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Hi
How would you work out the below question?
Following information available about X business at 30 Sept 20×6
Motor van 14000
Lon(Repayable in 4 equal annual instalments starting 1 january 20×7 100000
Receivable 23800
Bank Balance (debit of the bank statement) 3250
accumulated depreciation 7000
Payable 31050
Inventory 12560
Petty cash 150
Rent due 1200
Allowance for receivable 1500current liability current assest
a 34300 38260
b 32250 38260
c 57250 38260
d 60500 35010The correct answer shown by the book is D as
Current asset current liability
Recev 23800 overdraft 3250
allow -1500 payables 31050
inventory 1250 Rent accrual 1200
Petty cash 150 Loan 25000Since when the petty cash is included in the current assets? shouldn’t the cash only be included?
Why should the instalment of a long term loan (four annual instalment) be ncluded in the short financing? I understand that it repay within the year, but it is referering to long terms loan so long terms liabilityPlease help
thanks
GabbiPetty cash is simply ‘loose’ cash (i.e. coins and notes) as opposed to cash kept in the bank. Petty cash is always a current asset.
Although the loan is long-term overall, part of it is payable within one year and part is payable in more than one year. Anything payable within one year is a current liability, and the amount payable in more than one year is a non-current liability.
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