The bookkeeper for Chordwise Music, Inc., reports the following balance sheet amounts as of June 30, 2013.
Question:
The bookkeeper for Chordwise Music, Inc., reports the following balance sheet amounts as of June 30, 2013.
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $286,800
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 630,600
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158,920
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Owners' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558,480
A review of account balances reveals the following data.
(a) An analysis of current assets discloses the following:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 51,000
Investment securities-trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,300
Inventories, including advertising supplies of $3,500 . . . . . . . . . . . . . . . . . . . . . . . . . . . 127,500
$286,800
(b) Other assets include the following:
Property, plant, and equipment:
Depreciated book value (cost, $775,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $554,500
Deposit with a supplier for merchandise ordered for August delivery . . . . . . . . . . . . . . . 10,700
Goodwill recorded on the books to cancel losses incurred
by the company in prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,400
$630,600
(c) Current liabilities include the following:
Payroll payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,050
Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,870
Rent payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7,700
Accounts payable
Total owed to suppliers on account . . . . . . . . . . . . . . . . . . . . . . . . . . .$111,300
Less: 6-month note received from a supplier who purchased
some used equipment on June 29, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 106,300
Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,000
$158,920
(d) Other liabilities include the following:
10% mortgage on property, plant, and equipment, payable in semiannual
installments of $20,000 through June 30, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000
(e) Owners' equity includes the following:
Preferred stock: 15,000 shares outstanding ($20 par value) . . . . . . . . . . . . . . . . . . . . $300,000
Common stock: 175,000 shares at $1 stated value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,000
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,480
$558,480
(f) Common shares were originally issued for $495,000, but the losses of the company for the past years were charged against additional paid-in capital.
Instructions:
Using the account balances and related data, prepare a corrected balance sheet showing individual asset, liability, and owners' equity balances properly classified?
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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