Joined: 16 Oct 2009 Location: United States
Online Status: Offline Posts: 64
Posted: 04 Mar 2010 at 11:42 | IP Logged
I have choice B) as my answer.
So is the cash overdraft a current asset account? I've never seen a cash overdraft account in a balance sheet before, but I've always thought it would be a liability account, or at least in the bank's perspective.
Joined: 20 Jul 2009 Location: United States
Online Status: Offline Posts: 125
Posted: 04 Mar 2010 at 11:56 | IP Logged
It is tricky wording my friend!
The $30,000 of
checks were recorded/written on June 29 and resulted in a $10,000 overdraft, but the checks were not mailed until July 9. The overdraft means that they only had $20,000 in their checking account. It does not mean that they paid/accrued an overdraft fee.
As of the June
30, 1992 Balance Sheet date, they have $20,000 in Cash.
That's my best guess anyways. Upon reading it, I knew that there was something fishy about the "overdraft" and the date the checks were mailed. It made me question, how can an account be overdrafted before the checks are even sent out?
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Topic: current asset
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