The bookkeeper for Reliable Computers, Inc., reports the following balance sheet amounts as of June 30, 2008.
Question:
The bookkeeper for Reliable Computers, Inc., reports the following balance sheet amounts as of June 30, 2008.
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $233,400
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 667,100
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146,820
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Owners’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 653,680
A review of account balances reveals the following data.
(a) An analysis of current assets discloses the following:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 47,500
Investment securities—trading . . . . . . . . . . . . . . . . . . . . . 55,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,900
Inventories, including advertising supplies of $2,000 . . . . 79,000
$233,400
(b) Other assets include the following:
Property, plant, and equipment:
Depreciated book value (cost, $670,000) . . . . . . . . . . . . . . . . . . . $574,000
Deposit with a supplier for merchandise ordered
for August delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,200
Goodwill recorded on the books to cancel losses incurred
by the company in prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,900
$667,100
(c) Current liabilities include the following:
(d) Other liabilities include the following:
10% mortgage on property, plant, and equipment, payable in semiannual
installments of $10,000 through June 30, 2013 . . . . . . . . . . . . . $100,000
(e) Owners’ equity includes the following:
Preferred stock: 20,000 shares outstanding ($20 par value) . . . . $400,000
Common stock: 150,000 shares at $1 stated value . . . . . . . . . . . 150,000
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,680
$653,680
(f) Common shares were originally issued for $394,000, 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...
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0324312140
16th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen