Exercise-1 (Current assets section of the balance sheet)
Posted in: Inventory costing methods (exercises)
The trial balance of Hussnain manufacturing company shows the following assets at the end of December 2013:
- Cash: $380,000
- Prepaid insurance: $82,000
- Raw materials: $670,000
- Equipment: $2,200,000
- Accounts receivable: $800,000
- Work-in-process (WIP): $400,000
- Finished goods: $150,000
- Patents: $220,000
Required:
Prepare current assets section of the balance sheet of Husnain company.
Solution:

Notice that Hussnain manufacturing company reports three inventories (finished goods inventory, work-in-process inventory and raw materials inventory) in the current assets section of the balance sheet.
Merchandising companies report only one inventory that is ‘merchandising inventory’.
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