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Information of smamim’s at 30 September 2006:
Motor van= 14000
loan (repayable in 4 annual installments, starting January 2007)= 100,000
receivables =23,800
bank balance (a debit on the bank statement)= 3250
accumulated depreciation= 7000
payables =31,050
inventory =12,560
petty cash =150
rent due 1200
allowance for receivables=1500.
Calculate the current asset and current liability?Please do not simply type out a full question and expect to be provided with a full answer.
You must have an answer in the same book in which you found the question, so ask about whatever it is that you are not clear about and then I will explain.I assume that you have watched my free lectures? They are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
Yeah, I should have specified the doubt in
the question. I don’t have the answer, and the question is from the online group of students.
Should I include the loan (repayable in 4 annual instalments, starting January 2007)= 100,000 when calculating non-current liability as 25000? Since it is the liability start from the next January, I think it should not be included.
So, the amount of non-current liability is:
3250+31050+ 1200 =35,500.
35,500 is not in the options, but the 60,500.Given that 1 instalment of the loan is payable within 12 months, then that instalment (of 25,000) is shown as a current liability. (The other 75,000 is a long-term liability).
You really should use a Revision Kit from BPP because it is full of exam standard questions and has answers and explanations 🙂
And do watch our free lectures!!
But the liability of $25000 is for next year. Is not it? Or should we need a clear date of year ending. I couldn’t quite understand it, explain please.
Yes, of course it is a liability, but it is a current liability because it is payable within a year. The other 75000 is a non-current liability because it is payable in more than one year.
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