Question: Selected information taken from the December 31 2014 financial statements

Selected information taken from the December 31, 2014, financial statements for Mesa Company is shown below for the year just ended:
Current assets ........................... $120,000
Property, plant and equipment... 840,000
Intangibles................................ 50,000
Current liabilities....................... 72,000
Long-term liabilities ................... $660,000
Equity ........................................ 278,000
Revenues................................... 960,000
Expenses................................... 890,000

Mesa Company purchased $34,000 of merchandise inventory that was recorded as a debit to Merchandise Inventory and a credit to Accounts Payable on December 28; it was shipped FOB destination on December 28 and received on January 5. Because this liability was not due until 2015, it was listed as a long-term liability on the December 31, 2014, balance sheet. $50,000 of revenue earned but not recorded as of December 31, 2014, was recorded as a debit to Accounts Receivable and a credit to Revenue on December 31, 2014. $80,000 was collected on December 15 for services to be provided in February and March of 2015; this amount was recorded on December 15 as a debit to Cash and a credit to Revenue. $5,000 of interest accrued on a note payable during December and was recorded when it was paid on January 5, 2015, as a debit to Interest Expense and a credit to Interest Payable. $40,000 of payroll liabilities had accrued as of December 31, 2014, but had not been recorded. $430,000 of the long-term liabilities were due after December 31, 2015; the balance was current.

Required
Using the elements of critical thinking described on the inside front cover, comment.




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  • CreatedJanuary 08, 2015
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