Question

A partial list of Waterways' accounts and their balances for the month of November 2016 follows:

Answer 1

Answer:

Total current assets = $697,750

Explanation:

The partial balance sheet is as follows:

Waterways Corporation

Balance Sheet (Partial)

For the month of November 2016

Details                                                                $                         $          

Current Assets

Cash                                                           260,000

Accounts Receivable                                 275,000

Finished Goods Inventory, November       68,800

Raw Materials Inventory, November          52,700

Prepaid Expenses                                        41,250  

Total current assets                                                              697,750

Note:

Cash is the most liquid of assets.

Accounts receivable which should be collected within 30 to 60 days are less liquid than cash, but more liquid than inventory.

Finished Goods Inventory which is expected to be sold and converted to cash within one year, and Raw Materials Inventory which is expected to be converted to finished good within one year are more liquid than Prepaid expense.

Therefore, the least liquid among current assets’ item above is the Prepaid Expense as it is cash paid for services not yet received..