Expands on: E7-14

LO: 4

PorkChop Company has recorded the following items in its financial records.

Cash in bank:

Checking account $27,000

Money market fund 13,000

Payroll account 3,000

Certificate of deposit (matures in 2 months) 5,000

Certificate of deposit (matures in 12 months) 10,000 $ 58,000

Cash in plant expansion fund 120,000

Cash on hand 11,000

Highly liquid investments 30,000

Petty cash 300

Receivables from customers 99,000

Stock investments 61,000

U.S Treasury bills 20,000

The checking account is subject to a compensating balance of $5,000. The highly liquid investments had maturities of 3 months or less when they were purchased .The stock investments will be sold in the next 6 to 12 months. The plant expansion project will begin in 3 years.

Instructions:

(a) What amount should PorkChop report as Cash and cash equivalents on its balance sheet?

(b) Where should the items not included in part (a) be reported on the balance sheet?

(c) What disclosures should PorkChop make in its financial statements concerning cash and cash equivalents?