Balance sheet multiple choice



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ANS:



Euisara, Inc.

Balance Sheet

December 31, 2010


Assets










Current Assets:










Cash and Cash Equivalents




$ 8,527 




Accounts Receivable

$ 24,190 







Less:










Allowance for Doubtful Accounts

   (915)

23,275 



Inventories:












Raw Materials

$  9,576 







Work In Process

1,984 







Finished Goods

  9,718 

21,278 




Prepaid Expenses




 2,199 




Total Current Assets







$ 55,279 













Tangible Assets:










Equipment

$ 41,905 







Less: Accumulated Depreciation

 (9,980)




31,925 

Investments:












Investments in Unconsolidated Subsidiaries







  3,559 













Total Assets







$ 90,763 













Liabilities and Stockholders' Equity










Current Liabilities:










Current Maturities of Long-Term Debt




$ 1,257 




Notes Payable




6,156 




Accounts Payable




19,021 




Income Taxes Payable




 8,356 




Total Current Liabilities







$ 34,790 













Long-Term Liabilities:










Long-Term Debt




$15,258 




Deferred Taxes




 8,506 




Total Long-Term Liabilities







23,764 













Stockholders' Equity:










Common Stock




$ 3,895 




Additional Paid-In Capital




9,614 




Retained Earnings




18,951 










$32,460 




Less: Treasury Stock




(251)

32,209 













Total Liabilities and Stockholders' Equity







$ 90,763 

5. The following balance sheet, prepared by a careless bookkeeper, has been given to you to review.


Required:

List any corrections that need to be made. Errors can be in classification, lack of disclosure, format, or terminology.




Eldorado, Inc.

Balance Sheet



For the Year Ended June 30, 2010

Assets

Current Assets:







Accounts Receivable

$ 37,000 




Merchandise Inventory

62,000 




Cash

 17,000 

$116,000










Investments:







Marketable Securities

$ 18,000 




Treasury Stock

 4,000 

22,000










Tangible Assets:







Buildings

$194,000 




Less: Reserve for Depreciation

(34,000)

160,000










Other Assets:







Unamortized Portion of Bond Payable Discount




  3,000







$301,000










Liabilities and Stockholders' Equity

Current Liabilities:







Accounts Payable

$ 26,000 




Bank Note Payable (due 6/1/2011)

 22,000 

$ 48,000










Long-Term Liabilities:







Bonds Payable




112,000










Capital Stock:







Common Stock

$ 49,000 




Earned Surplus

 92,000 










141,000







$301,000

ANS:



1.

The date should read "June 30, 2010," as a balance sheet is at a particular point in time.

2.

Cash should be listed first under current assets.

3.

Marketable securities should be a current asset, listed after cash.

4.

Treasury stock should be deducted from stockholders' equity.

5.

"Allowance" is a better term than "Reserve" in relation to depreciation.

6.

The bond discount should be subtracted from bonds payable rather than being shown as an asset.

7.

The bank note payable is not due within a year and should be classified as long-term.

8.

Retained earnings is now common terminology to replace earned surplus.

9.

The par value and number of shares should be disclosed for the stock.

6. The following balance sheet, prepared by Whoops Bookkeeping Service, has been given to you to review.


Required:

Prepare a corrected, properly classified balance sheet in report form.




Butler Corporation

Balance Sheet

For Year Ended December 31, 2010














Current Assets:




Current Liabilities:




   Cash

$  6,200

   Accounts Payable

$ 15,000

   Accounts Receivable

13,000

   Wages Payable

2,000

   

Inventory



30,000

   Accumulated Depreciation

—Equipment



5,000

   

Treasury Stock



10,000

   Accumulated Depreciation

   —Buildings



10,000

Property, Plant, and Equipment:










   Land

7,000

Long-Term Liabilities:




   Trademarks

5,000

   Current Taxes Payable

4,000

   Buildings

45,000

   Premium on Common Stock

3,000

   Equipment

17,000

   Bonds Payable

60,000

Intangibles:




   Notes Payable—Long Term

10,000

   Organization Costs

4,000







   Discount on Bonds Payable

2,000

Owners' Equity:










   Common Stock

31,200

Investments:




   Retained Earnings

12,000

   Long-Term Investment in

     Bonds



8,000

   Allowance for Doubtful

     Accounts



  2,000

   Marketable Securities—

     Short-Term



   7,000







Total Assets

$154,200




$154,200



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