Question

The following data relate to the Prima Company.
(1) Exhibit 3.10: Balance sheet at December 31, Year 8.
ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 10,000
Marketable Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Merchandise Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Prepayments for Miscellaneous Services . . . . . . . . . . . . . . . . 3,000
Total Current Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 88,000
Land, Buildings, and Equipment (at cost) . . . . . . . . . . . . . . . $ 40,000
Less Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . (16,000)
Land, Buildings, and Equipment (net) . . . . . . . . . . . . . . . . . . . $ 24,000
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $112,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts Payable (for merchandise). . . . . . . . . . . . . . . . . . . . $ 25,000
Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300
Taxes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,300
Note Payable (6%, long-term). . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 49,300
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... $ 50,000
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,700
Total Shareholders’ Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 62,700
Total Liabilities and Shareholders’ Equity . . . . . . . . . . . . . $112,000
(2) Exhibit 3.11: Statement of net income and retained earnings for Year 8.
Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000
Less Expenses:
Cost of Goods Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $130,000
Depreciation Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
Taxes Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000
Other Operating Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,700
Interest Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $190,900
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,100
Less Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Increase in Retained Earnings . . . . . . . . . . . . . . . . . . . . . . $ 4,100
(3) Exhibit 3.12: Statement of cash receipts and disbursements for Year 8.
Cash Receipts
Cash Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 47,000
Collection from Credit Customers . . . . . . . . . . . . . . . . . . . . . . . 150,000
Total Receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $197,000
Cash Disbursements
Payment to Suppliers of Merchandise . . . . . . . . . . . . . . . . . . . . $128,000
Payment to Suppliers of Miscellaneous Services . . . . . . . . . . . 49,000
Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500
Payment of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200
Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Purchase of Marketable Securities . . . . . . . . . . . . . . . . . . . . . . . 8,000
Total Disbursements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $198,700
Excess of Disbursements over Receipts . . . . . . . . . . . . . . . $ 1,700
Purchases of merchandise during the period, all on account, were $127,000. All Other
Operating Expenses were credited to Prepayments. Prepare a balance sheet for December 31, Year 7.



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  • CreatedMarch 04, 2014
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