Black Co. requires advance payments with special orders for machinery constructed to customer specifications. These advances are nonrefundable. Information for 2006 is as follows:

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Customer advances—balance 12/31/05

$118,000

Advances received with orders in 2006

184,000

Advances applied to orders shipped in 2006

164,000

Advances applicable to orders cancelled in 2006

50,000

In Black’s December 31, 2006 balance sheet, what amount should be reported as a current liability for advances from customer?

  1. $0
  2. $ 88,000
  3. $138,000
  4. $148,000