Calculate total current assets given the following information. Cash $10,000; supplies $3,000; average collection period 54.75 days; days' sales in inventory 91.25 days; sales $80,000; COGS $60,000.
A) $42,000
B) $40,000
C) $38,000
D) $36,000
E) $34,000

Question

Quizplus · Accepted Answer

Total current assets include cash, supplies, accounts receivable, and inventory. Cash is $10,000 and supplies are $3,000. To find accounts receivable, use the average collection period formula: (Average Collection Period / 365) * Sales. This gives ($80,000 * 54.75) / 365 = $12,000. To find inventory, use the days' sales in inventory formula: (Days' Sales in Inventory / 365) * COGS. This gives ($60,000 * 91.25) / 365 = $15,000. Adding these together: $10,000 + $3,000 + $12,000 + $15,000 = $40,000.

Calculate Total Current Assets Given the Following Information