USA: +1(669)289-8683 
Sign in
HW 2
(Corrections of a Balance Sheet)
The bookkeeper for Garfield Company has prepared the following balance sheet as of July 31, 2012.
GARFIELD COMPANY
Balance Sheet
As of July 31, 2012
Cash
$71,370
Notes and accounts payable
$46,580
Accounts receivable (net)
43,080
Long-term liabilities
77,370
Inventories
62,370
Stockholders’ equity
157,870
Equipment (net)
84,000
$281,820
Patents
21,000
$281,820
The following additional information is provided.
1. Cash includes $1,200 in a petty cash fund and $12,290 in a bond sinking fund.
2. The net accounts receivable balance is comprised of the following two items: (a) accounts receivable–debit balances $46,580; (b) allowance for doubtful accounts $3,500.
3. Merchandise inventory costing $5,740 was shipped out on consignment on July 31, 2012. The ending inventory balance does not include the consigned goods. Receivables in the amount of $5,740 were recognized on these consigned goods.
4. Equipment had a cost of $112,000 and an accumulated depreciation balance of $28,000.
5. Taxes payable of $9,020 were accrued on July 31. Garfield Company, however, had set up a cash fund to meet this obligation. This cash fund was not included in the cash balance, but was offset against the taxes payable amount.
Prepare a corrected classified balance sheet as of July 31, 2012, from the available information, adjusting the account balances using the additional information.
(List current liabilities from largest to smallest amounts, e.g. 10, 5, 2.)
GARFIELD COMPANY
Balance Sheet
July 31, 2012
Assets
Current assets
$
$
Less:
Total current assets
Long-term investments
Property, plant, and equipment
Less:
Intangible assets
Total assets
$
Liabilities and Stockholders’ Equity
$
Total current liabilities
$
Long-term liabilities
Total liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity
$
(Current Assets Section of the Balance Sheet)
Presented below are selected accounts of Aramis Company at December 31, 2012.
Finished goods
$57,040
Cost of goods sold
$2,100,000
Revenue received in advance
90,000
Notes receivable
40,000
Equipment
253,000
Accounts receivable
166,090
Work-in-process
34,790
Raw materials
210,980
Cash
46,250
Supplies expense
60,000
Short-term investments in stock
31,000
Allowance for doubtful accounts
12,000
Customer advances
36,000
Licenses
18,000
Cash restricted for plant expansion
57,600
Additional paid-in capital
88,000
Treasury stock
22,000
The following additional information is available.
1. Inventories are valued at lower of cost or market using LIFO.
2. Equipment is recorded at cost. Accumulated depreciation, computed on a straight-line basis, is $50,600.
3. The short-term investments have a fair value of $29,000. (Assume they are trading securities.)
4. The notes receivable are due April 30, 2014, with interest receivable every April 30. The notes bear interest at 6%. (Hint: Accrue interest due on December 31, 2012.)
5. The allowance for doubtful accounts applies to the accounts receivable. Accounts receivable of $50,000 are pledged as collateral on a bank loan.
6. Licenses are recorded net of accumulated amortization of $14,000.
7. Treasury stock is recorded at cost.
Prepare the current assets section of Aramis Company’s December 31, 2012, balance sheet, with appropriate disclosures.
(List current assets in order of liquidity.)
Current assets
$
Less:
$
Trading securities at fair value
Less:
Inventories at lower of cost (determined using LIFO) or market
Raw materials
Total current assets
$
(Current vs. Long-term Liabilities)
Pascal Corporation is preparing its December 31, 2012, balance sheet. The following items may be reported as either a current or long-term liability.
1. On December 15, 2012, Pascal declared a cash dividend of $4.64 per share to stockholders of record on December 31. The dividend is payable on January 15, 2013. Pascal has issued 1,000,000 shares of common stock, of which 50,000 shares are held in treasury.
2. At December 31, bonds payable of $102,895,000 are outstanding. The bonds pay 12% interest every September 30 and mature in installments of $26,247,000 every September 30, beginning September 30, 2013.
3. At December 31, 2011, customer advances were $13,659,000. During 2012, Pascal collected $30,549,000 of customer advances, and advances of $26,248,000 were earned.
For each item above indicate the dollar amounts to be reported as a current liability and as a long-term liability.
(For item #2, list the bonds payable with the smallest amount first.)
1.
Dividends payable
$
2.
Bonds payable
$
Interest payable
$
Bonds payable
$
3.
Customer advances
$
(Current Assets and Current Liabilities)
The current assets and liabilities sections of the balance sheet of Agincourt Company appear as follows.
