The following information was taken from the accounting records of ABC Company f

Question

The following information was taken from the accounting records of ABC Company for the period ended January 31, 2003: Cash $29,000 Retained Earnings $66,000 (at January 1, 2003) Advertising Expense $18,000 Cost of Goods Sold $36,000 Supplies $19,000 Rental Revenue $11,000 Accounts Payable $53,000 Common Stock $94,000 Accounts Receivable $45,000 Income Tax Expense $15,000 Inventory $51,000 Wage Expense $12,000 Sales Revenue $93,000 Trademark $10,000 Buildings and Land $82,000 Calculate the amount of total current assets at January 31. Do not use decimals in your answer.

Explanation / Answer

Current Assets as on 31, jan 2003 (IF SUPPLIES TAKEN AS EXPENDITURE) Cash $29,000 Accounts Receivable $45,000 Inventory $51,000 TOTAL CURRENT ASSETS $125,000 Supplies are usually charged to expense when they are acquired. This is because their cost is so low that it is not worth expending the effort to track them as an asset for a prolonged period of time Current Assets as on 31, jan 2003 (IF SUPPLIES TAKEN AS CURRENT ASSETS) Cash $29,000 Accounts Receivable $45,000 Inventory $51,000 Supplies $19,000 TOTAL CURRENT ASSETS $144,000 If the decision is made to track supplies as an asset, then they are usually classified as a current asset. To be classified as a current asset, there must be a reasonable expectation that the supplies will be used within the next 12 months.

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