CURRENT ASSETS AND CURRENT LIABILITIES Hanson Construction has an operating cycle of nine months. On December 31, 2009, Hanson has the following assets and liabilities:

a. A note receivable in the amount of $1,000 to be collected in six months.

b. Cash totaling $600.

c. Accounts payable totaling $1,800, all of which will be paid within two months.

d. Accounts receivable totaling $12,000, including an account for $8,000 that will be paid in two months and an account for $4,000 that will be paid in 18 months.

e. Construction supplies costing $9,200, 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 $40,000, of which $7,000 is to be paid within the next year and the remainder in subsequent years.

Required:

Calculate the amounts of current assets and current liabilities reported on Hanson’s balance sheet at December 31, 2009.

Comment on Hanson’s liquidity.

Exercise