Question

QUESTION 40

1. Below is a list of items (all with normal balances) from the Bearkat Company adjusted trial balance as of 12/31/19. The accounts are presented in random order. Additional information is also provided below.

   Unearned Service Revenue	80,000		Salaries Expense	60,000
   Rent Revenue	115,000		Accounts Payable	33,000
   Accounts Receivable	60,000		Cost of Goods Sold	39,500
   Notes Payable	100,000		Land	260,000
   Accumulated Depreciation - Building	22,000		Building	92,000
   Sales	400,000		Retained Earnings	?
   Bonds Payable	90,000		Prepaid Advertising	8,000
   Common Stock	200,000		Allowance for Doubtful Accounts	12,000
   Depreciation Expense	30,000		Cash	175,000

   
   Additional Information:

   • The Cash balance of $175,000 includes $50,000 of restricted funds set aside to retire bonds that mature in 2022.
   • On 12/31/19, Bearkat Company purchased a plot of land for $260,000, shown in the adjusted trial balance above. The land is being held for investment.
   • The Notes Payable account consists of a $100,000 note due in four annual installments of $25,000 each. The first installment is due on 6/30/20, with remaining installments due on 6/30 of 2021-2023.
   • 200,000 shares of $1 par common stock are authorized and outstanding.

   What is the balance of total current assets?

   	A.	$181,000.
   	B.	$193,000.
   	C.	$231,000.
   	D.	$581,000.

Answer 1

A. $181,000

EXPLANATION: CURRENT ASSETS

ACCOUNT RECEIVABLE	60,000
LESS: ALLOWANCE FOR DOUBTFUL ACCOUNTS	12,000	48,000
PREPAID ADVERTISING		8,000
CASH	175,000
LESS: RESTRICTED CASH TO RETIRE BONDS	50,000	125,000
TOTAL CURRENT ASSETS		181,000

$50,000 INCLUDED IN CASH ARE RESTRICTED FUNDS AND ONLY USED FOR RETIREMENT OF BONDS AFTER 1YEAR, SO IT WILL NOT INCLUDED IN CURRENT ASSETS.

LAND OF 260,000 IS FIXED ASSETS AND WILL WE SHOWN IN NON CURRENT LIABILITIES.