LMN Company's accounting records reported the following
account balances as of December 31, 2026:

Accounts payable ............ ?
Copyright ................... $44,000
Land ........................ $56,000
Cost of goods sold .......... $49,000
Accumulated depreciation .... $23,000
Notes payable ............... $38,000
Interest revenue ............ $65,000
Building .................... $89,000
Cash ........................ $12,000
Dividends ................... $14,000
Income tax expense .......... $29,000
Accounts receivable ......... $26,000
Salaries expense ............ $24,000
Supplies .................... $13,000
Rent expense ................ $11,000
Retained earnings ........... $69,000 (at Jan. 1, 2026)
Sales revenue ............... $94,000
Common stock ................ $78,000
Patent ...................... $20,000
Salaries payable ............ $16,000
Inventory ................... $37,000
Utilities expense ........... $19,000

Calculate the total current assets reported in LMN
Company's December 31, 2026 balance sheet.

Question

LMN Company's accounting records reported the following
account balances as of December 31, 2026:

Accounts payable ............     ?
Copyright ...................  $44,000
Land ........................  $56,000
Cost of goods sold ..........  $49,000
Accumulated depreciation ....  $23,000
Notes payable ...............  $38,000
Interest revenue ............  $65,000
Building ....................  $89,000
Cash ........................  $12,000
Dividends ...................  $14,000
Income tax expense ..........  $29,000
Accounts receivable .........  $26,000
Salaries expense ............  $24,000
Supplies ....................  $13,000
Rent expense ................  $11,000
Retained earnings ...........  $69,000 (at Jan. 1, 2026)
Sales revenue ...............  $94,000
Common stock ................  $78,000
Patent ......................  $20,000
Salaries payable ............  $16,000
Inventory ...................  $37,000
Utilities expense ...........  $19,000

Calculate the total current assets reported in LMN
Company's December 31, 2026 balance sheet.

BlackTom AI · Accepted Answer

Current assets are assets expected to be converted to cash, sold, or consumed within one year; common examples include cash, accounts receivable, inventory, and supplies.

1) Relevant knowledge points and concepts
- Current assets include cash, accounts receivable, inventory, supplies, and any prepaid items. 
- Noncurrent assets (land, building, patents, copyrights) and contra-asset accounts (accumulated depreciation) are excluded from current assets. 
- Liabilities (accounts payable, notes payable, salaries payable) and equity (common stock, retained earnings) are not assets. 
- Revenue and expense accounts appear on the income statement, not in current assets.

2) Step-by-step reasoning and calculations
Identify which listed balances are current assets:
- Cash = $12,000
- Accounts receivable = $26,000
- Inventory = $37,000
- Supplies = $13,000

Exclude the following (with brief reasons):
- Land ($56,000) and Building ($89,000): long-term (noncurrent) assets.
- Patent ($20,000) and Copyright ($44,000): intangible, long-term assets.
- Accumulated depreciation ($23,000): contra-asset to long-term fixed assets.
- Notes payable, accounts payable, salaries payable: liabilities.
- Revenues, expenses, dividends, and equity accounts do not contribute to current assets.

3) Calculation (all intermediate steps)
- Sum current asset components:
  Cash: 12,000
  + Accounts receivable: 26,000 → subtotal 38,000
  + Inventory: 37,000 → subtotal 75,000
  + Supplies: 13,000 → total 88,000

4) Why the answer is correct
The total includes every asset expected to be realized or used within one year and excludes long-term assets, contra-accounts, liabilities, equity, and income statement items. The arithmetic above adds the appropriate line items only.

5) Other items not included (brief)
All other balances are noncurrent assets, liabilities, equity, or income/expense entries and therefore are correctly excluded from current assets.

Conclusion: The total current assets at December 31, 2026 equal $88,000, which matches the provided answer.

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