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1) SANA trial balance for July 31, the end of its fiscal year, included the following accounts: Accounts Receivable $31,000 Merchandise Inventory 46,000 Franchise 32,000 Investments 45,000 Interest payable 3,000 Prepaid insurance 5,000 Note Receivable 75,000 Building 20,000 Cash in Bank 5,000 The investment account consists of marketable securities of which management plans to sell half of by December 31
1) SANA trial balance for July 31, the end of its fiscal year, included the following accounts:
|
Accounts Receivable |
$31,000 |
|
Merchandise Inventory |
46,000 |
|
Franchise |
32,000 |
|
Investments |
45,000 |
|
Interest payable |
3,000 |
|
Prepaid insurance |
5,000 |
|
Note Receivable |
75,000 |
|
Building |
20,000 |
|
Cash in Bank |
5,000 |
The investment account consists of marketable securities of which management plans to sell half of by December 31. Prepaid insurance is a two year policy that was purchased on July 31. The note receivable is an installment note that will be paid in three equal installments on December 31 of each year.
QUESTION: CALCULATE The amount that should be classified as current assets in the July 31 balance sheet ? ( ????? ???? ??? ???? ???? ???? ??? ????? : like 16000 or 123500 ....)
Expert Solution
Answer :
Current Assets are assets which are expected to be recovered within firms normal operating cycle. (Lets say 1 year)
Current Asset
Accounts receivable : 31000
Merchandise Inventory : 46000
Investment : 22500 (45000/2)
Prepaid insurance :2500 (5000/2)
Notes receivable : 25000 (75000/3)
Cash in Bank : 5000
Total : 132000
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