[Anonymous]

Clear Co’s trial balance has the following selected accounts:

Cash (includes $10,000 in bond-sinking fund for long-term bond payable) $50,000

Accounts receivable 20,000

Allowance for doubtful accounts 5,000

Deposits received from customers 3,000

Merchandise inventory 7,000

Unearned rent 1,000

Investment trading securities 2,000

What amount should Clear report as total current assets in its balance sheet?

A. $64,000

B. $67,000

C. $72,000

D. $74,000

answer A

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I got Cash, AR net of allowance, inventory, and trading securities as current assets so 50,000 + 20,000 + (5,000) + 7,000 + 2,000 = 74,000. Is this not right?

[San27]

You have to subtract out the $10,000 in the bond sinking fund. It is cash held by an independent trustee that is set aside for buying back bonds and is invested by the trustee. It is usually a long term asset.

All done.

[Anonymous]

Doh, silly me. Much thanks.

[Author]

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