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Cash in banks $2,250,000
Cash on hand 125,000
Cash legally restricted for additions
to plant (expected to be disbursed in
year3) 1,600,000
Cash in banks includes $600,000 of compensating balances
against short-term borrowing arrangements. The compensating
balances are not legally restricted as to withdrawal by
Mena . In the current assets section of Mena’s December31, year
2 balance sheet, total cash should be reported at
a. $1,775,000
b. $2,250,000
c. $2,375,000
d. $3,975,000
c. $2,375,000<<<<<<<<<>>>>>>>>>>>>
Answer C is correct, Total Cash will be shown as Current Assets, where as the outstanding for Bank Borrowings can be shown in Current Liabilities side.
c. $2,375,000...........................................
appropriate ans is $2,375,000
Option A because Rs.600,000 are still payable, even though not legally restricted and so should be shown as current liabilities.
December31 year2 mena's total Current balance should be7,75,000
