Hendrickson Corporation's trial balance for July 31,the end of its fiscal year,included the following accounts: Investments are treasury bills that were purchased in May and mature on August 15.Prepaid insurance is a three year policy that was purchased on July 31.
The amount that should be classified as current assets in the July 31 balance sheet is ________.

Question

Hendrickson Corporation's trial balance for July 31,the end of its fiscal year,included the following accounts:  Investments are treasury bills that were purchased in May and mature on August 15.Prepaid insurance is a three year policy that was purchased on July 31.
The amount that should be classified as current assets in the July 31 balance sheet is ________.

Quizplus · Accepted Answer

Current assets are assets that are expected to be converted to cash or used within one year. The following accounts from the trial balance can be classified as current assets:

- Cash: $20,000
- Accounts receivable: $45,000
- Treasury bills (Investments): $73,500 (since they will mature on August 15)
- Prepaid insurance (portion that applies to the next year): $0 (since it is a three year policy purchased on July 31, only the portion that applies to the current year can be considered a current asset)
- Inventory: $40,000
- Supplies: $10,000

Adding up these amounts gives a total of $138,500, which is the correct answer (option B).

Hendrickson Corporation's Trial Balance for July 31,the End of Its