On the December 31, Balance Sheet of a Company, Current

question 76

Multiple Choice

On the December 31, balance sheet of a company, current assets included the following items: $$\begin{array} { | l | l | } \hline \text { Cash } & \$ 140 \\\hline \text { Accounts receivable } & 240 \\\hline \text { Inventories } & 120 \\\hline \text { Total Current Assets } & \$ 500 \\\hline\end{array}$$ An examination of the accounts revealed that the accounts receivable balance made up by the following items: $\begin{array}{|l|l|}\hline \text {Trade accounts receivable}&\$186\\\hline \text { Allowance for uncollectible accounts } & (4) \\\hline \text { Claim against shipper for goods lost in transit (November) } & 6 \\\hline \text { Selling price of unsold goods shipped by the company on consignment at } 130 \text { percent of cost (and not included } & \\\text { in ending inventory) } & 52 \\\hline \text { Net accounts receivable } & \$ 240\\\hline\end{array}$ What is the correct amount of current assets as of December 31?

• A) $500
• B) $488
• C) $448
• D) $442

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Definitions:

Raw Materials Purchases

The total cost or expenditure associated with buying raw materials that will be used in producing goods.

Estimated Direct Labor Cost

The forecasted cost associated with the labor directly involved in the manufacturing of goods.

Budgeted Required Production

The estimated amount of goods or services that a business plans to produce in a specific period, as determined by budgeting processes.

Cash Disbursements

The actual money or cash outflows paid out by a business, typically recorded in a cash disbursement journal.