Specter Co. combines cash and cash equivalents on the balance sheet. Using the following information, determine the amount reported on the year-end balance sheet for cash and cash equivalents. $16,000 cash deposit in checking account. $46,000 bond investment due in 20 years. $11,500 U.S. Treasury bill due in 1 month. $850, 3-year loan to an employee. $3,600 of currency and coins. $1,150 of accounts receivable. Checking account Bond investment U.S. Treasury bill Loan to an employee Currency and coins Accounts receivable Cash and cash equivalents 24
Specter Co. combines cash and cash equivalents on the balance sheet. Using the following information, determine the amount reported on the year-end balance sheet for cash and cash equivalents. $16,000 cash deposit in checking account. $46,000 bond investment due in 20 years. $11,500 U.S. Treasury bill due in 1 month. $850, 3-year loan to an employee. $3,600 of currency and coins. $1,150 of accounts receivable. Checking account Bond investment U.S. Treasury bill Loan to an employee Currency and coins Accounts receivable Cash and cash equivalents 24
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:**Specter Co. Cash and Cash Equivalents Calculation**
Specter Co. combines cash and cash equivalents on the balance sheet. Using the information provided, determine the amount reported on the year-end balance sheet for cash and cash equivalents.
**Items Listed:**
- $16,000 cash deposit in checking account.
- $46,000 bond investment due in 20 years.
- $11,500 U.S. Treasury bill due in 1 month.
- $850, 3-year loan to an employee.
- $3,600 of currency and coins.
- $1,150 of accounts receivable.
**Graph/Diagram Explanation:**
The table below outlines the categorization of each item for cash and cash equivalents:
| Category | Amount |
|---------------------------|----------------|
| Checking account | |
| Bond investment | |
| U.S. Treasury bill | |
| Loan to an employee | |
| Currency and coins | |
| Accounts receivable | |
| **Cash and cash equivalents** | **$0** |
**Explanation:**
To determine the amount classified as cash and cash equivalents, identify which items meet the criteria for cash equivalents. Typically, cash equivalents are short-term, highly liquid investments with maturities of three months or less.
**Included in Cash and Cash Equivalents:**
- Checking account deposit ($16,000)
- U.S. Treasury bill ($11,500 due in 1 month)
- Currency and coins ($3,600)
**Total Cash and Cash Equivalents:**
- $16,000 + $11,500 + $3,600 = $31,100
Note: The bond investment, loan to an employee, and accounts receivable do not qualify as cash equivalents due to their longer-term nature or different categorization.
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