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E5-5B (Current Assets Section of the Balance Sheet) ...

E5-5B (Current Assets Section of...
E5-5B (Current Assets Section of the Balance Sheet) Presented below are selected accounts of Coffey
Company at December 31, 2007.
Finished Goods $ 78,000 Cost of Goods Sold $3,150,000
Revenue Received in Advance 135,000 Notes Receivable 60,000
Bank Overdraft 12,000 Accounts Receivable 241,500
Equipment 379,500 Raw Materials 310,500
Work-in-Process 51,000 Supplies Expense 90,000
Cash 55,500 Allowance for Doubtful Accounts 18,000
Short-term Investments in Stock 46,500 Licenses 27,000
Customer Advances 54,000 Additional Paid-in Capital 132,000
Cash Restricted for Plant Expansion 75,000 Treasury Stock 33,000
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
$75,900.
3. The short-term investments have a fair value of $43,500. (Assume they are trading securities.)
4. The notes receivable are due April 30, 2009, with interest receivable every April 30. The notes bear
interest at 12%. (Hint: Accrue interest due on December 31, 2007.)
5. The allowance for doubtful accounts applies to the accounts receivable. Accounts receivable of
$75,000 are pledged as collateral on a bank loan.
6. Licenses are recorded net of accumulated amortization of $21,000.
7. Treasury stock is recorded at cost.
Instructions
Prepare the current assets section of Coffey Company's December 31, 2007, balance sheet, with appropriate disclosures.
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Answered in 4 hours by:
2/27/2008
Annie Kavitha
Annie Kavitha, Lecturer
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Coffey Company

Current assets

Cash.....................................................................................

$ 130,500*

Less: Cash restricted for plant expansion................................

(75,000)

$ 55,500

Trading securities at fair value (cost,
$46,500)............................................................................


43,500

Accounts receivable (of which $75,000 is
pledged as collateral on a bank loan)...................................


241,500

Less: Allowance for doubtful accounts....................................

(18,000)

223,500

Interest receivable [($60,000 X 12%) X 8/12].......................

4,800

Inventories at lower of cost (determined
using LIFO) or market

Finished goods................................................................

78,000

Work-in-process.............................................................

51,000

Raw materials..................................................................

310,500

439,500

Total current assets....................................................

$766,800

 

*An acceptable alternative is to report cash at $55,500 and simply report the cash restricted for plant expansion in the investments section.

 

 

Annie Kavitha
Annie Kavitha, Lecturer
Category: Finance
Satisfied Customers: 1,024
Experience: M.Com
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