Balance sheet : This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders ’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the components of balance sheet are assets, liabilities and shareholders’ equity. To prepare : Balance sheet of the MLM Company for the year ended December 31, 2016.

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3.10P

To determine

Balance sheet:

This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the components of balance sheet are assets, liabilities and shareholders’ equity.

To prepare: Balance sheet of the MLM Company for the year ended December 31, 2016.

Expert Solution & Answer

Explanation of Solution

Prepare a balance sheet of MLM Company for the year ended December 31, 2016.

MLM Company
Balance sheet
For the year ended December 31, 2016
	Amount (in $)	Amount (in $)
Assets:
Current assets:
Cash (1)	167,000
Inventories	100,000
Prepaid rent	3,000
Total current assets:		576,000
Property, plant and equipment:
Equipment and furniture	40,000
Less: accumulated depreciation	4,000
Net property , plant and equipment:		36,000
Total assets		306,000
Liabilities and shareholder's equity
Current liabilities:
Accounts payable (2)	21,000
Interest payable (3)	9,000
Loan payable (4)	100,000
Total current liabilities		130,000
Long term liabilities

Shareholders' equity
Common stock (5)	100,000
Retained earnings (6)	76,000
Total shareholders' equity		176,000
Total liabilities and shareholders’ equity		306,000

Table (1)

Working notes:

1. Compute cash balance as on December 31, 2016.

Cash Balance = (Total Cash Receipts - Total Cash Disbursments) = (($360,000 + 100,000 + 100,000) −($300,000 + 15,000 + 30,000 + 5,000 + 3,000 + 40,000)) = $560,000 − $393,000 = $167,000

2. Compute accounts payable for the year ended December 31, 2016.

Accounts Payables = (Suppliers + Utility Company) = $20,000 + $1,000 = $21,000

3. Compute interest payable

Interest Payable = Loan Amount × Interest Rate × (Number of months ÷ 12) = $100,000× 12% × 912 = $9,000

4. The bank loan repayable on 31 March 2017, which means loan repayable within the accounting year. Hence, bank loan is reported as current liability.

5. 100,000 shares of no par common stock are authorized, of which 20,000 shares were issued and are outstanding. Thus, 20,000 shares are issued for $100,000.

6. Net income for the year was $76,000

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Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3.10P

To determine

Balance sheet:

This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the components of balance sheet are assets, liabilities and shareholders’ equity.

To prepare: Balance sheet of the MLM Company for the year ended December 31, 2016.

Expert Solution & Answer

Explanation of Solution

Prepare a balance sheet of MLM Company for the year ended December 31, 2016.

MLM Company
Balance sheet
For the year ended December 31, 2016
	Amount (in $)	Amount (in $)
Assets:
Current assets:
Cash (1)	167,000
Inventories	100,000
Prepaid rent	3,000
Total current assets:		576,000
Property, plant and equipment:
Equipment and furniture	40,000
Less: accumulated depreciation	4,000
Net property , plant and equipment:		36,000
Total assets		306,000
Liabilities and shareholder's equity
Current liabilities:
Accounts payable (2)	21,000
Interest payable (3)	9,000
Loan payable (4)	100,000
Total current liabilities		130,000
Long term liabilities

Shareholders' equity
Common stock (5)	100,000
Retained earnings (6)	76,000
Total shareholders' equity		176,000
Total liabilities and shareholders’ equity		306,000

Table (1)

Working notes:

1. Compute cash balance as on December 31, 2016.

Cash Balance = (Total Cash Receipts - Total Cash Disbursments) = (($360,000 + 100,000 + 100,000) −($300,000 + 15,000 + 30,000 + 5,000 + 3,000 + 40,000)) = $560,000 − $393,000 = $167,000

2. Compute accounts payable for the year ended December 31, 2016.

Accounts Payables = (Suppliers + Utility Company) = $20,000 + $1,000 = $21,000

3. Compute interest payable

Interest Payable = Loan Amount × Interest Rate × (Number of months ÷ 12) = $100,000× 12% × 912 = $9,000

4. The bank loan repayable on 31 March 2017, which means loan repayable within the accounting year. Hence, bank loan is reported as current liability.

5. 100,000 shares of no par common stock are authorized, of which 20,000 shares were issued and are outstanding. Thus, 20,000 shares are issued for $100,000.

6. Net income for the year was $76,000

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3.10P

To determine

Balance sheet:

This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the components of balance sheet are assets, liabilities and shareholders’ equity.

To prepare: Balance sheet of the MLM Company for the year ended December 31, 2016.

Expert Solution & Answer

Explanation of Solution

Prepare a balance sheet of MLM Company for the year ended December 31, 2016.

