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XYZ Inc)has a balance of $ 270,000 cash in bank, restricted cash for plant expansion is $45,000; and a bank overdraft in an account at a different bank of XYZ Inc
XYZ Inc)has a balance of $ 270,000 cash in bank, restricted cash for plant expansion is $45,000; and a bank overdraft in an account at a different bank of XYZ Inc. should be: A. $72,000. B. $315,000 C. $270,000. D. None of the above amounts.
Expert Solution
Cash reported as cash and cash equivalents must be the cash readily available for use.
Therefore, cash in bank $270,000 can be reported as Cash
However, restricted cash for plant extension $45,000 cannot be reported as cash. It is shown as a separate line item under assets.
Bank overdraft $27,000 is a liability and will be shown under liabilities.
Therefore, the correct answer is option c. $270,000.
Hope this helps :)
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