4th Edition

ISBN: 9781337690881

Author: Jay Rich, Jeff Jones

Publisher: Cengage Learning

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The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business…

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Textbook Question

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:

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

Required:

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

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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Chapter 1, Problem 38E

Chapter 1, Problem 40E

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Chapter 1 Solutions

Cornerstones of Financial Accounting

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Solution Summary: The author explains that the balance sheet is a summary of Assets, Liabilities, and equity accounts that reports the financial position of the business.

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