Blake Matthews incorporated his paper manufacturing operations on January 1, 2013, by issuing 5,000 shares of $1

Question:

Blake Matthews incorporated his paper manufacturing operations on January 1, 2013, by issuing 5,000 shares of $1 par common stock to himself. The following balance sheet for the new corporation was prepared.

Looseleaf Corporation

Balance Sheet

January 1, 2013

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . $ 15,000

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,000

Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,000

Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . $285,000

Accounts payable-suppliers. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . $ 85,000

Capital stock, $1 par . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . 5,000

Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . $285,000

During 2013, Looseleaf Corporation engaged in the following transactions.

(a) Looseleaf Corporation produced paper costing $395,000. Paper costs consisted of the following: $307,000, raw materials purchased; $48,000, labor; and $40,000, overhead. Looseleaf Corporation paid the $85,000 owed to suppliers as of January 1 and $210,000 of the $307,000 of raw materials purchased during the year. All labor, except for $6,000, and recorded overhead were paid in cash during the year. Other operating expenses of $8,500 were incurred and paid in 2013.

(b) Paper costing $320,000 was sold during 2013 for $390,000. All sales were made on credit, and collections on receivables were $350,000.

(c) Looseleaf Corporation purchased machinery (fair market value = $245,000) by trading in old equipment costing $140,000 and paying $105,000 in cash. There is no accumulated depreciation on the old equipment as it was revalued when the new corporation was formed.

(d) Looseleaf Corporation issued an additional 15,000 shares of common stock for $10 per share and declared a dividend of $1.75 per share to all stockholders of record as of December 31, 2013, payable on January 15, 2014.

(e) Depreciation expense for 2013 was $45,000. The allowance for bad debts after year-end adjustments is $4,000.

Instructions:

Prepare a properly classified balance sheet for Looseleaf Corporation as of December 31, 2013?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance 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... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...