset net of the overdraft.

    d. The segregated and regular accounts should be reported as current assets net of theoverdraft.


    Work space and notes:

    C will be the answer if this is only one bank.

  • Cash, Receivables & Marketable Securities


    Items 4 and 5 are based on the following data:

    Poe Inc. had the following bank reconciliation at March 31:

    Balance per bank statement, 3/31 Add: Deposit in transit

    Less: Outstanding checks Balance per books, 3/31

    Data per bank for the month of April 20X7 follow:

    Deposits Disbursements

    All reconciling items at March 31 cleared the bank in April. Outstanding checks at April 30 totaled $7,000. There were no deposits in transit at April 30.

    4. What is the cash balance per books at April 30?

    a. $48,200b. $52,900c. $55,200d. $58,500

    (0875) Bank Balance, 3/31 DepositsDisbursementsBank Balance, 4/30 Outstanding ChecksBook Balance, 4/30

    Work space and notes:

    46,50010,30056,800(12,600) 44,200




  • Cash, Receivables & Marketable Securities


    5. What is the amount of cash disbursements per books in April?

    a. $44,100b. $49,200c. $54,300d. $56,700

    (9003) Disbursements per Bank Outstanding Checks, 3/31 Outstanding Checks, 4/30 Disbursements per Book

    6. At June 30, Almond Co.s cash balance was $10,012 before adjustments, while itsending bank statement balance was $10,772. Check number 101 was issued June 2 in the amount of $95, but was erroneously recorded in Almonds general ledger balance as $59. Thecheck was correctly listed in the bank statement at $95. The bank statement also included a credit memo for interest earned in the amount of $35, and a debit memo for monthly service charges in the amount of $50. What was Almonds adjusted cash balance at June 30?

    a. $9,598b. $9,961c. $10,048d. $10,462


    Unadjusted Cash Balance at 6/30 Check error Interest income Service Charge Adjusted Cash Balance

    Work space and notes:



    Answer is b.

  • Cash, Receivables & Marketable Securities



    A. Accounting for Bad Debts Two Methods



    B. Direct Write-off Method

    1. No entry for bad debts until customer

    2. At default, the customers account is

    Example Journal Entry

    Year 1: Accounts receivable Sales

    Year 4: Bad debt expense Accounts receivable

    3. Theoretically, the direct write-off method is because of the concept.

    4. Acceptable under GAAP as long as bad debt expenses are

    5. Material bad debt expense requires the

    Work space and additional notes:

    Direct write-off methodAllowance method

    defaultwritten off





    not material

    allowance method

  • Cash, Receivables & Marketable Securities


    ALLOWANCE METHOD Allowance Method: A company will accounts receivable expected to become bad debts and set up a for bad debts on the a sheet. Remember, there are approaches to the Allowance Method. A. approach

    B. approach Work space and additional notes:

    Independently answer multiple-choice questions 7-8.

    estimateprovision balance



    provision = allowance

    I/S = Income Statement

    B/S = Balance Sheet

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