Exercise 7-12 A new accountant at Marin Inc. is trying to identify which of the

ID: 2546926 • Letter: E

Question

Exercise 7-12

A new accountant at Marin Inc. is trying to identify which of the amounts shown below should be reported as the current asset “Cash and cash equivalents” in the year-end balance sheet, as of April 30, 2017.

(a) What balance should Marin report as its “Cash and cash equivalents” balance at April 30, 2017?

1. $98 of currency and coin in a locked box used for incidental cash transactions. 2. A $12,500 U.S. Treasury bill, due May 31, 2017. 3. $370 of April-dated checks that Marin has received from customers but not yet deposited. 4. An $98 check received from a customer in payment of its April account, but postdated to May 1. 5. $3,760 in the company’s checking account. 6. $6,350 in its savings account. 7. $70 of prepaid postage in its postage meter. 8. A $38 IOU from the company receptionist.

Explanation / Answer

Answer:

Particulars

Recorded As Cash & Cash Equivalents

Amount

$98 of currency and coin in a locked box used for incidental cash transactions.

Yes ( Petty Cash)

&60

A $12,500 U.S. Treasury bill, due May 31, 2017.

Yes ( Treasury Bill)

$ 12500

$370 of April-dated checks that Marin has received from customers but not yet deposited

Yes ( Deposit-in-transit)

$ 370

An $98 check received from a customer in payment of its April account, but postdated to May 1

No (Because this is a Receivable)

Nil

$3760 in the company’s checking account

Yes ( Bank A/c)

$ 3760

$6350 in its savings account.

Yes (Bank A/c)

$ 6350

$70 of prepaid postage in its postage meter

No ( because these are office supplies)

Nil

A $38 IOU from the company receptionist.

No ( because this is a Receivable)

Nil

Cash & Cash Equivalents Balance at April30, 2017 = $23040