Your firm has been engaged to examine the financial statements of Skysong Corporation for the year...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Your firm has been engaged to examine the financial statements of Skysong Corporation for the year 2017. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on January 2, 2012. The client provides you with the information below. SKYSONG CORPORATION BALANCE SHEET DECEMBER 31, 2017 Assets Liabilities Current assets $1,868,000 Current kablities $949,000 Other assets 5,251,500 Long-term liabilities 1,442,000 Capital 4,728,500 87,119,500 $7,119,500 An analysis of current assets discloses the following. Cash (restricted in the amount of $304,000 for plant expansion) $564,000 Investments in land 187,000 Accounts receivable less allowance of 30,000 474,000 Inventories (LIFO flow assumption) 643,000 $1,868,000 Other assets include: Prepaid expenses $64,000 Plant and equipment less accumulated depreciation of $1,404,000 4,202,000 Cash surrender value of life insurance policy 82,000 Unamortized bond discount 40,500 Notes receivable (short-term) 160,000 Goodwill 254,000 Land 449,000 $5,251,500 Current liabilities include: Accounts payable $501,000 Notes payable (due 2020) 154,000 Estimated income taxes payable 143,000 Premium on common stock 151,000 $949,000 Long-term liabilities include Unearned revenue $496,000 Dividends payable (cash) 196,000 8% bonds payable (due May 1, 2022) 750,000 $1,442,000 Capital includes: Retained earnings $2.928,500 Common stock, par value $10; authorized 200,000 shares, 180,000 shares issued 1,800,000 $4,728,500 The supplementary information below is also provided. 1. On May 1, 2017, the corporation issued at 94.60, $750,000 of bonds to finance plant expansion. The long-term bond agreement provided for the annual payment of interest every May 1. The existing plant was pledged as security for the loan. Use the straight-line method for discount amortization. 2 The bookkeeper made the following mistakes. (a) In 2015, the ending inventory was overstated by $182,000. The ending inventories for 2016 and 2017 were correctly computed. (b) in 2017, accrued wages in the amount of $225,000 were omitted from the balance sheet, and these expenses were not charged on the income statement. (c) In 2017, a gain of $173,000 (net of tax) on the sale of certain plant assets was credited directly to retained eamings. 3. A major competitor has introduced a line of products that will compete directly with Skysong's primary line, now being produced in a specially designed new plant. Because of manufacturing innovations, the competitor's line will be of comparable quality but priced 50% below Skysong's line. The competitor announced its new line on January 14, 2018. Skysong indicates that the company will meet the lower prices that are high enough to cover variable manufacturing and selling expenses, but permit recovery of only a portion of fixed costs. 4. You learned on January 28, 2018, prior to completion of the audit, of heavy damage because of a recent fire to one of Skysong's two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail. Analyze the above information to prepare a corrected balance sheet for Skysong in accordance with proper accounting and reporting principles. Prepare a description of any notes that might need to be prepared. The books are closed and adjustments to income are to be made through retained earnings. (List current assets in order of liquidity. Enter account name only and do not provide descriptive information.) Your firm has been engaged to examine the financial statements of Skysong Corporation for the year 2017. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on January 2, 2012. The client provides you with the information below. SKYSONG CORPORATION BALANCE SHEET DECEMBER 31, 2017 Assets Liabilities Current assets $1,868,000 Current kablities $949,000 Other assets 5,251,500 Long-term liabilities 1,442,000 Capital 4,728,500 87,119,500 $7,119,500 An analysis of current assets discloses the following. Cash (restricted in the amount of $304,000 for plant expansion) $564,000 Investments in land 187,000 Accounts receivable less allowance of 30,000 474,000 Inventories (LIFO flow assumption) 643,000 $1,868,000 Other assets include: Prepaid expenses $64,000 Plant and equipment less accumulated depreciation of $1,404,000 4,202,000 Cash surrender value of life insurance policy 82,000 Unamortized bond discount 40,500 Notes receivable (short-term) 160,000 Goodwill 254,000 Land 449,000 $5,251,500 Current liabilities include: Accounts payable $501,000 Notes payable (due 2020) 154,000 Estimated income taxes payable 143,000 Premium on common stock 151,000 $949,000 Long-term liabilities include Unearned revenue $496,000 Dividends payable (cash) 196,000 8% bonds payable (due May 1, 2022) 750,000 $1,442,000 Capital includes: Retained earnings $2.928,500 Common stock, par value $10; authorized 200,000 shares, 180,000 shares issued 1,800,000 $4,728,500 The supplementary information below is also provided. 