   Chapter 15.I, Problem 35RE ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# a. Use the following financial information to prepare a balance sheet with vertical analysis as of June 30, 2015, for Stargate Industries. Inc.: cash. $44,300; accounts receivable.$127,600; merchandise inventory. $88,100; prepaid maintenance.$4,100; office supplies. $4,000; land.$154,000; building. $237,000; fixtures.$21,400; vehicles. $64,000; computers,$13,000; goodwill, $20,000; investments.$32,000; accounts payable. $55,700; salaries payable.$23,200; notes payable (6-month). $38,000; mortgage payable.$91,300; debenture bonds. $165,000; common stock.$350,000; and retained earnings. $86,300.Stargate Industries. Inc.Balance SheetJune 30, 2015b. The following financial information is for Stargate Industries as of June 30, 2016: cash.$40,200; accounts receivable. $131,400; merchandise inventory.$92,200; prepaid maintenance. $3,700; office supplies.$6,200; land. $154,000; building.$231,700; futures. $23,900; vehicles;$55,100; computers. $16,800; goodwill.$22,000; investments. $36,400; accounts payable.$51,800; salaries payable. $25,100; notes payable (6-month).$19,000; mortgage payable. $88,900; debenture bonds.$165,000; common stock. $350,000; and retained earnings.$113,800.Prepare a comparative balance sheet with horizontal analysis for 2015 and 2016.Stargate Industries. Inc.Comparative Balance SheetJune 30, 2015 and 2016

(a)

To determine

To calculate: The balance sheet with vertical analysis as of June 30, 2015 of Stargate industries, Inc. which has cash of $44,300, accounts receivables of$127,600, merchandise inventory of $88,100, prepaid maintenance of$4,100, office supplies of $4,000, land of$154,000, building of $237,000, fixtures of$21,400, vehicles of $64,000, computers of$13,000, goodwill of $20,000, investments of$32,000, accounts payable of $55,700, salaries payable of$23,200, notes payable of $38,000, mortgage payable of$91,300, debenture bonds of $165,000, common stock of$350,000, retained earnings of $86,300. Explanation Given Information: Stargate industries, Inc. which has cash of$44,300, accounts receivables of $127,600, merchandise inventory of$88,100, prepaid maintenance of $4,100, office supplies of$4,000, land of $154,000, building of$237,000, fixtures of $21,400, vehicles of$64,000, computers of $13,000, goodwill of$20,000, investments of $32,000, accounts payable of$55,700, salaries payable of $23,200, notes payable of$38,000, mortgage payable of $91,300, debenture bonds of$165,000, common stock of $350,000, retained earnings of$86,300.

Formula used:

The formula to compute the owner’s equity is,

Owner's equity=(Current assets+Property, plant and equipment+investment+other assets)(Current liabilities+Long term liabilities)

Follow the steps to prepare a balance sheet

Step 1: At the top of the page, write the name of the company, type of sheet and date of preparation

Step 2: Prepare a section labeled as Assets and list three heads as all Current Assets, Property, Plant and Equipment and Investments and Other Assets.

Step 3: Add the above three heads to obtain the Total Assets.

Step 4: Double underline Total Assets.

Step 5: Name a section as Liabilities and Owner’s Equity and make two sub-heads as Current Liabilities and Long-Term Liabilities.

Step 6: Sum the two heads of liabilities to obtain the Total Liabilities.

Step 7: Total the Owner’s or Stockholder’s Equity.

Step 8: Add the Total Liabilities and Owner’s Equity

Step 9: Double underline Total Liabilities and Owner’s Equity.

Calculation:

Consider the provided infor4mation,

Compute Total Current Assets by adding all the current assets:

Total Current Assets=Cash+Accounts receivables+Merchandise inventory+Prepaid maintenance+Supplies=$44,300+$127,600+$88,100+$4,100+$4,000=$268,100

Compute total of Property, Plant and Equipment by adding all Property, Plant and Equipment

Total of Property, Plant and Equipment=Land+Building+Fixtures+Vehicles+Computers+Goodwill+Investments=$154,000+$237,000+$21,400+$64,000+$13,000+$20,000+$32,000=$545,800

Compute Total Assets by adding the current assets and property, plant and equipment.

Total Assets=Total Current Assets+Total of Property, Plant and Equipment=$268,100+$545,800=$813,900 Compute Total Current Liabilities by adding all current liabilities. Total Current Liabilities=Accounts payable+Salaries payable+Notes payable+Mortgage payable=$55,700+$23,200+$38,000+$91,300=$208,200

Compute Total Liabilities by adding total current liabilities to total long-term liabilities

(b)

To determine

To calculate: The comparative balance sheet with horizontal analysis of Stargate industries, Inc. which has cash of $40,200, accounts receivables of$131,400, merchandise inventory of $92,200, prepaid maintenance of$3,700, office supplies of $6,200, land of$154,000, building of $231,700, fixtures of$23,900, vehicles of $55,100, computers of$16,800, goodwill of $22,000, investments of$36,400, accounts payable of $51,800, salaries payable of$25,100, notes payable of $19,000, mortgage payable of$88,900, debenture bonds of $165,000, common stock of$350,000, retained earnings of \$113,800.

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