Assume Young Company holds the following assets at year-end and classifies as ca
ID: 2480517 • Letter: A
Question
Assume Young Company holds the following assets at year-end and classifies as cash equivalents everything allowed by professional standards.
Treasury bills (Acquired with less than 3 month maturity dates
$80,000
Treasury bills (Acquired with greater than 3 month maturity dates
$20,000
Commercial paper
$40,000
Investment in marketable equity securities
$100,000
What would be the total cash equivalents at year-end for Young Company?
$80,000
$100,000
$120,000
$140,000
Treasury bills (Acquired with less than 3 month maturity dates
$80,000
Treasury bills (Acquired with greater than 3 month maturity dates
$20,000
Commercial paper
$40,000
Investment in marketable equity securities
$100,000
Explanation / Answer
Hey Dear Student !!
Answer Would be $120000
Treasury Bonds upto or below 3 months maturity at a time of purchase are considered as Cash Equivalents so only $80000 can be included $20000 doesn't qualify for definition.
Commercial Papers are considered as Cash Equivalents because these are issued for short term duration so $40000 is considered.
Investment in Marketable Equity Securities is not considered as Cash Equivalents because these are securities having maturity beyond 3 months.
Pleasure Teaching You !!
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