Final answer:
Kennison Company should report a cash balance of $22,000, which is the sum of cash in bank and restricted cash, minus the bank overdraft.
Step-by-step explanation:
The correct amount that Kennison Company should report as cash is $22,000. This includes the cash in bank plus the restricted cash because both are considered to be part of the company's cash position. However, the bank overdraft is a short-term liability and should be reported separately from the cash balances.
Kennison Company has a total of $23,000 in cash if we simply add the cash in bank and the restricted cash. However, accounting principles dictate that a bank overdraft is not a form of cash but rather a short-term liability or negative cash balance in a checking account. Therefore, this overdraft should not be counted as part of the cash balances. Instead, it should be subtracted from the total cash balance. With this in mind, Kennison should report a cash balance of $20,000 (cash in bank) + $3,000 (restricted cash) - $1,000 (bank overdraft), bringing the total reportable cash amount to $22,000. This ensures an accurate reflection of the company's liquid assets that are readily available to meet short-term obligations and expenditures, excluding the overdraft, which represents a liability.
Kennison Company should report cash of $19,000.
Kennison Company has cash in the bank of $20,000.
They also have restricted cash in a separate account of $3,000.
However, they have a bank overdraft in an account at another bank of $1,000.
To calculate the total cash, we subtract the bank overdraft from the cash in the bank: $20,000 - $1,000 = $19,000. Therefore, Kennison should report cash of $19,000.