Cash and Liquid Assets on the Balance Sheet
Response to the following problem:
The following accounts are listed in a company's general ledger
December 31, 2008 December 31, 2007
Accounts receivable $12300 $10000
Certificates of deposit (three months) 10000 10000
Marketable securities 4500 4000
Pettey cash fund 1200 1500
Money merit' fund 25800 28000
Cash in checking account 6000 6000
Required
1. Which items are cash equivalents?
2. Explain where items that are not cash equivalents should be classified on the balance sheet.
3. What are the amount and the direction of change in cash and cash equivalents for 2008? Is the company as liquid at the end of 2008 as it was at the end of 2007? Explain your answer.