Problem 1-7 (AICPA Adapted)

Ivan Company showed the following current assets at the year-end:

Cash 3,200,000
Accounts receivable 2,500,000
Inventory 2,000,000

Total current assets 7,700,000

Cash on hand, including customer postdated check P100,000 and

employee IOU P50,000 500,000
Cash in bank per bank statement (outstanding check at year-end
P200,000) 2,700,000

Total cash 3,200,000

What total amount should be reported as current assets?

a. 7,700,000
b. 7,450,000
c. 7,400,000
d. 7,500,000

Solution:

Cash on hand ( 500,000 – 100,000 – 50,000 ) 350,000

Cash in bank 2,500,000
Accounts receivable 2,600,000
Advance to employee 50,000
Inventory 2,000,000

Total current assets 7,500,000