Final answer:
The student's question involves proper accounting practices for checks that are issued but not yet cashed, referred to as funds in transit, which should be reported on the company's balance sheet.
Step-by-step explanation:
The student's question pertains to the proper accounting treatment for checks that have been issued but not yet cashed, commonly known as funds in transit. When a company issues a check, it should maintain a copy as a record and acknowledge this outgoing payment as a future cash outflow. Until the cash is actually disbursed when the check is cashed by the recipient, this amount should be reported in the company's accounting records.
The correct reporting location for these funds in transit is on the balance sheet. Therefore, the completed sentence is: Maintain a copy of the exchange-for-cash check and report the check as funds in transit on the balance sheet until the cash is received.