1. How is cash managed at your organization?
2. What are the banking operations used at your organization? How often are the banking operations reconciled? How often should the banking operations be reconciled?
3. What types of cash equivalents does your organization have? How are the cash equivalents at your organization controlled?© BrainMass Inc. brainmass.com October 25, 2018, 4:40 am ad1c9bdddf
How is cash managed at your organization?
Cash within my organization is managed by the accountant. Every aspect that relates to the handling of cash all passes through the jurisdiction of the accountant, who is charged with not only receiving and receipting cash got, but making payments and recording all cash equivalents and transactions within the company's books of accounts. The cashier keeps physical records as well as soft copies of records of all transactions since they are all captured within the organization's computing systems.
What are the banking ...
Management of cash in an organization, banking operations that are used, and the types of cash equivalents used are discussed in this solution.
Determine the appropriate cash flow statement treatment / classification (e.g., operating, investing, financing) and timing, if applicable
Go Orange, Inc.
Go Orange, Incorporated ("Company") designs, manufactures, and sells a broad range of mobile network products and systems and communication devices, including mobile, cordless and corded telephones. The Company's primary sources of liquidity are internally generated cash flows, the Company's debt and revolving credit facilities, and the sale of trade accounts receivables. The Company's liquidity and capital requirements are primarily a function of its working capital needs, capital expenditures, and debt service requirements. The Company has the following transactions that need to be analyzed under FASB Statement No. 95, Statement of Cash Flows. (Copy of Statement No. 95 is posted on Blackboard)
1. Insurance Settlement Proceeds
The Company reached a settlement with its insurance carrier related to a claim from a tornado that destroyed one of the Company's manufacturing facilities. During the year, the Company received proceeds of $20 million from its insurance carrier in connection with its claim for reimbursement for the destroyed building. The Company plans to use the insurance proceeds to fund its defined-benefit pension plan, rather than to rebuild the destroyed facility.
2. Sale of Accounts Receivable
The Company sells undivided interests in designated pools of qualified accounts receivable to a securitization vehicle (a qualifying special purpose entity). The Company utilizes securitization as a "financing technique" (e.g., to reduce more expensive bank debt - the interest rates the company obtains on notes issued by the qualifying special purpose entity are lower than the company could get on its own bank debt). The Company services, administers and collects the receivables on behalf of the purchaser. The agreement includes certain covenants and provides for various events of termination. The agreement also requires that proceeds from securitization be used to pay down Company debt. During the current year, $11 million of receivables generated from sales of the Company's inventory were sold under the agreement, and, therefore, are not reflected in the accounts receivable balance in the Company's balance sheet.
3. Acquisition of Property, Plant, and Equipment on Account
In December, the Company incurred $12 million of capital expenditures related to the acquisition of manufacturing equipment and machinery. The terms of the invoice are
2%/15, net 45. The amounts were unpaid as of year-end (i.e., included in the accounts payable balance). The Company intends to pay the invoice in early January, in accordance with the terms of the invoice.
Determine the appropriate cash flow statement treatment â?" classification (e.g., operating, investing, financing) and timing, if applicable, â?" for the above transactions.