E5-7
Question
EXCEL (Current Assets Section of the Balance Sheet) Presented below are selected accounts of Yasunari Kawabata Company at December 31, 2017.
Inventory | \(52,000 |
| Cost of goods sold | 2,100,000 |
Unearned service revenue | 90,000 |
| Note receivable | 40,000 |
Equipment | 253,000 |
| Account receivable | 161,000 |
Inventory (Work-in-process) | 34,000 |
| Inventory (raw material) | 207,000 |
Cash | 37,000 |
| Supplies Expenses | 60,000 |
Debt investment (Short-term) | 31,000 |
| Allowance for doubtful accounts | 12,000 |
Customer advances | 36,000 |
| License | 18,000 |
Restricted cash for plant expansion | 50,000 |
| Additional paid-in-capital | 88,000 |
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|
| Treasury stock | 22,000 |
The following additional information is available.
1. Inventories are valued at lower-of-cost or market using LIFO.
2. Equipment is recorded at cost. Accumulated depreciation, computed on a straight-line basis, is \)50,600.
3. The short-term investments have a fair value of \(29,000. (Assume they are trading securities.)
4. The notes receivable are due April 30, 2019, with interest receivable every April 30. The notes bear interest at 6%. (Hint: Accrue interest due on December 31, 2017.)
5. The allowance for doubtful accounts applies to the accounts receivable. Accounts receivable of \)50,000 are pledged as collateral on a bank loan.
6. Licenses are recorded net of accumulated amortisation of $14,000.
7. Treasury stock is recorded at cost.
Instructions
Prepare the current assets section of Yasunari Kawabata Company’s December 31, 2017, balance sheet, with appropriate disclosures.
Step-by-Step Solution
VerifiedThe current assets of the business entity total $509,600.
The amount of money earned as interest income but not received from the borrower is known as interest receivable. This is stated in the section of current assets.
Particular | Amount $ | Amount $ |
Cash | $87,000 |
|
Less: Restricted cash for plant expansion | (50,000) | $37,000 |
|
|
|
Debt investment (Short-term) |
| 29,000 |
Account receivable | 161,000 |
|
Less: Allowance for doubtful accounts | (12,000) | 149,000 |
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|
|
Interest receivable (6% of $40,000 for 8 months) |
| 1,600 |
Inventories: |
|
|
Inventory | 52,000 |
|
Inventory (Work-in-process) | 34,000 |
|
Inventory (raw material) | 207,000 | 293,000 |
Total current assets |
| $509,600 |