1. On May 1, 2017, the corporation issued at 94.60, $750,000 of bonds to finance plant expansion. The long-term bond agreement provided for the annual payment of interest every May 1. The existing plant was pledged as security for the loan. Use the straight-line method for discount amortization. 2 The bookkeeper made the following mistakes. (a) In 2015, the ending inventory was overstated by $182,000. The ending inventories for 2016 and 2017 were correctly computed. (b) in 2017, accrued wages in the amount of $225,000 were omitted from the balance sheet, and these expenses were not charged on the income statement. (c) In 2017, a gain of $173,000 (net of tax) on the sale of certain plant assets was credited directly to retained eamings. 3. A major competitor has introduced a line of products that will compete directly with Skysong's primary line, now being produced in a specially designed new plant. Because of manufacturing innovations, the competitor's line will be of comparable quality but priced 50% below Skysong's line. The competitor announced its new line on January 14, 2018. Skysong indicates that the company will meet the lower prices that are high enough to cover variable manufacturing and selling expenses, but permit recovery of only a portion of fixed costs. 4. You learned on January 28, 2018, prior to completion of the audit, of heavy damage because of a recent fire to one of Skysong's two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail. Analyze the above information to prepare a corrected balance sheet for Skysong in accordance with proper accounting and reporting principles. Prepare a description of any notes that might need to be prepared. The books are closed and adjustments to income are to be made through retained earnings. (List current assets in order of liquidity. Enter account name only and do not provide descriptive information.) Your firm has been engaged to examine the financial statements of Skysong Corporation for the year 2017. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on January 2, 2012. The client provides you with the information below. SKYSONG CORPORATION BALANCE SHEET DECEMBER 31, 2017 Assets Liabilities Current assets $1,868,000 Current kablities $949,000 Other assets 5,251,500 Long-term liabilities 1,442,000 Capital 4,728,500 87,119,500 $7,119,500 An analysis of current assets discloses the following. Cash (restricted in the amount of $304,000 for plant expansion) $564,000 Investments in land 187,000 Accounts receivable less allowance of 30,000 474,000 Inventories (LIFO flow assumption) 643,000 $1,868,000 Other assets include: Prepaid expenses $64,000 Plant and equipment less accumulated depreciation of $1,404,000 4,202,000 Cash surrender value of life insurance policy 82,000 Unamortized bond discount 40,500 Notes receivable (short-term) 160,000 Goodwill 254,000 Land 449,000 $5,251,500 Current liabilities include: Accounts payable $501,000 Notes payable (due 2020) 154,000 Estimated income taxes payable 143,000 Premium on common stock 151,000 $949,000 Long-term liabilities include Unearned revenue $496,000 Dividends payable (cash) 196,000 8% bonds payable (due May 1, 2022) 750,000 $1,442,000 Capital includes: Retained earnings $2.928,500 Common stock, par value $10; authorized 200,000 shares, 180,000 shares issued 1,800,000 $4,728,500 The supplementary information below is also provided. 1. On May 1, 2017, the corporation issued at 94.60, $750,000 of bonds to finance plant expansion. The long-term bond agreement provided for the annual payment of interest every May 1. The existing plant was pledged as security for the loan. Use the straight-line method for discount amortization. 2 The bookkeeper made the following mistakes. (a) In 2015, the ending inventory was overstated by $182,000. The ending inventories for 2016 and 2017 were correctly computed. (b) in 2017, accrued wages in the amount of $225,000 were omitted from the balance sheet, and these expenses were not charged on the income statement. (c) In 2017, a gain of $173,000 (net of tax) on the sale of certain plant assets was credited directly to retained eamings. 3. A major competitor has introduced a line of products that will compete directly with Skysong's primary line, now being produced in a specially designed new plant. Because of manufacturing innovations, the competitor's line will be of comparable quality but priced 50% below Skysong's line. The competitor announced its new line on January 14, 2018. Skysong indicates that the company will meet the lower prices that are high enough to cover variable manufacturing and selling expenses, but permit recovery of only a portion of fixed costs. 4. You learned on January 28, 2018, prior to completion of the audit, of heavy damage because of a recent fire to one of Skysong's two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail. Analyze the above information to prepare a corrected balance sheet for Skysong in accordance with proper accounting and reporting principles. Prepare a description of any notes that might need to be prepared. The books are closed and adjustments to income are to be made through retained earnings. (List current assets in order of liquidity. Enter account name only and do not provide descriptive information.) Your firm has been engaged to examine the financial statements of Skysong Corporation for the year 2017. