The following shows the ending balances of accounts for A Company as of December

Question

The following shows the ending balances of accounts for A Company as of December 31, 2018.

Additional information:

1. Prepaid expenses include $120,000 paid on December 31, 2018 for a two-year lease on the company's office building. The remaining prepaid expenses are for items that management expects will be consumed during 2019.

2. Investments include $30,000 in Treasury bills purchased on November 30, 2016 and that mature on January 30, 2019. The remaining investments are marketable securities that management expects to sell during 2019.

3. The deferred revenue is for magazine subscriptions that are one year or less.

4. The notes payable consists of a $40,000 note due in six months, a $100,000 note due in five years, and $60,000 note due in three annual installments of $20,000 with the next installment due on August 31, 2019.

Determine the amount of total assets.

Account Debits Credits Taxes payable 30,000 Inventory 285,000 Investments 140,000 Retained earnings 202,000 Prepaid expenses 148,000 Accumulated depreciation - equipment 110,000 Deferred revenue 80,000 Cash 65,000 Common stock 400,000 Equipment 320,000 Accounts payable 60,000 Accounts receivable 160,000 Notes payable 200,000 Allowance for uncollectible accounts 16,000 Interest payable 20,000 Total 1,118,000 1,118,000

Explanation / Answer

Solution: Computation of Total Assets: Amount ($) Inventory     2,85,000.00 Investment     1,40,000.00 Prepaid Expenses     1,48,000.00 Equipment     3,20,000.00 Less: Accumulated Depreciation -1,10,000.00 Cash        65,000.00 Accounts Receivable     1,60,000.00 Total Assets before Adjustment 10,08,000.00 Less: Prepaid Expenses        60,000.00 (120000/2) Adjusted Total Assets on 31st December 2018     9,48,000.00

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