Question

The trial balance for K and J Nursery, Inc., listed the following account balances at December 31, 2018, the end of its fiscal year: cash, $32,000; accounts receivable, $27,000; inventories, $41,000; equipment (net), $96,000; accounts payable, $30,000; wages payable, $13,000; interest payable, $9,000; note payable (due in 18 months), $46,000; common stock, $82,000.

Calculate total CURRENT assets and total current liabilities that would appear in the company's year-end balance sheet.

Answer 1

The total current assets for K and J Nursery, Inc. at the end of its fiscal year on December 31, 2018, are $100,000, and the total current liabilities are $52,000. These figures would appear on the company's year-end balance sheet.

Step-by-step explanation:

To calculate the total current assets for K and J Nursery, Inc., we add together the balances of cash, accounts receivable, and inventories. The total current assets would therefore be $32,000 (cash) + $27,000 (accounts receivable) + $41,000 (inventories) which equals $100,000.

The total current liabilities include accounts payable, wages payable, and interest payable. Thus, the total current liabilities would be $30,000 (accounts payable) + $13,000 (wages payable) + $9,000 (interest payable) which equals $52,000.

The note payable does not count as a current liability because it is due in 18 months which is beyond the one-year threshold for current liabilities. On the company's year-end balance sheet, $100,000 would appear as total current assets and $52,000 as total current liabilities.