Chapter 4, Problem 5P

To determine

Fill in the blanks labeled (a) through (p).

Explanation of Solution

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 main elements of the balance sheet are assets, liabilities, and stockholders’ equity.

Fill the missing information:

Company C
Balance Sheet
December 31
Particulars	2016	2017
Current assets	(1)(d)$35,200	$39,800
Long-term investments	$40,100	(8)(o)$42,300
Property, plant, and equipment (net)	(2)(h) $153,000	$180,000
Less: Accumulated depreciation	($37,500)	($48,600)
Intangible assets	$19,100	$18,600
Total assets	(e)$209,900	(m)$232,100
Current liabilities	(3)(g)$17,300	(9)(p)$20,000
Long-term liabilities	(4)(a)$34,600	$33,100
Total liabilities	$51,900	(10)(j)$53,100
Common stock, $10 par	(5)(b)$29,000	(11)(i)$30,000
Additional paid-in capital	(6)(f)$37,700	(12)(n)$39,200
Total contributed capital	$66,700	(13)(l)$69,200
Retained earnings	$83,300	(14)(k)$100,900
Accumulated other comprehensive income	$8,000	$8,900
Total shareholders’ equity	(7)(c)$158,000	$179,000
Total liabilities and shareholders’ equity	$209,900	$232,100

Table (1)

Note:

The amount of total assets for missing information (e) for the year 2016 and (m) for the year 2017 is same as the amount of total liabilities and shareholders’ equity for the year 2016 ($209,900) and year 2017 ($232,100) since, total assets equals total of liabilities and shareholders’ equity.

Working notes:

Year 2016:

(1) Calculate the amount of current assets:

$\begin{array}{c}\text{Current}\text{Assets}\text{=}\text{Current}\text{liabilities}\text{+Working}\text{capital}\\ \text{=}\text{\$17,300}+\text{\$17,900}\\ \text{=\$35,200}\end{array}$

(2) Calculate the amount of property, plant and equipment:

$\begin{array}{c}\text{Property,}\text{plant}\text{and}\text{equipment}\text{=}\left(\begin{array}{l}\text{Total}\text{assets}-\text{Current}\text{assets}-\text{Long-term}\text{investments}-\\ \text{Intangible}\text{assets}\text{+Accumulated depreciation}\end{array}\right)\\ \text{=}\text{\$209,900}-\text{\$35,200}-\text{\$40,100}-\text{\$19,100}\text{+}\text{\$37,500}\\ \text{=\$153,300}\end{array}$

(3) Calculate the amount of current liabilities:

$\begin{array}{c}\text{Current}\text{liability (x)}\text{=}\text{Total liabiltiy}-\text{Long-term}\text{liability}\text{(2x)}\\ \text{x}\text{=}\text{\$51,900}-\text{2x}\\ \text{\$51,900}\text{=}-\text{2x}-\text{x}\\ \text{\$51,900}\text{= -3x}\end{array}$

$\begin{array}{c}\text{Current}\text{liability}\text{(x)}\text{=}\frac{-\text{\$51,900}}{-\text{3}}\\ =\frac{\text{\$51,900}}{\text{3}}\\ \text{=}\text{\$17,300}\end{array}$

(4) Calculate the amount of long-term liabilities:

$\begin{array}{c}\text{Long-term}\text{liabilities}\text{=}\text{Current}\text{liabilities}\text{×}\text{2x}\\ \text{=}\text{\$17,300}\text{(3)}\text{×}\text{2x}\\ \text{x=}\text{\$34,600}\end{array}$

(5) Calculate the amount of common stock:

$\begin{array}{c}\text{Coomon}\text{stock=}\text{Number}\text{of}\text{shares}\text{outstanding}\text{×}\text{Par}\text{value}\text{of}\text{stock}\\ \text{=}\text{2,900}\text{shares}\text{×}\text{\$10}\\ \text{=\$29,000}\end{array}$

(6) Calculate the amount of additional paid-in capital:

$\begin{array}{c}\text{Additonalpaid-in}\text{capital}\text{=}\text{Total}\text{contributed}\text{capital}-\text{Commons}\text{stock}\\ \text{=}\text{\$66,700}-\text{\$29,000}\text{(5)}\\ \text{=\$37,700}\end{array}$

(7) Calculate the amount of total shareholders’ equity:

