Cash Held by Multiple Entities McGregor Company holds 100 percent ownership of Lansing Company and Dubuque Company. At December 31, 2000, the individual companies reported cash on hand of $150,000, $90,000, and

$40,000, respectively, and the owners of McGregor held cash of $70,000 in their personal accounts. Hometown Bank agreed to lend McGregor $240,000 and deposit the balance in McGregor’s checking account any time McGregor made a request. On December 29, 2000, McGregor asked to have the money deposited, and the bank deposited it into McGregor’s checking account on January 1, 2001.

a. What cash balance should be reported in McGregor’s consolidated balance sheet at December 31, 2000?

b. In this situation, explain why the accounting entity includes or excludes McGregor Company, the owners of McGregor Company, Lansing Company, Dubuque Company, and Hometown Bank.