Question

Checking account balance $651,600; cash restricted for future plant expansion $540,900; short-term Treasury bills $185,260; cash advance received from customer $840 (not included in checking account balance); cash advance of $7,140 to company executive, payable on demand; refundable deposit of $26,390 paid to federal government to guarantee performance on construction contract.Cash balance $ ____________.

Answer 1

Cash balance is $652,440

Step-by-step explanation:

The cash balance is computed as:

Cash balance = Checking account balance + Cash Advance

= $651,600 + $840

= $652,440

Future plant expansion would not be included in cash balance because it is restricted to use as it is kept for future expansion.

Advance to executive will not be included in the cash balance because it is an advance which is receivable in future.

Refundable deposit will also not be included as it is refundable in nature and act as receivable.

Treasury bill is not included as it represent temporary investment.