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on January 2, 2012. The client provides you with the information below. SKYSONG CORPORATION BALANCE SHEET DECEMBER 31, 2017 Assets Liabilities Current assets $1,868,000 Current kablities $949,000 Other assets 5,251,500 Long-term liabilities 1,442,000 Capital 4,728,500 87,119,500 $7,119,500 An analysis of current assets discloses the following. Cash (restricted in the amount of $304,000 for plant expansion) $564,000 Investments in land 187,000 Accounts receivable less allowance of 30,000 474,000 Inventories (LIFO flow assumption) 643,000 $1,868,000 Other assets include: Prepaid expenses $64,000 Plant and equipment less accumulated depreciation of $1,404,000 4,202,000 Cash surrender value of life insurance policy 82,000 Unamortized bond discount 40,500 Notes receivable (short-term) 160,000 Goodwill 254,000 Land 449,000 $5,251,500 Current liabilities include: Accounts payable $501,000 Notes payable (due 2020) 154,000 Estimated income taxes payable 143,000 Premium on common stock 151,000 $949,000 Long-term liabilities include Unearned revenue $496,000 Dividends payable (cash) 196,000 8% bonds payable (due May 1, 2022) 750,000 $1,442,000 Capital includes: Retained earnings $2.928,500 Common stock, par value $10; authorized 200,000 shares, 180,000 shares issued 1,800,000 $4,728,500 The supplementary information below is also provided. 1. On May 1, 2017, the corporation issued at 94.60, $750,000 of bonds to finance plant expansion. The long-term bond agreement provided for the annual payment of interest every May 1. The existing plant was pledged as security for the loan. Use the straight-line method for discount amortization. 2 The bookkeeper made the following mistakes. (a) In 2015, the ending inventory was overstated by $182,000. The ending inventories for 2016 and 2017 were correctly computed. (b) in 2017, accrued wages in the amount of $225,000 were omitted from the balance sheet, and these expenses were not charged on the income statement. (c) In 2017, a gain of $173,000 (net of tax) on the sale of certain plant assets was credited directly to retained eamings. 3. A major competitor has introduced a line of products that will compete directly with Skysong's primary line, now being produced in a specially designed new plant. Because of manufacturing innovations, the competitor's line will be of comparable quality but priced 50% below Skysong's line. The competitor announced its new line on January 14, 2018. Skysong indicates that the company will meet the lower prices that are high enough to cover variable manufacturing and selling expenses, but permit recovery of only a portion of fixed costs. 4. You learned on January 28, 2018, prior to completion of the audit, of heavy damage because of a recent fire to one of Skysong's two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail. Analyze the above information to prepare a corrected balance sheet for Skysong in accordance with proper accounting and reporting principles. Prepare a description of any notes that might need to be prepared. The books are closed and adjustments to income are to be made through retained earnings. (List current assets in order of liquidity. Enter account name only and do not provide descriptive information.) Your firm has been engaged to examine the financial statements of Skysong Corporation for the year 2017. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on January 2, 2012. The client provides you with the information below. SKYSONG CORPORATION BALANCE SHEET DECEMBER 31, 2017 Assets Liabilities Current assets $1,868,000 Current kablities $949,000 Other assets 5,251,500 Long-term liabilities 1,442,000 Capital 4,728,500 87,119,500 $7,119,500 An analysis of current assets discloses the following. Cash (restricted in the amount of $304,000 for plant expansion) $564,000 Investments in land 187,000 Accounts receivable less allowance of 30,000 474,000 Inventories (LIFO flow assumption) 643,000 $1,868,000 Other assets include: Prepaid expenses $64,000 Plant and equipment less accumulated depreciation of $1,404,000 4,202,000 Cash surrender value of life insurance policy 82,000 Unamortized bond discount 40,500 Notes receivable (short-term) 160,000 Goodwill 254,000 Land 449,000 $5,251,500 Current liabilities include: Accounts payable $501,000 Notes payable (due 2020) 154,000 Estimated income taxes payable 143,000 Premium on common stock 151,000 $949,000 Long-term liabilities include Unearned revenue $496,000 Dividends payable (cash) 196,000 8% bonds payable (due May 1, 2022) 750,000 $1,442,000 Capital includes: Retained earnings $2.928,500 Common stock, par value $10; authorized 200,000 shares, 180,000 shares issued 1,800,000 $4,728,500 The supplementary information below is also provided. 1. On May 1, 2017, the corporation issued at 94.60, $750,000 of bonds to finance plant expansion. The long-term bond agreement provided for the annual payment of interest every May 1. The existing plant was pledged as security for the loan. Use the straight-line method for discount amortization. 2 The bookkeeper made the following mistakes. (a) In 2015, the ending inventory was overstated by $182,000. The ending inventories for 2016 and 2017 were correctly computed. (b) in 2017, accrued wages in the amount of $225,000 were omitted from the balance sheet, and these expenses were not charged on the income statement. (c) In 2017, a gain of $173,000 (net of tax) on the sale of certain plant assets was credited directly to retained eamings. 3. A major competitor has introduced a line of products that will compete directly with Skysong's primary line, now being produced in a specially designed new plant. Because of manufacturing innovations, the competitor's line will be of comparable quality but priced 50% below Skysong's line. The competitor announced its new line on January 14, 2018. Skysong indicates that the company will meet the lower prices that are high enough to cover variable manufacturing and selling expenses, but permit recovery of only a portion of fixed costs. 4. You learned on January 28, 2018, prior to completion of the audit, of heavy damage because of a recent fire to one of Skysong's two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail. Analyze the above information to prepare a corrected balance sheet for Skysong in accordance with proper accounting and reporting principles. Prepare a description of any notes that might need to be prepared. The books are closed and adjustments to income are to be made through retained earnings. (List current assets in order of liquidity. Enter account name only and do not provide descriptive information.) Your firm has been engaged to examine the financial statements of Skysong Corporation for the year 2017. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on January 2, 2012. The client provides you with the information below. SKYSONG CORPORATION BALANCE SHEET DECEMBER 31, 2017 Assets Liabilities Current assets $1,868,000 Current kablities $949,000 Other assets 5,251,500 Long-term liabilities 1,442,000 Capital 4,728,500 87,119,500 $7,119,500 An analysis of current assets discloses the following. Cash (restricted in the amount of $304,000 for plant expansion) $564,000 Investments in land 187,000 Accounts receivable less allowance of 30,000 474,000 Inventories (LIFO flow assumption) 643,000 $1,868,000 Other assets include: Prepaid expenses $64,000 Plant and equipment less accumulated depreciation of $1,404,000 4,202,000 Cash surrender value of life insurance policy 82,000 Unamortized bond discount 40,500 Notes receivable (short-term) 160,000 Goodwill 254,000 Land 449,000 $5,251,500 Current liabilities include: Accounts payable $501,000 Notes payable (due 2020) 154,000 Estimated income taxes payable 143,000 Premium on common stock 151,000 $949,000 Long-term liabilities include Unearned revenue $496,000 Dividends payable (cash) 196,000 8% bonds payable (due May 1, 2022) 750,000 $1,442,000 Capital includes: Retained earnings $2.928,500 Common stock, par value $10; authorized 200,000 shares, 180,000 shares issued 1,800,000 $4,728,500 The supplementary information below is also provided. 1. On May 1, 2017, the corporation issued at 94.60, $750,000 of bonds to finance plant expansion. The long-term bond agreement provided for the annual payment of interest every May 1. The existing plant was pledged as security for the loan. Use the straight-line method for discount amortization. 2 The bookkeeper made the following mistakes. (a) In 2015, the ending inventory was overstated by $182,000. The ending inventories for 2016 and 2017 were correctly computed. (b) in 2017, accrued wages in the amount of $225,000 were omitted from the balance sheet, and these expenses were not charged on the income statement. (c) In 2017, a gain of $173,000 (net of tax) on the sale of certain plant assets was credited directly to retained eamings. 3. A major competitor has introduced a line of products that will compete directly with Skysong's primary line, now being produced in a specially designed new plant. Because of manufacturing innovations, the competitor's line will be of comparable quality but priced 50% below Skysong's line. The competitor announced its new line on January 14, 2018. Skysong indicates that the company will meet the lower prices that are high enough to cover variable manufacturing and selling expenses, but permit recovery of only a portion of fixed costs. 4. You learned on January 28, 2018, prior to completion of the audit, of heavy damage because of a recent fire to one of Skysong's two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail. Analyze the above information to prepare a corrected balance sheet for Skysong in accordance with proper accounting and reporting principles. Prepare a description of any notes that might need to be prepared. The books are closed and adjustments to income are to be made through retained earnings. (List current assets in order of liquidity. Enter account name only and do not provide descriptive information.)
Expert Answer:
Answer rating: 100% (QA)
Vaughu corporation Balaume sheet Dee 31 2017 Curreut Ass... View the full answer
Related Book For
Financial Reporting and Analysis
ISBN: 978-1259722653
7th edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
Posted Date:
Students also viewed these accounting questions
-
During Year 1, ABC Inc's ending inventory was overstated by $10,000. During Year 2, ABC Incs ending inventory was understated by $20.000. Assuming that the Year 2 books have not yet been closed, the...
-
Hitech State University issued $14,000,000 of bonds to finance construction of a new computer facility on March 25, 20X8. The contractor billed the university $3,200,000 for work completed during...
-
On January 2, 2015, Mahoney Sales issued $20,000 in bonds for $19,800. They were 5-year bonds with a stated rate of 8%, and pay semiannual interest payments. Mahoney Sales uses the straight-line...
-
All of the following companies manufacture toasters. The following costs were incurred by each company during September: Required: 1. What is the total conversion cost for Warner Co.? 2. What is the...
-
A gate in an irrigation canal is constructed in the form of a trapezoid 3 ft wide at the bottom, 5 ft wide at the top, and 2 ft high. It is placed vertically in the canal so that the water just...
-
Schultz, Inc. produces three separate products from a common process costing $100,000. Each of the products can be sold at the split-off point or can be processed further and then sold for a higher...
-
Nationwide Insurance developed a program to recruit new insurance agents by offering planning, training, and start-up financing to build self-sustaining agencies. These new agents would be...
-
Comprehensive Problem. As of July 1, 2011, the trial balance for Korner College was as follows: During the year ended June 30, 2012, the following transactions occurred: 1. Cash collections included:...
-
Define what is meant by an asset and a liability. Give an example of each.
-
A URL is a type of _________. a. Web page b. URI c. Link d. Network
-
San Remo launched a campaign called 'Make Friday Night Pasta Night' from February to July 2022. It is a multi-media campaign including video and print ads; see a print ad (over the page) from this...
-
Discussions are for the live week only no posts are accepted after the live week ends. In this class you will be analyzing numerous case studies. Researching and providing information based upon the...
-
answers for each questions below. a. After attending the live classroom, which big questions about this competency remain for you? b. How do you think this competency may connect to others in this...
-
A country's population in 1965 was 12.4 million and it was growing at 3% per year. Assume no net migration. If necessary, round answers to 2 decimal points. Show all work. (10 points total) a. In...
-
Mike Smiley spent his final year at college studying the effect of various economic factors on the economy of developing nations. Based on the results of his study, he concluded that globalization...
-
A women's outerwear brand NYC Style has been offering quality duck down jackets. The jacket has been sold at $100. However, due to increase in raw material costs and the gas price hike affecting...
-
What do the following body language cues indicate? Tapping a finger on the desk. Leaning back with arms folded across the chest Sitting in the middle of a sofa, smiling.
-
1) Predict the organicproduct formed when BzCl reacts with cyclohexanol. BzCl = benzoylchloride. 2) Provide the majororganic product of the reaction below. 3) Draw the structureof the product formed...
-
Cummings Inc. had the following reconciliation at December 31, 2017: Fair value of plan assets.......................$5,000 PBO...............................................4,200 Funded...
-
An income statement for the first year of operations for Patti Company appears below: Sales $ 390,000 Dividend revenue 39,000 Interest revenue 24,050 Cost of goods sold (208,000) Salary expense...
-
Diana Gomez Corporation, a manufacturer of cowboy boots, provided the following information from its accounting records for the year ended December 31, 2017. Inventory at December 31, 2017 (based on...
-
Visit the Suzy Lamplugh Trust website at http://www.suzylamplugh.org and the Social Research Association at http://the-sra.org.uk/sra_resources/safety-code/ . Browse the guidance leaflets/web pages...
-
Andrew, a final year part-time MBA student employed by a large Maltese market research company, read in a local newspaper that Malta (a small island state situated in the centre of the Mediterranean...
-
Maria had a problem. The research proposal for her masters research project was due. But she had no idea what to research. Sustainable tourism had been her favourite module on the programme and...
Study smarter with the SolutionInn App