Use the following information to prepare the Current Assets section of the balance sheet for Bostitch Art Supplies on December 31, 20—. Also list any information that should be disclosed in the footnotes accompanying the financial statements.
1. Bostitch currently has $14,000 in a checking account and $3,000 in a money market account. Bostitch must keep $5,000 in its checking account as a compensating balance on a line of credit.
2. Bostitch has $25,000 in accounts receivable and $6,000 in notes receivable. Bostitch estimates that it will not collect $2,000 of its accounts receivable.
3. Bostitch has inventory that cost $47,000 using LIFO inventory methods. The current cost to replace these inventory items would be $54,000, and the retail selling price is estimated to be $78,000.
Bostitch Art Supplies
Balance Sheet
December 31, 20—
Current assets:
Cash and cash equivalents…………………………………….. $ 17,000
Accounts receivable……………………………………………….. $25,000
Less allowance for doubtful
accounts…………………………………………………….. 2,000 23,000
Notes receivable……………………………………………………… 6,000
Inventory………………………………………………………………….. 47,000
Total current assets………………………………………… $93,000
Required footnote disclosures:
1. $5,000 in cash must be kept in Bostitch’s checking account as a compensating balance on a line of credit.
2. Inventory is valued at cost using the LIFO inventory method.
