Prepare the current assets section of Yasunari Kawabata Company’s December 31, 2014, balance sheet, with appropriate disclosures.
1. Exercise 5-7 Presented below are selected accounts of Yasunari Kawabata Company at December 31, 2014.
Inventory (finished goods) $ 52,000
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Access Free Writing ToolsCost of Goods Sold $2,100,000
Unearned Service Revenue 90,000
Notes Receivable 40,000 Equipment 253,000
Accounts Receivable 161,000
Inventory (work in process) 34,000
Inventory (raw materials) 207,000
Cash 37,000
Supplies Expense 60,000
Equity Investments (short-term) 31,000
Allowance for Doubtful Accounts 12,000
Customer Advances 36,000
Licenses 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, 2016, with interest receivable every April 30. The notes bear interest at 6%. (Hint: Accrued interest due on December 31, 2014.)
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 amortization of $14,000.
7. Treasury stock is recorded at cost.
Prepare the current assets section of Yasunari Kawabata Companys December 31, 2014, balance sheet, with appropriate disclosures. (List Current Assets in order of liquidity. Enter account name only and do not provide the descriptive information provided in the question.)
Answer: Current assets Cash $ 87,000 Less : Cash restricted for plant expansion ( 50,000 ) $ 37,000 Trading securities at fair value ( cost , 31,000 ) 29,000 Accounts Receivable ( 50,000 is pledged as collateral on bank loan ) 161,000 Less : Allowance for doubtful accounts ( 12,000 ) 149,000 Interest Receivable ( 40,000 X 6 % ) X 8/12 } 1,600 Inventories at lower – of – cost – ( determined using LIFO ) – or – market Finished Goods 52,000 Work in Process 34,000 Raw Materials 207,000 293,000 Total current assets $ 509,600
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