AGINCOURT COMPANY
Balance Sheet (Partial)
December 31, 2012
Cash
$40,150
Accounts payable
$65,370
Accounts receivable
$91,980
Notes payable
72,240
Less: Allowance for doubtful accounts
8,400
83,580
$137,610
Inventories
172,660
Prepaid expenses
9,840
$306,230
The following errors in the corporation’s accounting have been discovered:
1. January 2013 cash disbursements entered as of December 2012 included payments of accounts payable in the amount of $39,500, on which a cash discount of 2% was taken.
2. The inventory included $27,000 of merchandise that had been received at December 31 but for which no purchase invoices had been received or entered. Of this amount, $12,000 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30.
3. Sales for the first four days in January 2013 in the amount of $30,000 were entered in the sales book as of December 31, 2012. Of these, $21,500 were sales on account and the remainder were cash sales.
4. Cash, not including cash sales, collected in January 2013 and entered as of December 31, 2012, totaled $36,032. Of this amount, $24,892 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan.
(a)
Restate the current assets and liabilities sections of the balance sheet in accordance with good accounting practice. (Assume that both accounts receivable and accounts payable are recorded gross.)
(List current liabilities with notes payable first.)
AGINCOURT COMPANY
Partial Balance Sheet
As of December 31, 2012
Current assets
$
$
Less:
Inventories
Total current assets
$
Current liabilities
$
Total current liabilities
$
(b)
State the net effect of your adjustments on Agincourt Company’s retained earnings balance.
(For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
Adjustment to retained earnings balance:
Add: January sales discounts
$
Deduct: January sales
$
January purchase discounts
December purchases
Consignment inventory
Change (decrease) to retained earnings
$
(Current Liabilities)
Mary Smith is the controller of Arnold Corporation and is responsible for the preparation of the year-end financial statements. The following transactions occurred during the year.
(a)
On December 20, 2012, an employee filed a legal action against Arnold for $106,700 for wrongful dismissal. Management believes the action to be frivolous and without merit. The likelihood of payment to the employee is remote.
(b)
Bonuses to key employees based on net income for 2012 are estimated to be $152,200.
(c)
On December 1, 2012, the company borrowed $950,400 at 8% per year. Interest is paid quarterly.
(d)
Credit sales for the year amounted to $10,114,500. Arnold’s expense provision for doubtful accounts is estimated to be 2% of credit sales.
(e)
On December 15, 2012, the company declared a $2.48 per share dividend on the 40,300 shares of common stock outstanding, to be paid on January 5, 2013.
(f)
During the year, customer advances of $192,600 were received; $59,900 of this amount was earned by December 31, 2012.
For each item above, indicate the dollar amount to be reported as a current liability. If a liability is not reported, enter 0.
(a)
$
(b)
$
(c)
$
(d)
$
(e)
$
(f)
$
(Preparation of a Balance Sheet)
Presented below is the trial balance of Vivaldi Corporation at December 31, 2012.
Debit
Credits
Cash
$200,290
Sales
$7,902,540
Trading securities (at cost, $145,000)
155,540
Cost of goods sold
4,802,540
Long-term investments in bonds
302,290
Long-term investments in stocks
280,290
Short-term notes payable
92,540
Accounts payable
457,540
Selling expenses
2,002,540
Investment revenue
64,920
Land
260,000
Buildings
1,043,290
Dividends payable
139,290
Accrued liabilities
98,540
Accounts receivable
437,540
Accumulated depreciation-Buildings
352,000
Allowance for doubtful accounts
27,540
Administrative expenses
901,920
Interest expense
212,920
Inventories
600,290
Extraordinary gain
81,920
Long-term notes payable
903,290
Equipment
602,540
Bonds payable
1,003,290
Accumulated depreciation-Equipment
60,000
Franchise (net of $80,000 amortization)
160,000
Common stock ($5 par)
1,002,540
Treasury stock
193,540
Patent (net of $30,000 amortization)
195,000
Retained earnings
81,290
Additional paid-in capital
83,290
$12,350,530
$12,350,530
Prepare a balance sheet at December 31, 2012, for Vivaldi Corporation. Ignore income taxes.
(List liabilities, long-term investments, and intangible assets from largest to smallest amounts, e.g. 10, 5, 3.)
VIVALDI CORPORATION
Balance Sheet
December 31, 2012
Assets
Current assets
$
$
Less: Allowance for doubtful accounts
Inventories
Total current assets
$
Long-term investments
Total long-term investments
Property, plant, and equipment
Less:
Equipment
Less:
Total property, plant, and equipment
Intangible assets
Total intangible assets
Total assets
$
Liabilities and Stockholders’ Equity
Current liabilities
$
Dividends payable
Total current liabilities
$
Long-term liabilities
Total long-term liabilities
Total liabilities
Stockholders’ equity
Paid-in capital
$
Retained earnings
Total paid-in capital and retained earnings
Less:
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
