During year five, estimated tax payments of$225,000 were paid and debited to prepaidtaxes. There were no differences betweenfinancial statement and taxable income for yearfive. Included in accounts receivable is $400,000due from a loyal customer. Special terms weregranted to this customer to make payments of$100,000 semi-annually every March 1 andSeptember 1. In JB Company's December 31, year fiveBalance Sheet, what amount should bereported as current assets?

a. 710,000

b. 910,000

c. 935,0001,

d. 135,000

Question

Business

Leslie Wood

28 May, 09:47

During year five, estimated tax payments of$225,000 were paid and debited to prepaidtaxes. There were no differences betweenfinancial statement and taxable income for yearfive. Included in accounts receivable is $400,000due from a loyal customer. Special terms weregranted to this customer to make payments of$100,000 semi-annually every March 1 andSeptember 1. In JB Company's December 31, year fiveBalance Sheet, what amount should bereported as current assets?

a. 710,000

b. 910,000

c. 935,0001,

d. 135,000

+5

Answers (1)

Know the Answer?

Kismet · Answer 1

a. 710,000

Explanation:

Current assets are calculated as follows:

Cash: $185,000

Accounts receivable, net $725,000

Recall that a loyal customer is to make semi-annually payments of $100000 into to the tune of $400,000 accounts receivable. For the year five balance sheet, the reclassification of o/s receivable will therefore be $200000

Therefore Total current assets = $185,000 + $725,000 - $200000 = $710,000

In JB Company's December 31, year five Balance Sheet $710,000 should be reported as current assets.