Question

Logistics Company had the following items listed in its trial balance at 12/31/2021: Balance in checking account, Bank of the East $ 352,000 Treasury bills, purchased on 11/1/2021, mature on 1/30/2022 15,000 Loan payable, long-term, Bank of the East 380,000 Included in the checking account balance is $50,000 of restricted cash that Bank of the East requires as a compensating balance for the $380,000 note. What amount will Logistics include in its year-end balance sheet as cash and cash equivalents

Answer 1

To determine the amount of cash and cash equivalents on Logistics Company's year-end balance sheet, we need to consider the balance in the checking account, treasury bills, and restricted cash. The loan payable is not included as cash or cash equivalents.

Step-by-step explanation:

To determine the amount of cash and cash equivalents included in the year-end balance sheet, we need to analyze the items listed in the trial balance:

1. The balance in the checking account, Bank of the East ($352,000): This is considered as cash and will be included in the cash and cash equivalents.
2. Treasury bills purchased on 11/1/2021, mature on 1/30/2022 ($15,000): These are short-term investments and considered as cash equivalents.
3. The loan payable, long-term, Bank of the East ($380,000): This is not considered as cash or cash equivalents.
4. Restricted cash of $50,000: This is included in the checking account balance and is required as a compensating balance for the loan payable. It is still considered as cash and will be included in cash and cash equivalents.

Therefore, the total amount of cash and cash equivalents on Logistics Company's year-end balance sheet will be $352,000 (balance in checking account) + $15,000 (treasury bills) + $50,000 (restricted cash) = $417,000.

Answer 2

$317,000

Step-by-step explanation:

Given that,

Opening Balance in Checking Account = $352,000

Restricted Balance = $50,000

Treasury bill = $15,000

Cash and Cash Equivalent at Year End:

= Opening Balance in Checking Account - Restricted Balance + Treasury bill amount

= $352,000 - $50,000 + $15,000

= $317,000

Therefore, the amount will Logistics include in its year-end balance sheet as cash and cash equivalents is $317,000.