Question: Illini Company, Inc. Balance Sheet as of 12/31/20X0 Assets Current Assets: Cash $1,500,000 Accounts receivable, net 18,000 Inventory 50,000 Total current assets 1,568,000 Equipment 90,000

Illini Company, Inc.

Balance Sheet

as of 12/31/20X0

Assets

Current Assets:



Cash



$1,500,000

Accounts receivable, net


              18,000

Inventory



              50,000

Total current assets


        1,568,000

Equipment



              90,000

Goodwill



              20,000

Total assets



$1,678,000









Liabilities and shareholders\' equity





Shareholders\' equity:



Common stock, 20,000 shares outstanding, $1 par

$20,000

Additional paid-in capital


           280,000

Retained earnings


        1,378,000

Total shareholders\' equity


        1,678,000





Total liabilities and shareholders\' equity

$1,678,000

  • Note that all additional paid-in capital (APIC) sub-accounts (e.g., APIC-options and APIC-treasury stock), if any, are tracked in the “Additional paid-in capital” account on the Balance Sheet.
  • Illini provides a one-year warranty for one of its products. Based on industry experience, the estimated total warranty costs are 6% of sales. Sales of the product in 20X1 and 20X2 are $350,000 and $400,000, respectively. Actual warranty claims in 20X1 and 20X2 are $10,000 and $30,000, respectively. Out of the $30,000 claims in 20X2, $12,000 is related to the 20X1 sale.


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