The following statement of financial position has been submitted to you by an employee in the accounting
Question:
The following statement of financial position has been submitted to you by an employee in the accounting department who has recently received notice of termination. It contains many errors in terminology, classification, and numbers. Hathaway follows IFRS.
Hathaway Inc.
Financial Position
For the Period Ended December 31, 2021
Assets
Fixed Assets—Tangible | ||
Equipment | $110,000 | |
Less: reserve for depreciation | (40,000) | $ 70,000 |
Factory supplies | 22,000 | |
Land and buildings (land is 80,000) | 400,000 | |
Less: reserve for depreciation | (150,000) | 250,000 |
Plant site held for future use | 90,000 | 432,000 |
Current Assets | ||
Accounts receivable | 175,000 | |
Cash | 80,000 | |
Inventory | 220,000 | |
Fixed Assets—Intangible | ||
Goodwill | 80,000 | |
Notes receivable (short term) | 40,000 | |
Patents | 26,000 | 146,000 |
Deferred Charges | ||
Advances to salespersons (due Feb. 2022) | 60,000 | |
Prepaid rent | 27,000 | |
TOTAL ASSETS | $1,235,000 | |
Liabilities
Current Liabilities | ||
Accounts payable | $140,000 | |
Allowance for doubtful accounts | 8,000 | |
Notes payable (short term) | 42,000 | |
Rent payable | 17,000 | 242,000 |
Long-Term Liabilities, 5% debenture bonds, due 2024 | 500,000 | |
Reserve for contingencies | 100,000 | 600,000 |
TOTAL LIABILITIES | 892,000 | |
Equity | ||
Common shares, no par value, issued 12,000 shares | $240,000 | |
Dividends paid during the year | (20,000) | |
Earned surplus | 23,000 | |
Other accumulated past income | 100,000 | |
TOTAL LIABILITIES AND EQUITY | $1,235,000 | |
Note 1. The reserve for contingencies has been created by charges to earned surplus and has been established to provide a cushion for future uncertainties.
Note 2. The inventory account includes only items physically present at the main plant and warehouse. Items located at the company’s branch sales office, amounting to $30,000, are excluded since the company has consistently followed this procedure for many years.
Required:
Prepare the 2021 classified Statement of Financial Position in good form. Fix all errors in classification, terminology, and numbers.
Expert Answer:
Hathaway Inc Statement of Financial Position As of December 31 2021 Assets Current Assets Cash and c... View the full answer
