Exercise 14-7 Balance sheet identification and preparation LO C4 The following i

Question

Exercise 14-7 Balance sheet identification and preparation LO C4 The following information applies to the questions displayed below Current assets for two different companies at fiscal year-end 2015 are listed here. One is a manufacturer Rayzer Skis Mfg, and the other, Sunrise Foods, is a grocery distribution company. Account Company 1 Company 2 $8,000$6,000 Cash Raw materials inventory Merchandise inventory Work in process inventory Finished goods inventory Accounts receivable, net Prepaid expenses 4.25041.250 30,000 50,000 80,000 800 69,000 4,000

Explanation / Answer

Company 1 is a merchandise company as it does not have any inventory of raw materials and finished goods and only has inventory of goods it deals in.

Company 2 is a manufacturer as it has inventory classified according to various stages of manufactyring such as raw materials conversion into work in progress and finished goods

Current Asset Section Company 1 Accounts receivable, net 69000 Cash 8000 Prepaid expenses 4000 Merchandise Inventory 44250 Total Current Assets 125250

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