Question

Super Mario Corp. had the following account balances at the end of the period: Accounts Receivable: $1,000 Unearned Revenue: $500 Accounts Payable: $300 Inventory: $600 Equipment: $5,000 Retained Earnings: $2,000 Cash: $1,200 Calculate the amount of current assets.

Answer 1

The total amount of current assets for Super Mario Corp. is $2,800, calculated by adding Accounts Receivable ($1,000), Inventory ($600), and Cash ($1,200).

Step-by-step explanation:

To calculate the amount of current assets for Super Mario Corp., we need to identify which assets are likely to be converted into cash within one year or one business cycle, whatever is longer. Current assets typically include cash and cash equivalents, accounts receivable, inventory, marketable securities, and prepaid expenses.

In this case, Super Mario Corp. has the following current assets:

• Accounts Receivable: $1,000
• Inventory: $600
• Cash: $1,200

We do not include the Unearned Revenue because this is a liability, representing revenue received but not yet earned. The equipment value is not considered a current asset as it is a long-term asset.

So, the total amount of current assets for Super Mario Corp. is calculated as:

Accounts Receivable ($1,000) + Inventory ($600) + Cash ($1,200) = $2,800.