Question

Assets
Accounts receivable. 5000
Investments. 25000
Inventories. 34000
Prepaid insurance. 3000
Note Receivable, due 2022. 38000

Liabilities
Accounts payable. 17000
Salaries Payable. 8000
Notes Payable, due 2021. 11000
Notes Payable, due 2022. 23000

Current Assets:
Non Current Assets:
Current Liabilities:
Long term Liabilities:
Total Equity:
Please show your work

Prepaid insurance covers 2 years

Answer 1

	For Classification of Current and Non Current is assumed Year Ended December 31, 2020
	Assets	Amount in $
	Non Current
	Note Receivable, due 2022	38,000
	Investments (Assumed to be Non Current in absence of information)	25,000
		63,000
	Current
	Accounts receivable	5,000
	Inventories	34,000
	Prepaid insurance	3,000
		42,000
	Total Assets	105,000
	Equity and Liabilities
	Non Current
	Notes Payable, due 2022	23,000
	Current
	Accounts payable	17,000
	Salaries Payable	8,000
	Notes Payable, due 2021	11,000
	Liabilities	59,000
	Equity ( Total Assets - Liabilities) ( 105000-59000)	46,000
	Total Equity and Liabilities	105,000
	Current Asset – “An entity shall classify an asset as current when: (a) it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle; (b) it holds the asset primarily for the purpose of trading; (c) it expects to realise the asset within twelve months after the reporting period; (d) the asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. An entity shall classify all other assets as non-current	Account Receviable, Inventory and Prepaid Expenses fall under Current Assets as they satisfy the defination unlike Investment and Notes Receviable 2022
	Current Liability – “An entity shall classify a liability as current when: (a) it expects to settle the liability in its normal operating cycle; (b) it holds the liability primarily for the purpose of trading; (c) the liability is due to be settled within twelve months after the reporting period; or (d) it does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. An entity shall classify all other liabilities as non-current.”	Accounts Payable, Salaries Payable, Notes Payable, due 2021 fall under Current Liability as they satisfy the defination unlike Notes Payable 2022