Calculate total current assets and total current liabilities that would appear in the company’s year-end balance sheet.

The trial balance for K and J Nursery, Inc., listed the following account balances at December 31, 2018, the end of its fiscal year:

cash, $16,000

accounts receivable, $11,000

inventories, $25,000

equipment (net), $80,000

accounts payable, $14,000

wages payable, $9,000

interest payable, $1,000

note payable (due in 18 months), $30,000

common stock, $50,000

Calculate total current assets and total current liabilities that would appear in the company’s year-end balance sheet.

Solutions

Expert Solution

Current assets : Current assets are assets that can be converted to cash within a year or consumed within a year.

Current liabilities: Current liabilities are those liabilities that represent the company's debt. These are expected to be satisfied within a year by using current assets or by incurring new current liabilities.

Calculation of Current assets

Current assets = Cash + Accounts receivables + Inventories

=$16,000 + $11,000 + $25,000

=$52,000

Calculation of Current liabilities

Current liabilities = Accounts payable + Wages payable + Interest payable

=$14,000 + $9,000 + $1,000

=$24,000

Because an equipment is a long-term asset, it is not considered a current liability because the due date is more than 12 months. The shareholder's equity is represented by common stock.

Therefore,Current asset and current liability of the firm is $52,000 and $24,000 respectively.

balaji rao answered 1 year ago

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