Hanson Construction has an operating cycle of 9 months. On December 31, 2019, Hanson has the following
Question:
Hanson Construction has an operating cycle of 9 months. On December 31, 2019, Hanson has the following assets and liabilities:
a. A note receivable in the amount of $1,500 to be collected in 6 months
b. Cash totaling $1,380
c. Accounts payable totaling $2,100, all of which will be paid within 2 months
d. Accounts receivable totaling $12,000, including an account for $7,000 that will be paid in
2 months and an account for $5,000 that will be paid in 18 months
e. Construction supplies costing $6,200, all of which will be used in construction within the next 12 months
f. Construction equipment costing $60,000, on which depreciation of $22,400 has accumulated
g. A note payable to the bank in the amount of $6,800 is to be paid within the next year
Required:
1. Calculate the amounts of current assets and current liabilities reported on Hanson's balance sheet at December 31, 2019.
2. Comment on Hanson's liquidity?
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