$\begin{array}{c}\text{Total}\text{shareholders'}\text{equity}\text{=}\left(\begin{array}{l}\text{Common}\text{stock}\text{+}\text{Additional}\text{paid-in}\text{capital}\text{+}\\ \text{Retained}\text{earnings}\text{+}\text{Accumulated}\text{other}\\ \text{comprehensive}\text{income}\end{array}\right)\\ \text{=\$29,000}\text{+}\text{\$37,700}\text{(6)}\text{+\$83,300}\text{+}\text{\$8,000}\\ \text{=\$158,000}\end{array}$

Year 2017:

(8) Calculate the amount of long-term investments:

$\begin{array}{c}\text{Long-term}\text{investments}\text{=}\left(\begin{array}{l}\text{Total}\text{assets}-\text{Current}\text{assets}-\text{property,plant}\\ \text{and}\text{equipments}-\text{Intangible}\text{assets+Accumulated depreciation}\end{array}\right)\\ \text{=\$232,100}-\text{\$39,800}-\text{\$180,000}-\text{\$18,600}+\$48,600\\ \text{=\$42,300}\end{array}$

(9) Calculate the amount of current liabilities:

$\begin{array}{c}\text{Current}\text{liabilities}\text{=}\text{Current}\text{assets}-\text{Working}\text{capital}\\ \text{=}\text{\$39,800}-\text{\$19,800}\\ \text{=\$20,000}\end{array}$

(10) Calculate the amount of total liabilities:

$\begin{array}{c}\text{Total}\text{liabilities}\text{=}\text{Current}\text{liabilities+long-term liabilities}\\ \text{=}\text{\$20,000}\text{(9)+\$33,100}\\ \text{=\$53,100}\end{array}$

(11) Calculate the amount of common stock:

$\begin{array}{c}\text{Coomon}\text{stock=}\left[\begin{array}{l}\left(\text{Number}\text{of}\text{shares}\text{outstanding}\text{+}\text{Additional}\text{shares}\text{issued}\right)\\ \text{×}\text{Par}\text{value}\text{of}\text{stock}\end{array}\right]\\ \text{=}\left(\text{2,900}\text{shares}\text{+100 shares}\right)\text{×}\text{\$10}\\ \text{=\$3,000}\text{shares}\times \text{10}\\ \text{=}\text{\$30,000}\end{array}$

(12) Calculate the amount of additional paid-in capital:

$\begin{array}{c}\text{Additonal}\text{paid-in}\text{capital}\text{=}\left(\begin{array}{l}\text{Additonal}\text{paid}\text{-in}\text{capital}\text{(2019)+}\\ \text{Value}\text{of}\text{additional}\text{shares}\text{issued}\end{array}\right)\\ \text{=}\text{\$37,700+\$1,500}\text{(15)}\\ \text{=\$39,200}\end{array}$

(13) Calculate the amount of total contributed capital:

$\begin{array}{c}\text{Total}\text{contributed}\text{capital}\text{=}\text{Coomon}\text{stock}\text{(11)+}\text{Additional}\text{paid-in}\text{capital}\text{(12)}\\ \text{=}\text{\$30,000}\text{+}\text{\$39,200}\\ \text{=\$69,200}\end{array}$

(14) Calculate the amount of retained earnings:

$\begin{array}{c}\text{Retained}\text{earnings}\text{=}\left(\begin{array}{l}\text{Total}\text{shareholders'}\text{equity}-\text{Total}\text{contributed}\text{capital}\\ -\text{Accumulated}\text{other}\text{comprehensive}\text{income}\end{array}\right)\\ \text{=}\text{\$179,000}-\text{\$69,200}-\text{\$8,900}\\ \text{=\$100,900}\end{array}$

(15) Calculate the value of additional shares issued:

$\begin{array}{c}\text{Value}\text{of}\text{addtional}\text{shares}\text{issued}\text{=}\left[\begin{array}{l}\text{Number}\text{of}\text{shares}\text{issued}\text{×}\\ \left(\text{Market}\text{value}\text{of}\text{shares}-\text{Par}\text{value}\text{of}\text{stock}\right)\end{array}\right]\\ \text{=}\text{100}\text{shares}\text{×}\left(\text{\$25}-\text{\$10}\right)\\ \text{=100}\text{shares}\text{×}\text{\$15}\\ \text{=\$1,500}\end{array}$