ABC Company began operations in April, 2007 by selling common stockto owners in

Question

ABC Company began operations in April, 2007 by selling common stockto owners in exchange for $70,000. During 2007, ABC Companyentered into the following transactions:


(1.) On April 23, ABC Company purchased inventory for $40,000cash.

(2.) On May 1, ABC Company purchased a three-year insurance policyfro $18,000 cash.

(3.) On June 1, ABC Company received $45,000 cash from a customerfor services to be performed over the next 18 months.

(4.) On August 1, ABC Company sold one-half of the inventorypurchased on April 23 to a customer for $35,000 cash.

 Calculate the amount of total current assets that ABC Company would report in its December 31, 2007
balance sheet after all the above transactions are recorded and all necessary adjusting entries are
made. Do not use decimals in your answer.

I know the final answer is $118,000 but I don't understand how to obtain it.

Explanation / Answer

                        Stock      Inventory      Insurance         Services           Sales
Cash               70,000  - 40,000      -  18,000       +   45,000      +   35,000                 $92,000 Inventory            40,000x 1/2 ( 1/2 already sold on August1)                                       $20,000 PrepaidInsurance         18,000x 32 months / 36months                                                $16,000 Total CurrentAssets                                                                                                 $128,000

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---