FINANCIAL ACCOUNTING>IC<
15th Edition
ISBN: 9781119344988
Author: Kimmel
Publisher: WILEY C
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Chapter 2, Problem 2.5E
To determine
Classified
To prepare: Classified balance sheet for Corporation L as at December 31, 2017
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These items are taken from the financial statements of Oliver Co. at December 31, 2018.
Buildings
$105,800
Accounts receivable
12,600
Prepaid insurance
3,200
Cash
11,900
Equipment
82,400
Land
61,200
Insurance expense
780
Depreciation expense
5,300
Interest expense
2,600
Common stock
60,000
Retained earnings (January 1, 2017)
40,000
Accumulated depreciation—buildings
45,700
Accounts payable
9,380
Notes payable
93,600
Accumulated depreciation—equipment
18,800
Interest payable
3,600
Service revenue
14,700
Instructions
Prepare a classified balance sheet. Assume that $12,600 of the note payable will be paid in 2019.OLIVER COMPANY
Sage Hill Inc. had the following balance sheet at December 31, 2016.
SAGE HILL INC.BALANCE SHEETDECEMBER 31, 2016
Cash
$9,600
Accounts payable
$14,500
Accounts receivable
14,000
Bonds payable
8,800
Investments
15,500
Common stock
36,900
Plant assets (net)
35,500
Retained earnings
32,300
Land
17,900
$92,500
$92,500
During 2017, the following occurred.
1.
Net income was $23,700.
2.
Depreciation expense was $8,100.
3.
Sage Hill liquidated its investment portfolio (comprised of available-for-sale investments), realizing a $3,200 loss.
4.
Sage Hill issued $20,800 of common stock at par.
5.
Dividends of $8,200 were declared and paid to stockholders.
6.
Accounts receivable and accounts payable at December 31, 2017 were $15,800 and $13,900, respectively.
7.
Sage Hill obtained $8,200in plant assets in exchange for issuing bonds.
8.
Sage Hill purchased additional plant assets for $17,900.
9.…
The following balances were taken from the books of Schimank Corp. on December 31, 2014.
Interest revenue $1,20,400 Accumulated depreciation-equipment $56,000
Cash 71,400 Accumulated depreciation-building 39,200
Sales 19,32,000 Notes receivable 2,17,000
Accounts receivable 2,10,000 Selling expenses 2,71,600
Prepaid insurance 28,000 Accounts payable 2,38,000
Sales returns and allowances 2,10,000 Bonds payable 1,40,000
Allowance for doubtful accounts 9,800 Administrative and general expenses 1,35,800
Sales discounts 63,000 Accrued liabilities 44,800
Land 1,40,000 Interest expense 84,000
Equipment 2,80,000 Notes payable 1,40,000
Building 1,96,000 Loss from earthquake damage (extraordinary item) 2,10,000
Cost of goods sold 8,69,400 Common stock 7,00,000
Retained earnings 29,400
Assume the total effective tax rate on all items is 34%.
Prepare a multiple-step income statement; 100,000 shares of common stock were outstanding during the year.