MLM Company
Balance sheet
For the year ended December 31, 2016
	Amount (in $)	Amount (in $)
Assets:
Current assets:
Cash (1)	167,000
Inventories	100,000
Prepaid rent	3,000
Total current assets:		576,000
Property, plant and equipment:
Equipment and furniture	40,000
Less: accumulated depreciation	4,000
Net property , plant and equipment:		36,000
Total assets		306,000
Liabilities and shareholder's equity
Current liabilities:
Accounts payable (2)	21,000
Interest payable (3)	9,000
Loan payable (4)	100,000
Total current liabilities		130,000
Long term liabilities

Shareholders' equity
Common stock (5)	100,000
Retained earnings (6)	76,000
Total shareholders' equity		176,000
Total liabilities and shareholders’ equity		306,000

Table (1)

Working notes:

1. Compute cash balance as on December 31, 2016.

Cash Balance = (Total Cash Receipts - Total Cash Disbursments) = (($360,000 + 100,000 + 100,000) −($300,000 + 15,000 + 30,000 + 5,000 + 3,000 + 40,000)) = $560,000 − $393,000 = $167,000

2. Compute accounts payable for the year ended December 31, 2016.

Accounts Payables = (Suppliers + Utility Company) = $20,000 + $1,000 = $21,000

3. Compute interest payable

Interest Payable = Loan Amount × Interest Rate × (Number of months ÷ 12) = $100,000× 12% × 912 = $9,000

4. The bank loan repayable on 31 March 2017, which means loan repayable within the accounting year. Hence, bank loan is reported as current liability.

5. 100,000 shares of no par common stock are authorized, of which 20,000 shares were issued and are outstanding. Thus, 20,000 shares are issued for $100,000.

6. Net income for the year was $76,000

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3.10P

To determine

Balance sheet:

This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the components of balance sheet are assets, liabilities and shareholders’ equity.

To prepare: Balance sheet of the MLM Company for the year ended December 31, 2016.

Expert Solution & Answer

Explanation of Solution

Prepare a balance sheet of MLM Company for the year ended December 31, 2016.

MLM Company
Balance sheet
For the year ended December 31, 2016
	Amount (in $)	Amount (in $)
Assets:
Current assets:
Cash (1)	167,000
Inventories	100,000
Prepaid rent	3,000
Total current assets:		576,000
Property, plant and equipment:
Equipment and furniture	40,000
Less: accumulated depreciation	4,000
Net property , plant and equipment:		36,000
Total assets		306,000
Liabilities and shareholder's equity
Current liabilities:
Accounts payable (2)	21,000
Interest payable (3)	9,000
Loan payable (4)	100,000
Total current liabilities		130,000
Long term liabilities

Shareholders' equity
Common stock (5)	100,000
Retained earnings (6)	76,000
Total shareholders' equity		176,000
Total liabilities and shareholders’ equity		306,000

Table (1)

Working notes:

1. Compute cash balance as on December 31, 2016.

Cash Balance = (Total Cash Receipts - Total Cash Disbursments) = (($360,000 + 100,000 + 100,000) −($300,000 + 15,000 + 30,000 + 5,000 + 3,000 + 40,000)) = $560,000 − $393,000 = $167,000

2. Compute accounts payable for the year ended December 31, 2016.

Accounts Payables = (Suppliers + Utility Company) = $20,000 + $1,000 = $21,000

3. Compute interest payable

Interest Payable = Loan Amount × Interest Rate × (Number of months ÷ 12) = $100,000× 12% × 912 = $9,000

4. The bank loan repayable on 31 March 2017, which means loan repayable within the accounting year. Hence, bank loan is reported as current liability.

5. 100,000 shares of no par common stock are authorized, of which 20,000 shares were issued and are outstanding. Thus, 20,000 shares are issued for $100,000.

6. Net income for the year was $76,000

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Answer 5

Chapter 3, Problem 3.10P

To determine

Balance sheet:

This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the components of balance sheet are assets, liabilities and shareholders’ equity.

To prepare: Balance sheet of the MLM Company for the year ended December 31, 2016.

Expert Solution & Answer

Explanation of Solution

Prepare a balance sheet of MLM Company for the year ended December 31, 2016.

MLM Company
Balance sheet
For the year ended December 31, 2016
	Amount (in $)	Amount (in $)
Assets:
Current assets:
Cash (1)	167,000
Inventories	100,000
Prepaid rent	3,000
Total current assets:		576,000
Property, plant and equipment:
Equipment and furniture	40,000
Less: accumulated depreciation	4,000
Net property , plant and equipment:		36,000
Total assets		306,000
Liabilities and shareholder's equity
Current liabilities:
Accounts payable (2)	21,000
Interest payable (3)	9,000
Loan payable (4)	100,000
Total current liabilities		130,000
Long term liabilities

Shareholders' equity
Common stock (5)	100,000
Retained earnings (6)	76,000
Total shareholders' equity		176,000
Total liabilities and shareholders’ equity		306,000

Table (1)

Working notes:

1. Compute cash balance as on December 31, 2016.

Cash Balance = (Total Cash Receipts - Total Cash Disbursments) = (($360,000 + 100,000 + 100,000) −($300,000 + 15,000 + 30,000 + 5,000 + 3,000 + 40,000)) = $560,000 − $393,000 = $167,000

2. Compute accounts payable for the year ended December 31, 2016.

Accounts Payables = (Suppliers + Utility Company) = $20,000 + $1,000 = $21,000

3. Compute interest payable

Interest Payable = Loan Amount × Interest Rate × (Number of months ÷ 12) = $100,000× 12% × 912 = $9,000

4. The bank loan repayable on 31 March 2017, which means loan repayable within the accounting year. Hence, bank loan is reported as current liability.

