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AccountingIntermediate Accounting: Reporting And Analysis3rd Edition

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Chapter 4, Problem 5P
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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Balance Sheet Calculations Cornerstone Development Company’s balance sheet information at the end of 2019 and 2020 is provided in random order, as follows:

Chapter 4, Problem 5P, Balance Sheet Calculations Cornerstone Development Companys balance sheet information at the end of

Additional information: At the end of 2019, (a) the amount of long-term liabilities is twice the amount of current liabilities and (b) there are 2,900 shares of common stock outstanding. During 2020, the company (a) issued 100 shares of common stock for $25 per share, (b) earned net income of $20,600, and (c) paid dividends of $1 per share on the common stock outstanding at year-end.

Required:

Next Level Fill in the blanks lettered (a) through (p). All of the necessary information is provided. (Hint: It is not necessary to calculate your answers in alphabetical order.)

To determine

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

Explanation

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
Particulars20192020
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 2019 and (m) for the year 2020 is same as the amount of total liabilities and shareholders’ equity for the year 2019 ($209,900) and year 2020 ($232,100) since, total assets equals total of liabilities and shareholders’ equity.

Working notes:

Year 2019:

(1) Calculate the amount of current assets:

Current Assets = Current liabilities +Working capital= $17,300+$17,900=$35,200

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

Property, plant and equipment = (Total assets − Current assets−Long-term investments−Intangible assets +Accumulated depreciation)= $209,900−$35,200−$40,100−$19,100 + $37,500=$153,300

(3) Calculate the amount of current liabilities:

Current liability (x) =  Total liabiltiy−Long-term liability (2x)x = $51,900−2x$51,900 = − 2x−x$51,900 = -3x

Current liability (x) =−$51,900−3=$51,9003= $17,300

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

Long-term liabilities = Current liabilities × 2x = $17,300 (3)  × 2xx= $34,600

(5) Calculate the amount of common stock:

Coomon stock= Number of shares outstanding × Par value of stock= 2,900 shares × $10=$29,000

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

Additonalpaid-in capital = Total contributed capital−Commons stock= $66,700−$29,000 (5)=$37,700

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

Total shareholders' equity =(Common stock + Additional paid-in capital + 

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