Question

Current assets for two different companies at fiscal year-end 2017 are listed here. One is a manufacturer, Rayzer Skis Mfg., and the other, Sunrise Foods, is a grocery distribution company. Account Company1 Company 2 $13,000 $11,000 41,250 Cash Raw materials inventory Merchandise inventory Work in process inventory Finished goods inventory Accounts receivable, net Prepaid expenses 44,250 30,000 50,000 81,000 600 66,000 3,000 Required: (1) ldentify which set of numbers relates to the manufacturer and which to the merchandiser. (2) Prepare the current asset section for each company from this information

Answer 1

1)

Company 2 has raw material inventory, work in process inventory and finished goods inventory. That means it is involved in manufacturing. Hence, it is manufacturer.

Company 1 has merchandise inventory and not having any raw material or work in process or finished goods inventory. Hence, it is merchandiser.

2)

Preparation of Current assets section of each company:

Current assets section of Company 1:

Particulars	Amount
Current Assets
Cash	13,000
Merchandise inventory	44,250
Accounts receivables, net	66,000
Prepaid expenses	3,000
Total current assets	126,250

Current assets section of Company 2:

Particulars	Amount
Current Assets
Cash	11,000
Raw materials inventory	41,250
Work in process inventory	30,000
Finished goods inventory	50,000
Accounts receivable, ,net	81,000
Prepaid expenses	600
Total current assets	213,850