5. 100,000 shares of no par common stock are authorized, of which 20,000 shares were issued and are outstanding. Thus, 20,000 shares are issued for $100,000.

6. Net income for the year was $76,000

Answer 6

Chapter 3, Problem 3.10P

To determine

Balance sheet:

This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the components of balance sheet are assets, liabilities and shareholders’ equity.

To prepare: Balance sheet of the MLM Company for the year ended December 31, 2016.

Expert Solution & Answer

Explanation of Solution

Prepare a balance sheet of MLM Company for the year ended December 31, 2016.

MLM Company
Balance sheet
For the year ended December 31, 2016
	Amount (in $)	Amount (in $)
Assets:
Current assets:
Cash (1)	167,000
Inventories	100,000
Prepaid rent	3,000
Total current assets:		576,000
Property, plant and equipment:
Equipment and furniture	40,000
Less: accumulated depreciation	4,000
Net property , plant and equipment:		36,000
Total assets		306,000
Liabilities and shareholder's equity
Current liabilities:
Accounts payable (2)	21,000
Interest payable (3)	9,000
Loan payable (4)	100,000
Total current liabilities		130,000
Long term liabilities

Shareholders' equity
Common stock (5)	100,000
Retained earnings (6)	76,000
Total shareholders' equity		176,000
Total liabilities and shareholders’ equity		306,000

Table (1)

Working notes:

1. Compute cash balance as on December 31, 2016.

Cash Balance = (Total Cash Receipts - Total Cash Disbursments) = (($360,000 + 100,000 + 100,000) −($300,000 + 15,000 + 30,000 + 5,000 + 3,000 + 40,000)) = $560,000 − $393,000 = $167,000

2. Compute accounts payable for the year ended December 31, 2016.

Accounts Payables = (Suppliers + Utility Company) = $20,000 + $1,000 = $21,000

3. Compute interest payable

Interest Payable = Loan Amount × Interest Rate × (Number of months ÷ 12) = $100,000× 12% × 912 = $9,000

4. The bank loan repayable on 31 March 2017, which means loan repayable within the accounting year. Hence, bank loan is reported as current liability.

5. 100,000 shares of no par common stock are authorized, of which 20,000 shares were issued and are outstanding. Thus, 20,000 shares are issued for $100,000.

6. Net income for the year was $76,000

Answer 7

Chapter 3, Problem 3.10P

To determine

Balance sheet:

This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the components of balance sheet are assets, liabilities and shareholders’ equity.

To prepare: Balance sheet of the MLM Company for the year ended December 31, 2016.

Answer 8

Expert Solution & Answer

Explanation of Solution

Prepare a balance sheet of MLM Company for the year ended December 31, 2016.

MLM Company
Balance sheet
For the year ended December 31, 2016
	Amount (in $)	Amount (in $)
Assets:
Current assets:
Cash (1)	167,000
Inventories	100,000
Prepaid rent	3,000
Total current assets:		576,000
Property, plant and equipment:
Equipment and furniture	40,000
Less: accumulated depreciation	4,000
Net property , plant and equipment:		36,000
Total assets		306,000
Liabilities and shareholder's equity
Current liabilities:
Accounts payable (2)	21,000
Interest payable (3)	9,000
Loan payable (4)	100,000
Total current liabilities		130,000
Long term liabilities

Shareholders' equity
Common stock (5)	100,000
Retained earnings (6)	76,000
Total shareholders' equity		176,000
Total liabilities and shareholders’ equity		306,000

Table (1)

Working notes:

1. Compute cash balance as on December 31, 2016.

Cash Balance = (Total Cash Receipts - Total Cash Disbursments) = (($360,000 + 100,000 + 100,000) −($300,000 + 15,000 + 30,000 + 5,000 + 3,000 + 40,000)) = $560,000 − $393,000 = $167,000

2. Compute accounts payable for the year ended December 31, 2016.

Accounts Payables = (Suppliers + Utility Company) = $20,000 + $1,000 = $21,000

3. Compute interest payable

Interest Payable = Loan Amount × Interest Rate × (Number of months ÷ 12) = $100,000× 12% × 912 = $9,000

4. The bank loan repayable on 31 March 2017, which means loan repayable within the accounting year. Hence, bank loan is reported as current liability.

5. 100,000 shares of no par common stock are authorized, of which 20,000 shares were issued and are outstanding. Thus, 20,000 shares are issued for $100,000.