Question

The following items are taken from the adjusted trial balance of Westley Company for the month ending July 31, 2018: Accounts payable $2,000 Accounts receivable 3,300 Accumulated depreciation - equipment 8,000 Cash 2,600 Common Stock 30,000 Depreciation expense 2,000 Equipment 54,000 Retained earnings 7/1/18 22,000 Service revenue 33,000 Supplies 1,200 Prepare the current assets section of Westley's classified balance sheet. (List Current Assets in order of liquidity.)

Answer 1

Answer:

   Westley Company

Balance sheet as on July 31,

                                          $

Current Assets

Cash                               2,600

Accounts receivable     3,300

Supplies                         1,200

Total Current Assets     7,100

Explanation:

Current asset are those asset which can be converted in to the cash within the one year time. Order of Liquidity is based on the amount of time it takes to convert into cash. The most liquid form of current asset is cash is the money which need no conversion. Receivable is the second as we receive cash from customers. Inventory is sold and then cash will be received it might take several days to receive the cash from sale of inventory.

Following accounts are not included in current assets format because these are non current asset account.

Accounts payable $2,000

Service revenue 33,000

Retained earnings 7/1/18 22,000

Equipment 54,000

Depreciation expense 2,000

Common Stock 30,000

Accumulated depreciation - equipment 8,000