Question

Adjusted account balances and supplemental information for Brockbank Research Corp. as of December 31, 2008, are as follows:
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 32,160
Accounts Receivable—Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,731
Accumulated Depreciation—Leasehold Improvements and Equipment . . 579,472
Additional Paid-In Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265,000
Allowance for Bad Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,731
Automotive Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,800
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,600
Cash Fund for Bond Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000
Deferred Income Tax Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000
Dividends Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,500
Franchises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,150
Furniture, Fixtures, and Store Equipment . . . . . . . . . . . . . . . . . . . . . . . . . 769,000
Insurance Claims Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201,620
Investment in Unconsolidated Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Leasehold Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,800
7 1⁄2%–12% Mortgage Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Notes Payable—Banks (due in 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Notes Payable—Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,540
Patent Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,402
Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500
Profit Sharing, Payroll, and Vacation Payable . . . . . . . . . . . . . . . . . . . . . 40,000
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225,800
Supplemental information is as follows:
(a) Depreciation is provided by the straight-line method over the estimated useful lives of the assets.
(b) Common stock is $1 par, and 35,000 of the 100,000 authorized shares were issued and are outstanding.
(c) The cost of an exclusive franchise to import a foreign company’s ball bearings and a related patent license are being amortized on the straight-line method over their remaining lives: franchise, 10 years; patents, 15 years.
(d) Inventories are stated at the lower of cost or market; cost was determined by the specific identification method.
(e) Insurance claims based on the opinion of an independent insurance adjustor are for property damages at the central warehouse. These claims are estimated to be two-thirds collectible in the following year and one-third collectible thereafter.
(f) The company leases all of its buildings from various lessors. Estimated fixed-lease obligations are $50,000 per year for the next 10 years. The leases do not meet the criteria for capitalization.
(g) The company is currently in litigation over a claimed overpayment of income tax of $13,000. In the opinion of counsel, the claim is valid. The company is contingently liable on guaranteed notes worth $12,000.

Instructions:
Prepare a properly classified balance sheet. Include all notes and parenthetical notations necessary to properly disclose the essential financial data.



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  • CreatedApril 07, 2012
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