Reference no: EM131763643
1) Adjusted Trial Balance
Eastwood Company Adjusted Trial Balance December 31, 2010 Assets
Current Assets:
Cash $ 41,000
Accounts receivable 163,500
Allowance for Doubtful Accounts $ 8,700
Prepaid Insurance 5,900
Inventory 208,000
Long-term Investments 339,000
Land 85,000
Construction Work in Progress 124,000
Patents 36,000
Equipment 400,000
Accumulated Depreciation of Equpment 240,000
Unamortized Discount on Bonds Payable 20,000
Accounts Payable 148,000
Accrued Expenses 49,200
Notes Payable 94,000
Bonds Payable 200,000
Common Stock 500,000
Paid-in Capital in Excess of Par - Common Stock 45,000
Retained Earnings 138,000
1,422,900 1,422,900
Additional Info:
1. The LIFO method of inventory value is used.
2. The cost and fair value of the long-term investments that consist of stocks and bonds is the same.
3. The amount of the Construction Work in Progress account represents the costs expended to date on a building in the process of construction. (The company rents factory space at the present time.) The land on which the building is being constructed cost $85,000, as shown in the trial balance.
4. The patents were purchased by the company at a cost of $40,000 and are being amortized on a straight-line basis.
5. Of the unamortized discount on bonds payable, $2,000 will be amortized in 2011.
6. The notes payable represent bank loans that are secured by long-term investments carried at $120,000. These bank loans are due in 2011.
7. The bonds payable bear interest at 8% payable every December 31, and are due January 1, 2021.
8. 600,000 shares of common stock of a par value of $1 were authorized, of which 500,000 shares were issued and outstanding.
Instructions: Prepare a balance sheet as of December 31, 2010, so that all important information is fully disclosed.
2) Balance Sheet Adjustment and Preparation:
Presented below is the balance sheet of Sargent Corporation for the current year, 2010.
Sargent Corporation Balance Sheet December 31, 2010
Current Assets $ 485,000
Investments 640,000
Property, plant, and equipment 1,720,000
Intangible assets 305,000
3,150,000
Current Liabilities $ 380,000
Long-term liabilities 1,000,000
Stockholders' equity 1,770,000
3,150,000
Additional Info:
1. The current assets section includes: cash $150,000, accounts receivable $170,00 less $10,000 for allowance for doubtful accounts, inventories $180,000, and unearned revenue $5,000. Inventories are stated on the lower of FIFO cost or market.
2. The investments section includes: the cash surrender value of a life insurance contract $40,000; investments in common stock, short-term (trading) $80,000 and long-term (available-for-sale) $270,000, and bond sinking fund $250,000. The cost and fair value of investments in common stock are the same.
3. Property, plant, and equipment includes: buildings $1,040,000 less accumulated depreciation $360,000; equipment $450,000 less accumulated depreciation $180,000; land $500,000; and land held for future use $270,000.
4. Intangible assets include: a franchise $165,000; goodwill $100,000; and discount on bonds payable $40,000.
5. Current liabilities include: accounts payable $140,000; notes payable - short-term $80,000 and long-term $120,000; and taxes payable $40,000.
6. Long-term liabilities are composed solely of 7% bonds payable due 2018.
7. Stockholders' equity has: preferred stock, no par value, authorized 200,000 shares, issued 70,000 shares for $450,000; and common stock, $1.00 par value, authorized 400,000 shares, issued 100,000 shares at an average price of $10. In addition, the corporation has retained earnings of $320,000.
Instructions: Prepare a balance sheet in good form, adjusting in each balance sheet classification as affected by the information given above.