Chapter _end_of_chapter problems.docVIP

Ch7 Recommended End-of-chapter Problems E 7-1 ? Cash and cash equivalents; restricted cash ? ?LO2  The controller of the Red Wing Corporation is in the process of preparing the companys 2011 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: a. ? Balances in the companys accounts at the First National Bank; checking $13,500, savings $22,100. b. ? Undeposited customer checks of $5,200. p. 377 c. ? Currency and coins on hand of $580. d. ? 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 2013). e. ? $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 2014. f. ? 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 2011 balance sheet. 2. ? For each of the items not included in your answer to requirement 1, explain the correct classification of the item. E 7-4 ? Trade and cash discounts; the gross method and the net method compared ? ?LO3  Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2011. The units have a list price of $600 each, but Thomas was given a 30% trade discount. The terms of the sale were 2/10, n/30. Required: 1. ? Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on November 26, 2011, assuming that the gross method of accounting for cash discounts is used. 2. ? Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on December 15, 2011, a