91Ó°ÊÓ

EXCEL (Current Assets Section of the Balance Sheet) Presented below are selected accounts of Yasunari Kawabata Company at December 31, 2017.

Inventory	\(52,000		Cost of goods sold	2,100,000
Unearned service revenue	90,000		Note receivable	40,000
Equipment	253,000		Account receivable	161,000
Inventory (Work-in-process)	34,000		Inventory (raw material)	207,000
Cash	37,000		Supplies Expenses	60,000
Debt investment (Short-term)	31,000		Allowance for doubtful accounts	12,000
Customer advances	36,000		License	18,000
Restricted cash for plant expansion	50,000		Additional paid-in-capital	88,000
			Treasury stock	22,000

The following additional information is available.

1. Inventories are valued at lower-of-cost or market using LIFO.

2. Equipment is recorded at cost. Accumulated depreciation, computed on a straight-line basis, is \)50,600.

3. The short-term investments have a fair value of \(29,000. (Assume they are trading securities.)

4. The notes receivable are due April 30, 2019, with interest receivable every April 30. The notes bear interest at 6%. (Hint: Accrue interest due on December 31, 2017.)

5. The allowance for doubtful accounts applies to the accounts receivable. Accounts receivable of \)50,000 are pledged as collateral on a bank loan.

6. Licenses are recorded net of accumulated amortisation of $14,000.

7. Treasury stock is recorded at cost.

Instructions

Prepare the current assets section of Yasunari Kawabata Company’s December 31, 2017, balance sheet, with appropriate disclosures.

Step by step solution

01

Definition of Interest Receivable

The amount of money earned as interest income but not received from the borrower is known as interest receivable. This is stated in the section of current assets.

02

Current Asset Section

Particular	Amount $	Amount $
Cash	$87,000
Less: Restricted cash for plant expansion	(50,000)	$37,000
Debt investment (Short-term)		29,000
Account receivable	161,000
Less: Allowance for doubtful accounts	(12,000)	149,000
Interest receivable (6% of $40,000 for 8 months)		1,600
Inventories:
Inventory	52,000
Inventory (Work-in-process)	34,000
Inventory (raw material)	207,000	293,000
Total current assets		$509,600

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