Problem: Company A bank accounts and balances at the end of December 31, 2010 are:
Bank Account Type Balance
City Bank Savings $2,450,000.00
Chase Checking 1 $47,500.00
Chase Checking 2 ($450.00)
Chase Savings $2,000,000.00
Chase Certificate of Deposit $50,000.00
First National Checking 3 ($12,000.00)
State how each of the following items should be classified on the financial statements as of December 31. 2010. Classify each as one of:
Cash
Cash Equivalent
Accounts Receivable
Temporary Investment
Prepaid Expense
Other Current Asset
Fixed Asset
Other Long Term Asset
Accounts Payable
Revenue
Expense
a. Customer paid with a check dated January 2, 2011 for $450
b. $750,000 restricted cash for construction of a new building beginning in 2012. Cash is in the savings account at City Bank.
c. $10,000 of U.S. Treasury bills that mature on January 21, 2011.
d. $500 advancement to Dave for a business trip. Dave is an outside salesman and pays his own expenses. This money will be recovered from Dave's next paycheck.
e. Money market fund in the amount of $25,000. The particular money market fund allows withdrawals only upon written request.
f. Sara, a employee, was given $50 from the petty cash fund. She signed a note that she owed back $50.
g. A certificate of deposit with Chase in the amount of $10,000 that matures February 28, 2011.
h. $42 in U.S. Postage Stamps are in the petty cash box.
i. Checking account 2 is overdrawn $450.
j. Company A holds commercial paper from Time Corp. in the amount of $40,000 and maturing on February 28, 2011.
k. Company A has loaned $100,000 to its wholly owned subsidiary.
l. Certificate of deposit with Chase in the amount of $40,000 that matures on April 30, 2011.
m. Company A has a money market fund in the amount of $125,000. They can write checks on the fund.
n. The petty cash fund contains $9.25 in coins and $235.00 in currency.
o. U.S. Treasury bills in the amount of $25,000 that mature on May 31, 2011.
p. The board has restricted $1,000,000 of the cash in City Bank for use in constructing a new factory in 2011.
q. Chase has returned a check from a customer in the amount of $450.
r. Company A must maintain $500,000 in their savings account at Chase per the terms of a loan agreement. The loan is $2,000,000 and must be repaid no later than December 31, 2011.
s. Company A must maintain an additional $100,000 in their savings account at Chase per the terms of another loan. That loan is in the amount of $250,000 and must be repaid no later than July 31, 2012.
t. The Company has overdrawn checking 3 at First National $12,000.
u. Tina was advanced $400 for travel expenses to another company location for a meeting. Her travel expenses are paid by the company.
v. The Company holds commercial paper from Time Corp. in the amount of $25,000 and maturing on May 30, 2011.