Problem Set #2

Bayou Corporation produced the following draft statement of financial position at December 31, 2020.

Bayou Corporation Statement of Financial Position December 31, 2020

Current Assets	$518,950	Current liabilities	$406,600
Investments	684,800	Long-term liabilities	1,027,200
Property, plant, and equipment	1,840,400	Shareholders' equity (see additional information items #7 and 8 below)	1,893,900
Intangible assets	283,550
Total Assets	$3,327,700	Total Liabilities and Shareholders' Equity	$3,327,700

The following additional information is available:

1. The current assets section includes the following: cash $160,500; accounts receivable $181,900, less $10,700 allowance for doubtful accounts; inventory $192,600; and warranty payable $5,350. The cash balance is composed of $203,300, less a bank overdraft of $42,800 (at a separate financial institution). Inventory is stated at the lower of FIFO cost and net realizable value.

2. The investments section includes the following: note receivable from a related company, due in 2026, $42,800; FV-NI investments in shares $85,600 (fair value $85,600); FV-OCI investments in shares $133,750 (fair value $165,850); bond sinking fund $267,500; and patents $123,050, net of accumulated amortization.

3. Property, Plant, and Equipment include buildings $1,112,800, less accumulated depreciation $385,200; equipment $481,500, less accumulated depreciation $192,600; land $535,000; and land held for future use $288,900

4. Intangible Assets include goodwill valued at $283,550.

5. Current liabilities include the following: accounts payable $149,800; short term notes payable, $85,600, long-term notes payable, $128,400; and income tax payable $42,800.

6. Long-term liabilities as stated in the statement of financial position above are composed solely of 7% bonds payable issued at a discount, due in 2028

7. Shareholders' equity has 70,000 preferred shares (200,000 authorized), which were issued for $481,500, and 107,000 common shares (unlimited number authorized), which were issued at an average price of $10 per share. In addition, the corporation has accumulated other comprehensive income of $32,100.

8. Find the value of retained earnings to balance the statement of financial position.

Required: Prepare a classified statement of financial position in good form. Adjust the amounts in each SFP classification based on the additional information. Provide a three-line title for your Statement of Financial Position.

Show all contra account balances where possible as well as net carrying value. Use proper disclosure techniques as appropriate.

Show all calculations. Be sure to list current assets in order of liquidity.