Question

Cheyenne Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2020: Cash $9520, Land $40000, Patents $15700, Accounts Receivable $97570, Prepaid Insurance $6030, Inventory $42700, Allowance for Doubtful Accounts $5350, and Equity Investments (to be sold in the next quarter) $14640. Prepare the current assets section of the balance sheet. (List Current Assets in order of liquidity.)

Answer 1

2020 BALANCE SHEETS

$9,520 Cash

$14,640 Equity Investments

$92,220 Accounts Receivable

$42,700 Inventory

$6,030 Prepaid Insurance

$165,110 TOTAL CURRENT ASSETS

Step-by-step explanation:

Liquidity it's define as the speed of an assets to be converted to cash,

the assets that take less days to buy or to sold are more liquid than others.

Cash it's the assets most liquid then are the Accounts Receivables and Inventories for last, in the middle exist different assets as Equity investments.

Prepaid expenses are not liquid because these accounts doesn't means the company could get cash if not that the company have rights over something.