Question

6. Old Rusty Lager Brewery has currency of $4,900; petty cash of $100; 100 shares of Twitter common stock valued at $3,800; deposits in two checking accounts equaling $83,234; two different certificates of deposit – one for $3,000 which matures in 55 days and the second one for $5,000 which matures in 125 days. Calculate the amount of cash and cash equivalents that will be shown on the company’s year-end balance sheet.

Answer 1

Currency = $4,900

Petty cash = $100

Deposits in checking account = $83,234

Certificate of deposit maturity in 55 days = $3,000

Certificate of deposit maturity in 125 days = $5,000

Shares of common stock = $3,800

Cash and cash equivalents = Currency + Petty cash + Deposits in checking account + Certificate of deposit maturity in 55 days

= 4,900+100+83,324+3,000

= $91,324

Certificate of deposit maturing after 3 months and shares of common stock are not included in cash and cash equivalents.

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