Question

On the December 31 balance sheet of Mann Co., the current receivables consisted of the following:Trade accounts receivable $93,000 Allowance for credit losses(2,000) Claim against shipper for goods lost in transit (November) 3,000 Selling price of unsold goods sent by Mann on consignment at 130% of cost (not included in Mann's ending inventory) 26,000 Security deposit on lease of warehouse used for storing some inventories 30,000 Total$150,000 At December 31, the correct total of Mann's current net receivables was

a. $94,000
b. $120,000
c. $124,000
d. $150,000

Answer 1

The correct total of Mann Co.'s current net receivables on December 31 is $120,000.

Step-by-step explanation:

The question asks for the correct total of Mann Co.'s current net receivables on December 31. To calculate this, we need to consider the current receivables mentioned in the balance sheet and exclude any items that are not part of the net receivables. Let's break it down:

1. Trade accounts receivable: $93,000
2. Allowance for credit losses: (-$2,000)
3. Claim against shipper for goods lost in transit (November): $3,000
4. Selling price of unsold goods sent on consignment: $26,000
5. Security deposit on lease of warehouse: $30,000

We exclude the security deposit on the lease of the warehouse as it is not a receivable. The total of the remaining items is $120,000 (93,000 - 2,000 + 3,000 + 26,000). Therefore, the correct total of Mann's current net receivables on December 31 is $120,000.