Chapter 1, Problem 39E

Exercise 1-39 Current Assets and Current Liabilities

Hanson Construction has an operating cycle of '5' months. On December 31. 2019, Hanson has the following assets and liabilities:

1. A note receivable in the amount of $1500 10 be collected in 6 months
2. Cash totaling $1,380
3. Accounts payable totaling $2,100, all of which will be paid within 2 months
4. Accounts receivable totaling $12,000, including an account for $7,000 that will be paid in 2 months and an account for $5,000 that will be paid in 18 months
5. Construction supplies coming $6,200, all of which will be used in construction within the next 12 months
6. Construction equipment costing $60,000 on which depreciation of $22,400 has accumulated
7. A note payable to the bank in the amount of $6,800 is to be paid within the next year

Required:

1. Calculate the amounts of current assets and current liabilities reported on Hanson’s balance sheet at December 31, 2019.
2. CONCEPTUAL CONNECTION Comment on Hanson’s liquidity.