Chapter 2 Solutions
FINANCIAL ACCOUNTING>IC<
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- The comparative balance sheet of Prime Sports Gear, Inc., at December 31, the end of the fiscal year, is as follows: Additional data obtained from the records of Prime Sports Gear are as follows: a. Net income for 2013 was 121,610. b. Depreciation reported on income statement for 2013 was 46,500. c. Purchased 165,000 of new equipment, putting 90,000 cash down and issuing 75,000 of bonds for the balance. d. Old equipment originally costing 19,500, with accumulated depreciation of 7,950, was sold for 8,000. e. Retired 60,000 of bonds. f. Declared cash dividends of 64,000. g. Issued 1,500 shares of common stock at 27 cash per share. Open the file CASHFLOW from the website for this book at cengagebrain.com. First, enter the formulas. Then, complete the worksheet in the manner described next. According to the problem, cash increased from 39,600 to 67,210 during the year. This is a 27,610 increase. To record this increase on the worksheet, move to row 17. Since this is the first account you are analyzing, enter the letter a in column C. Then enter 27610 in column D (a debit since cash increased). This brings the year-end balance (column G) to 67,210, its proper balance. Now move to the bottom part of the statement where you see the categories Operating Activities, Investing Activities, and so on. The credit side of the entry has to be entered here. The proper space for this cash entry is on row 59. Enter the letter a in cell E59 and 27610 in cell F59. Notice the totals at the bottom of the page (row 60) now agree. The next account balance that changed is accounts receivable. It increased by 9,035. To enter this change on the worksheet, enter the letter b in cell C18 and 9035 in cell D18 (again, a debit since accounts receivable increased). This brings the year-end balance in column G to 121,250, its proper balance. The change in accounts receivable balance is an operating activity adjustment (as explained in your textbook). Enter the credit side of this entry in cells E34 and F34, and enter the explanation Increase in accounts receivable in cell A34. Note: Your textbook probably shows Net income as the first item under Operating Activities. We will get to that later. The sequence in which you enter items on this worksheet is not important. All other balance sheet accounts must be analyzed in the same manner, placing appropriate debit or credit entries in the top part of the worksheet to obtain the proper balances in column G, and then entering the second side of the entry in the appropriate row on the bottom part of the worksheet. You should use letter references to identify all entries. Also, you must enter a description of the entry in column A under the appropriate activity category. Although a sequence of analyzing the balance sheet from top to bottom is suggested here, this order is not necessary. As mentioned earlier, your textbook may specify a different sequence. Also, note that some accounts may have both debit and credit adjustments to them. The worksheet is not a substitute for a statement of cash flows, but it does provide you with all the numbers you need to properly prepare one. You will be done with your analysis when: a. The individual account balances at December 31, 2013, as shown on the worksheet (column G) equal those shown in the given problem data. b. The transaction column totals are equal (cells D60 and F60). c. The sum of the operating, investing, and financing activities (cell G59) equals the change in cash (cell D59 or F59). When you are finished, enter your name in cell A1. Save your completed file as CASHFLOW2. Print the worksheet when done. Also print your formulas. Check figure: Total credits at 12/31/2013 (cell G31), 860,460.arrow_forwardThe comparative balance sheet of Prime Sports Gear, Inc., at December 31, the end of the fiscal year, is as follows: Additional data obtained from the records of Prime Sports Gear are as follows: a. Net income for 2013 was 121,610. b. Depreciation reported on income statement for 2013 was 46,500. c. Purchased 165,000 of new equipment, putting 90,000 cash down and issuing 75,000 of bonds for the balance. d. Old equipment originally costing 19,500, with accumulated depreciation of 7,950, was sold for 8,000. e. Retired 60,000 of bonds. f. Declared cash dividends of 64,000. g. Issued 1,500 shares of common stock at 27 cash per share. You have been asked to prepare a statement of cash flows for Prime Sports Gear for 2013. Review the worksheet called CASHFLOW that has been provided to assist you in preparing the statement. 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(List Property, plant and equipment in order of land, buildings and equipment. List Current Assets in order of liquidity.)arrow_forward
