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Wiley CPAexcel Exam Review 2014 Study Guide, Financial Accounting and Reporting by O. Ray Whittington

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Multiple-Choice Questions (1–117)

A. Cash

1. Burr Company had the following account balances at December 31, year 2:

Cash in banks $2,250,000
Cash on hand 125,000
Cash legally restricted for additions to plant (expected to be disbursed in year 3) 1,600,000

Cash in banks includes $600,000 of compensating balances against short-term borrowing arrangements. The compensating balances are not legally restricted as to withdrawal by Burr. In the current assets section of Burr’s December 31, year 2 balance sheet, total cash should be reported at

a. $1,775,000

b. $2,250,000

c. $2,375,000

d. $3,975,000

2. Ral Corp.’s checkbook balance on December 31, year 2, was $5,000. In addition, Ral held the following items in its safe on that date:

Check payable to Ral Corp., dated January 2, year 3, in payment of a sale made in December year 2, not included in December 31 checkbook balance $2,000
Check payable to Ral Corp., deposited December 15 and included in December 31 checkbook balance, but returned by bank on December 30 stamped “NSF.” The check was redeposited on January 2, year 3, and cleared on January 9 500
Check drawn on Ral Corp.’s account, payable to a vendor, dated and recorded in Ral’s books on December 31 but not mailed until January 10, year 3 300

The proper amount to be shown as Cash on Ral’s balance sheet at December 31, year 2, is

a. $4,800

b. $5,300

c. $6,500

d. $6,800

3. Trans Co. had the following balances at December 31, year 2:

Cash in checking account ...

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