ACCT 1220 Lecture Notes - Lecture 2: Deferral, Financial Statement, Accounts Receivable
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Presented below is the balance sheet of Sargent Corporation forthe current year, 2014.
SARGENT CORPORATION | ||||||
Current assets | $ 487,300 | Current liabilities | $ 382,300 | |||
Investments | 642,300 | Long-term liabilities | 1,002,300 | |||
Property, plant, and equipment | 1,722,300 | Stockholders’ equity | 1,772,300 | |||
Intangible assets | 305,000 | $3,156,900 | ||||
$3,156,900 |
The following information is presented.
1. | The current assets section includes cash $152,300, accountsreceivable $172,300 less $12,300 for allowance for doubtfulaccounts, inventories $182,300, and unearned rent revenue $7,300.Inventory is stated on the lower-of-FIFO-cost-or-market. | |
2. | The investments section includes the cash surrender value of alife insurance contract $42,300; investments in common stock,short-term (trading) $82,300 and long-term (available-for-sale)$272,300; and bond sinking fund $245,400. The cost and fair valueof investments in common stock are the same. | |
3. | Property, plant, and equipment includes buildings $1,042,300less accumulated depreciation $362,300; equipment $452,300 lessaccumulated depreciation $182,300; land $502,300; and land held forfuture use $270,000. | |
4. | Intangible assets include a franchise $167,300; goodwill$102,300; and discount on bonds payable $35,400. | |
5. | Current liabilities include accounts payable $142,300; notespayable-short-term $82,300 and long-term $122,300; and income taxespayable $35,400. | |
6. | Long-term liabilities are composed solely of 8% bonds payabledue 2022. | |
7. | Stockholders’ equity has preferred stock, no par value,authorized 200,000 shares, issued 72,300 shares for $433,800; andcommon stock, $1.00 par value, authorized 400,000 shares, issued102,300 shares at an average price of $10. In addition, thecorporation has retained earnings of $315,500. |
Prepare a balance sheet in good form, adjusting the amounts in eachbalance sheet classification as affected by the information givenabove. (List Current Assets in order of liquidity. ListProperty, Plant and Equipment in order of Land, Building andEquipment. Enter account name only and do not provide thedescriptive information provided in thequestion.)
Presented below is the balance sheet of Sargent Corporation forthe current year, 2014.
SARGENT CORPORATION | ||||||
Current assets | $ 488,120 | Current liabilities | $ 383,120 | |||
Investments | 643,120 | Long-term liabilities | 1,003,120 | |||
Property, plant, and equipment | 1,723,120 | Stockholders’ equity | 1,773,120 | |||
Intangible assets | 305,000 | $3,159,360 | ||||
$3,159,360 |
The following information is presented.
1. | The current assets section includes cash $153,120, accountsreceivable $173,120 less $13,120 for allowance for doubtfulaccounts, inventories $183,120, and unearned rent revenue $8,120.Inventory is stated on the lower-of-FIFO-cost-or-market. | |
2. | The investments section includes the cash surrender value of alife insurance contract $43,120; investments in common stock,short-term (trading) $83,120 and long-term (available-for-sale)$273,120; and bond sinking fund $243,760. The cost and fair valueof investments in common stock are the same. | |
3. | Property, plant, and equipment includes buildings $1,043,120less accumulated depreciation $363,120; equipment $453,120 lessaccumulated depreciation $183,120; land $503,120; and land held forfuture use $270,000. | |
4. | Intangible assets include a franchise $168,120; goodwill$103,120; and discount on bonds payable $33,760. | |
5. | Current liabilities include accounts payable $143,120; notespayable-short-term $83,120 and long-term $123,120; and income taxespayable $33,760. | |
6. | Long-term liabilities are composed solely of 8% bonds payabledue 2022. | |
7. | Stockholders’ equity has preferred stock, no par value,authorized 200,000 shares, issued 73,120 shares for $438,720; andcommon stock, $1.00 par value, authorized 400,000 shares, issued103,120 shares at an average price of $10. In addition, thecorporation has retained earnings of $303,200. |
Prepare a balance sheet in good form, adjusting the amounts in eachbalance sheet classification as affected by the information givenabove. (List Current Assets in order of liquidity. ListProperty, Plant and Equipment in order of Land, Building andEquipment. Enter account name only and do not provide thedescriptive information provided in thequestion.)
The comparative statements of financial position of Mikos Inc. as at December 31, 2017 and 2018, and its statement of earnings for the year ended December 31, 2018, are presented below:
MIKOS INC. | ||||||
Comparative Statements of Financial Position | ||||||
December 31 | ||||||
2018 | 2017 | |||||
Assets | ||||||
Cash | $ | 10,600 | $ | 18,600 | ||
Short-term investments | 72,200 | 40,800 | ||||
Accounts receivable | 76,000 | 32,400 | ||||
Inventories, at cost | 57,200 | 41,600 | ||||
Prepaid expenses | 5,600 | 9,200 | ||||
Land | 51,400 | 78,000 | ||||
Property, plant, and equipment, net | 286,400 | 187,000 | ||||
Intangible assets | 25,600 | 31,200 | ||||
$ | 585,000 | $ | 438,800 | |||
Liabilities and Shareholders’ Equity | ||||||
Accounts payable | $ | 18,600 | $ | 43,200 | ||
Income tax payable | 9,200 | 2,600 | ||||
Accrued liabilities | 11,600 | -0- | ||||
Long-term notes payable | 126,000 | 182,000 | ||||
Contributed capital | 232,000 | 68,000 | ||||
Retained earnings | 187,600 | 143,000 | ||||
$ | 585,000 | $ | 438,800 |
MIKOS INC. | |||||
Statement of Earnings | |||||
For the Year Ended December 31, 2018 | |||||
Sales | $ | 898,000 | |||
Cost of sales | $ | 446,000 | |||
Amortization expense—intangible assets | 5,600 | ||||
Depreciation expense—property, plant, and equipment | 34,600 | ||||
Operating expenses | 237,000 | ||||
Interest expense | 13,600 | 736,800 | |||
Earnings before income taxes | 161,200 | ||||
Income tax expense | 48,360 | ||||
Net earnings | $ | 112,840 | |||
Additional information is as follows: | |
a. | Land was sold for cash at its carrying amount. |
b. | The short-term investments will mature in February 2019. |
c. | Cash dividends were declared and paid in 2018. |
d. | New equipment with a cost of $167,600 was purchased for cash, and old equipment was sold at its carrying amount. |
e. | Long-term notes of $18,000 were paid in cash, and notes of $38,000 were converted to shares. |
1. | Prepare a statement of cash flows for Mikos Inc. for the year ended December 31, 2018 by using the indirect method. (Negative answers should be indicated by a minus sign.) |