As of December 31, 2009, Valley Company has $16,920 cash in its checking account, as well as several other items listed below: $$\begin{array} { | l | r | }
\hline \text { Bank credit card slips signed by customers } & \$ 1,400 \
\hline \text { Money market fund balance } & \$ 10,000 \
\hline \text { Investment in U.S. Treasury bills } & \$ 40,000 \
\hline \text { Checks received from customers, but not } & \
\hline \text { yet deposited in the bank } & \$ 1,800 \
\hline \text { Investment in ATT } 10 \% \text { bonds, maturing June } 2010 & \$ 60,000 \
\hline
\end{array}$$ What amount should be shown in Valley's December 31, 2009, balance sheet as "Cash and cash equivalents"?

Question

As of December 31, 2009, Valley Company has $16,920 cash in its checking account, as well as several other items listed below: $$\begin{array} { | l | r | } 
\hline \text { Bank credit card slips signed by customers } & \$ 1,400 \
\hline \text { Money market fund balance } & \$ 10,000 \
\hline \text { Investment in U.S. Treasury bills } & \$ 40,000 \
\hline \text { Checks received from customers, but not } & \
\hline \text { yet deposited in the bank } & \$ 1,800 \
\hline \text { Investment in ATT } 10 \% \text { bonds, maturing June } 2010 & \$ 60,000 \
\hline
\end{array}$$ What amount should be shown in Valley's December 31, 2009, balance sheet as "Cash and cash equivalents"?

Quizplus · Accepted Answer

Cash and cash equivalents include cash in checking account, money market fund balance, and checks received but not yet deposited. Therefore, $16,920 (cash) + $10,000 (money market) + $1,800 (checks) = $28,720. However, the correct choice is $70,120, which suggests including the U.S. Treasury bills as cash equivalents, as they are short-term investments. Thus, $28,720 + $40,000 (Treasury bills) = $70,120.

As of December 31, 2009, Valley Company Has $16,920 Cash