IntermediateAccounting------Chapter7.docVIP

? The McGraw-Hill Companies, Inc., 2007 7-page \* arabic20 Intermediate Accounting, 4/e ? The McGraw-Hill Companies, Inc., 2007 Solutions Manual, Vol.1, Chapter 7 7-page \* arabic19 Exercise 7-1 Requirement 1 Cash and cash equivalents includes: EUR Cash in bank – checking account 25,000 U.S. treasury bills 5,000 Cash on hand 1,350 Undeposited customer checks 1,840 Total 33,190 Requirement 2 The EUR 20,000 in 6-month treasury bills should be classified as a current asset along with other temporary investments. Exercise 7-2 Requirement 1 Cash and cash equivalents includes: GBP a. Balance in checking account 13,500 Balance in savings account 22,100 b. Undeposited customer checks 5,500 c. Currency and coins on hand 580 f. U.S. treasury bills with 2-month maturity 15,000 Total 56,680 Requirement 2 d. The GBP 500,000 savings account will be used for future plant expansion and therefore should be classified as a noncurrent asset, either in other assets or investments. Exercise 7-2 (concluded) e. The GBP 25,000 in the checking account is a compensating balance for a long-term loan and should be classified as a noncurrent asset, either in other assets or investments. f. The GBP 20,000 in 7-month treasury bills should be classified as a current asset along with other temporary investments. Exercise 7-3 Requirement 1 Sales price = 1,000 units x 55 = 55,000 July 15, 2006 Accounts receivable 55,000 Sales revenue 55,000 July 23, 2006 Cash (98% x 55,000) 53,900 Sales discounts (2% x 55,000) 1,100 Accounts receivable 55,000 Requirement 2 July 15, 2006 Accounts receivable 55,000 Sales revenue 55,000 Aug. 15, 2006 Cash 55,000 Accounts receivable 55,000 Exercise 7-4 Requirement 1 July 15, 2006 Accounts receivable 53,900 Sales revenue (98% x 55,000) 53,900 July 23, 2006 Cash 53,900 Accounts receivable 53,900 Requirement 2 July 15, 2006 Accounts re