A is corrent. The requirement is to determine the amount of cash and cash equivalents to be reported on the balance sheet. A is corrent because the cash and cash equivalents include the cash in the checking account, the petty cash, and the commercial paper $27,200 ($20,000 + $200 + $7,000). The commercial paper is included because it is a highly liquid investment that has a maturity of three months or less.
B is incorrect because it includes the postdated check that is not available for a demand withdrawal.
C is incorrect because it includes the certificate of deposit that has a maturity of more than three months.
D is incorrect because it includes the bond sinking fund which is restricted as to use.
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