- These items are taken from the financial statements of Rainey Company at December 31, 2021. Buildings $95,800 Accounts receivable 15,600 Prepaid insurance 4,680 Cash 18,840 Equipment 79,400 Land 61,200 Insurance expense 780 Depreciation expense 7,300 Interest expense 2,600 Common stock 57,000 Retained earnings (January 1, 2019) 40,000 Accumulated depreciation—buildings 45,600 Accounts payable 15,500 Mortgage payable 88,600 Accumulated depreciation—equipment 18,720 Interest payable 3,600 Service revenue 17,180 Instructions Prepare a classified balance sheet. Assume that $13,600 of the mortgage payable will be paid in 2022.arrow_forwardThe following information is taken from French Corporation’s financial statements: December 31 2018 2017 Cash $63,000 $ 27,000 Accounts receivable 102,000 80,000 Allowance for doubtful accounts (4,500) (3,100) Inventory 160,000 175,000 Prepaid expenses 7,500…arrow_forwardGiven below are the balances taken from Amber’s ledger accounts on 31st December 2017. £ Fittings 10,950 Accumulated depreciation – fittings at 01/01/2017 3,750 Buildings 45,000 Accumulated depreciation – buildings at 01/01/2017 9,000 Inventory at 01/01/2017 22,500 Trade receivables 15,000 Allowance for doubtful debts 01/01/2017 1,200 Cash in hand 75 Cash at bank 1,875 Trade payables 27,000 Capital 28,575 Drawings 7,125 Purchases 120,000 Revenue 180,000 Wages 18,000 Advertising 300 Rates 6,000 Bank charges 2,700 The following information is also available: i. The value of inventory as at 31st December 2017 was £31,500 ii. Fittings are to be depreciated at 12% on reducing balance basis and buildings have a 40-year life and depreciated at cost. iii. Of the rates payments, £540 is for the next accounting period iv. Amber has just been notified that a debt of £850 is irrecoverable. As the economy is in recession it is expected that debtors may struggle to pay so an additional allowance of…arrow_forward
- These items are taken from the financial statements of Oriole Co. at December 31, 2022. Buildings$116,380 Accounts receivable 13,860 Prepaid insurance 3,520 Cash 13,024 Equipment 90,640 Land 67,320 Insurance expense 858 Depreciation expense5,830 Interest expense 2,860 Common stock 66,000 Retained earnings (January 1, 2022) 44,000 Accumulated depreciation—buildings 50,160 Accounts payable 10,450 Notes payable 102,960 Accumulated depreciation—equipment 20,592 Interest payable 3,960 Service revenue 16,170 Prepare a classified balance sheet. Assume that $14,960 of the note payable will be paid in 2023. (List Current Assets in order of liquidity. List Property, Plant and Equipment in order of Land, Buildings and Equipment.)arrow_forwardOn December 31, 2018, the balances of the accounts appearing in the ledger of Wyman Company are as follows: Cash $13,500 Accounts receivable 72,000 Inventory, January 1, 2018 257,000 Estimated returns inventory, January 1, 2018 35,000 Office supplies 3,000 Prepaid insurance 4,500 Land 150,000 Store equipment 270,000 Accumulated depreciation-store equipment 55,900 Office equipment 78,500 Accumulated depreciation-office equipment 16,000 Accounts payable 77,800 Salaries payable 3,000 Customer refunds payable 50,000 Unearned rent 8,300 Notes payable 50,000 Common stock 150,000 Retained earnings 365,600 Dividends 25,000 Sales 3,280,000 Purchases 2,650,000 Purchases returns and allowances 93,000 Purchases discounts 37,000 Freight in 48,000 Sales salaries expense 300,000 Advertising expense 45,000 Delivery expense 9,000 Depreciation expense-store equipment 6,000 Miscellaneous selling expense 12,000 Office salaries expense 175,000…arrow_forwardOn December 31, 2018, the balances of the accounts appearing in the ledger of Wyman Company are as follows: Cash $13,500 Accounts receivable 72,000 Inventory, January 1, 2018 257,000 Estimated returns inventory, January 1, 2018 35,000 Office supplies 3,000 Prepaid insurance 4,500 Land 150,000 Store equipment 270,000 Accumulated depreciation-store equipment 55,900 Office equipment 78,500 Accumulated depreciation-office equipment 16,000 Accounts payable 77,800 Salaries payable 3,000 Customer refunds payable 50,000 Unearned rent 8,300 Notes payable 50,000 Common stock 150,000 Retained earnings 365,600 Dividends 25,000 Sales 3,280,000 Purchases 2,650,000 Purchases returns and allowances 93,000 Purchases discounts 37,000 Freight in 48,000 Sales salaries expense 300,000 Advertising expense 45,000 Delivery expense 9,000 Depreciation expense-store equipment 6,000 Miscellaneous selling expense 12,000 Office salaries expense 175,000…arrow_forward
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