The controller of the Red Wing Corporation is in the process of preparing the company’s 2021 financial statements. She is trying to determine the correct balance of cash and cash equivalents to be reported as a current asset in the balance sheet. The following items are being considered: Balances in the company’s accounts at the First National Bank; checking $13,500, savings $22,100.Undeposited customer checks of $5,200.Currency and coins on hand of $580.Savings account at the East Bay Bank with a balance of $400,000. This account is being used to accumulate cash for future plant expansion (in 2023).$20,000 in a checking account at the East Bay Bank. The balance in the account represents a 20% compensating balance for a $100,000 loan with the bank. Red Wing may not withdraw the funds until the loan is due in 2024.U.S. Treasury bills; 2-month maturity bills totaling $15,000, and 7-month bills totaling $20,000.Required:1. Determine the correct balance of cash and cash equivalents to be reported in the current asset section of the 2021 balance sheet.

Cash and cash equivalents: This includes all the cash in hand present with the business, coins or…

Answered: The controller of the Red Wing…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments

Section: Chapter Questions

Problem 21RQSC

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The controller of the Red Wing Corporation is in the process of preparing the company’s 2021 financial statements. She is trying to determine the correct balance of cash and cash equivalents to be reported as a current asset in the balance sheet. The following items are being considered:

Balances in the company’s accounts at the First National Bank; checking $13,500, savings $22,100.
Undeposited customer checks of $5,200.
Currency and coins on hand of $580.
Savings account at the East Bay Bank with a balance of $400,000. This account is being used to accumulate cash for future plant expansion (in 2023).
$20,000 in a checking account at the East Bay Bank. The balance in the account represents a 20% compensating balance for a $100,000 loan with the bank. Red Wing may not withdraw the funds until the loan is due in 2024.
U.S. Treasury bills; 2-month maturity bills totaling $15,000, and 7-month bills totaling $20,000.

Required:
1. Determine the correct balance of cash and cash equivalents to be reported in the current asset section of the 2021 balance sheet.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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