Reference no: EM133264729
Assignment - Construction of Financial Statements
A firm has lost its balance sheet as of 12/31/19 and income statement for the year ended 12/31/19. Its records are a mess, but you were able to locate the following information:
Information as of 12/31/19:
Cash on hand, $125
Marketable securities, $285
Long-term loan from the bank, $3,000
Amount owed to employees, $700
Amount owed to suppliers, $825
Other assets, $3,287
Fixed assets, net of allowance, $4,800
Accounts receivable, net of allowance, $1,200
Depreciation expense $850
Information as of 12/31/18:
Inventory, $3,000
Retained earnings, $1,340
During both 2018 and 2019, the firm declared and paid $1,000 in dividends.
During 2019, the firm recognized interest income of $150 and interest expense of $125. The firm's effective tax rate was 20%.
During 2019, the firm was awarded a patent based upon its research and development. The firm's valuation consultants believe the patent is worth $1,250. The firm also recognized purchases of $14,500 for inventory, and paid suppliers $13,295.
During 2019 the firm recognized sales of $23,500 and received $21,500 in cash payments from its customers. The firm's gross profit margin was 40%, it recognized bad debt expense of $300, administration expense of $5,650 and R&D expense of $285.
The firm has 100 shares outstanding. The shares have a $1 par value and when they were issued, the firm received $6,360. The valuation consultants believe the shares are currently worth $10,000. There have been no changes in the shares outstanding in 2019.
Required - Please prepare the missing balance sheet as of 12/31/19 and income statement for the year ended 12/31/19 in good form based upon this information.