Janson Corporation Co.'s trial balance included the following account balances at December 31,2016:

Investments consist of treasury bills that were purchased in November and mature in January.Prepaid insurance is for the next two years.What amount should be included in the current asset section of Janson's December 31,2016,balance sheet?

Question

Janson Corporation Co.'s trial balance included the following account balances at December 31,2016:

Investments consist of treasury bills that were purchased in November and mature in January.Prepaid insurance is for the next two years.What amount should be included in the current asset section of Janson's December 31,2016,balance sheet?

Quizplus · Accepted Answer

Only the following accounts are considered current assets:
- Cash: $50,000
- Accounts receivable: $45,000
- Prepaid insurance: $40,000 (half of the $80,000 represents the current year, which should be included in the current assets section)
Therefore, the total current assets are $135,000, and the correct answer is B. The investments are not considered current assets because they will not be realized within the next 12 months.