As controller for Henderson, you are attempting to reconstruct and revise the following balance sheet prepared by
Question:
As controller for Henderson, you are attempting to reconstruct and revise the following balance sheet prepared by a staff accountant at the end of 2016.
Henderson Manufacturing Company | ||
Balance Sheet | ||
? | ||
($ in 000s) | ||
| ||
Assets | ||
Current assets: | | |
Cash | | $ 1,600 |
Accounts receivable | | 4,300 |
Allowance for uncollectible accounts | | (500) |
Finished goods inventory | | 5,000 |
Prepaid expenses | | 2,400 |
Total current assets | | 12,800 |
Noncurrent assets: | | |
Investments | | 2,000 |
Raw materials and work in process inventory | | 3,200 |
Equipment | | 18,000 |
Accumulated depreciation–equipment | | (8,000) |
Franchise | | ? |
Total assets | | $ ? |
| ||
Liabilities and Shareholders’ Equity | ||
Current liabilities: | | |
Accounts payable | | $6,200 |
Note payable | | 8,000 |
Interest payable–note | | 200 |
Deferred revenue | | 2,400 |
Total current liabilities | | 16,800 |
Long-term liabilities: | | |
Bonds payable | | 7,000 |
Interest payable–bonds | | 200 |
Shareholders’ equity: | | |
Common stock, $2. Par; 7,500 shares authorized, 4,000 shares outstanding | 10,000 | |
Retained earnings | ? | ? |
Total liabilities and shareholders’ equity | | ? |
Additional information ($ in 000s):
1. Certain records that included the account balances for the franchise and shareholders' equity items were lost. However, a complete, preliminary balance sheet prepared before the records were lost showed a debt to equity ratio of 1.5. That is, total liabilities are 150% of total shareholders' equity. Retained earnings at the beginning of the year was $4,300. Net income for 2016 was $2,500, and $800 in cash dividends were declared and paid to shareholders.
2. The investments represent treasury bills purchased in December 2016 that mature in January 2017. These are considered cash equivalents.
3. Interest on both the note and the bonds is payable annually.
4. The note payable is due in annual installments of $800 each.
5. Deferred revenue will be earned equally over the next 18 months.
6. Prepaid Expenses will cover 2 years.
7. The common stock represents 500,000 shares of no par stock authorized, 300,000 shares issued and outstanding.
Required:
Prior to preparing the corrected classified balance, many account balances and other items need to be restated. On a separate answer sheet, enter the following:
Heading dateline
Cash and cash equivalents balance
Interest Payable balance
Total current liabilities
How will the note payable be classified on the revised balance sheet?.
Will this balance sheet report any “Other Assets”?
Deferred revenue is correctly classified as a Current liability.
Retained earnings on this balance sheet will be stated at what amount?
How many shares of stock have been issued?
Is this company holding any shares of Treasury Stock? Explain your answer.
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen