The following incomplete balance sheet for the Sanderson Manufacturing Company was prepared by the company's controller. As accounting manager for Sanderson, you are attempting to reconstruct and revise the balance sheet.

Additional Information ($ in thousands):
1. Certain records that included the account balances for the patent and shareholders' equity items were lost. However, the controller told you that a complete, preliminary balance sheet prepared before the records were lost showed a debt to equity ratio of 1.2. That is, total liabilities are 120% of total shareholders' equity. Retained earnings at the beginning of the year was $4,000. Net income for 2018 was $1,560 and $560 in cash dividends were declared and paid to shareholders.
2. Management intends to sell the investments in the next six months.
3. Interest on both the note and the bonds is payable annually.
4. The note payable is due in annual installments of $1,000 each.
5. Deferred revenue will be recognized as revenue equally over the next two fiscal years.
6. The common stock represents 400,000 shares of no par stock authorized, 250,000 shares issued and outstanding.
Required:
Prepare a complete, corrected, classified balance sheet.

Transcribed Image Text:

Sanderson Manufacturing Company Balance Sheet At December 31, 2018 ($ In thousands) Assets Current assets: Cash Accounts receivable Allowance for uncollectible accounts Finished goods inventory Prepaid expenses $1,250 3,500 410 6,000 1,200 11,550 Total current assets Long-term assets: Investments Raw materials and work in process inventory Equipment Accumulated depreciation-equipment Patent 3,000 2,250 15,000 (4,200) Total assets Liabliities and Shareholders' Equity Current liabilities Accounts payable Note payable Interest payable-note Deferred revenue $ 5,200 4,000 10313 3,000 12,300 Total current liabilities Bonds payable Interest payable-bonds Common stock Retained earnings Long-term liabilities: 5,500 200 Shareholders' equity Total liabilities and shareholders' equity