Prepare a corrected classified balance sheet in good form

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Reference no: EM131764386

Problem - Preparation of a Corrected Balance Sheet

Presented below and on the next page is the balance sheet of Kishwaukee Corporation as of December 31, 2010.

KISHWAUKEE CORPORATION Balance Sheet December 31, 2010

Assets

Goodwill (Note 2)

$120,000

Buildings (Note 1)

1,640,000

Inventories

312,100

Land

950,000

Accounts receivable

170,000

Treasury stock (50,000 shares, no par)

87,000

Cash on hand

175,900

Assets allocated to trustee for plant expansion


       Cash in bank

70,000

       U.S. Treasury notes, at cost and fair value

138,000


$3,663,000



Equities

Notes payable (Note 3)

$600,000

Common stock, authorized and issued, 1,000,000 shares, no par

1,150,000

Retained earnings

858,000

Appreciation capital (Note 1)

570,000

Federal income taxes payable

75,000

Reserve for depreciation recorded to date on the building

410,000


$3,663,000

Note 1: Buildings are stated at cost, except for one building that was recorded at appraised value. The excess of appraisal value over cost was $570,000. Depreciation has been recorded based on cost.

Note 2: Goodwill in the amount of $120,000 was recognized because the company believed that book value was not an accurate representation of the fair market value of the company. The gain of $120,000 was credited to Retained Earnings.

Note 3: Notes payable are long-term except for the current installment due of $100,000.

Required - Prepare a corrected classified balance sheet in good form. The notes above are for information only.

Reference no: EM131764386

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