The following trial balance of Rosen Corp. at December 31, 2004 has been properly adjusted except for the income tax expense adjustment.
December 31, 2004
Cash $ 875,000
Accounts receivable (net) 2,695,000
Property, plant, and equipment (net) 7,366,000
Accounts payable and accrued liabilities $ 1,501,000
Income taxes payable 654,000
Deferred income tax liability 85,000
Common stock 2,350,000
Additional paid-in capital 3,680,000
Retained earnings, 1/1/04 3,650,000
Net sales and other revenues 13,360,000
Costs and expenses 11,080,000
Income tax expenses 1,179,000
$25,280,000 $25, 280,000
Other financial data for the year ended December 31, 2004:
? Included in accounts receivable is $800,000 due from a customer and payable in quarterly installments of $100,000. The last payment is due December 29, 2006.
? The balance in the Deferred Income Tax Liability account pertains to a temporary difference that arose in a prior year, of which $30,000 is classified as current.
? During the year, estimated tax payments of $325,000 were charged to income tax expense. The current and future tax rate on all types of income is 30%.
In Rosen's December 31, 2004 balance sheet,
The current assets total is
The current liabilities total is
The final retained earnings balance is
Current assets would be defined as those amounts expected to convert to cash within one year. It would be an unusual situation to have an open account receivable which extends beyond one year. Normally, in such a situation, the account receivable would be converted to a note receivable (to offset the time value of money lost) and the expected payment schedule would provide ...
The solution defines current and non-current classifications for the balance sheet, and then provides solutions with explanations for the calculation of the totals for current assets, current liabilities and retained earnings.