Question

Question 5 Assume Deloitte & Touche, the accounting firm, advises Deep Sea Seafood that their financial statements must be changed to confirm with GAAP. At December 31, 2016, Deep Sea Seafood accounts include the following: Cash Short-term trading investments, at cost Accounts receivable Inventory Prepaid expenses Total current assets Accounts payable Other current liabilities Total current liabilities $51,000 1 9,000 37,000 61,000 14,000 $182,000 $62,000 41,000 $103,000 Deloitte & Touche advised Deep Sea Seafood that: Cash includes $20,000 that is deposited in a compensating balance account that is tied up until 2018 The fair value of the short-term trading investments is $17,000. Deep Sea Seafood purchased the investments a couple of weeks ago

Answer 1

The following three major financial statements are required under GAAP: the income statement, the balance sheet, and the cash flow statement. A company's balance sheet summarizes assets and sets them equal to liabilities and shareholder's equity. Here in the given case we are preparing only balance sheet, as there is no information for preparing income statement and cash flow statement.

GAAP standards require assets, liabilities, and equity to be presented in decreasing order of liquidity. The balance sheet is generally presented with total assets equaling total liabilities and shareholders' equity.

Note: All the amounts are in $

Balance sheet as December 31, 2016.

Particulars	Amount	Amount
LIABILITIES AND OWNERS EQUITY
Current Liabilities
Accounts payable	62,000
Other current Liabilities	41000
Total	$103,000
Long-term liabilities	0
Equity Capital	0
TOTAL OF LIABILITIES AND EQUITY CAPITAL		$103,000
ASSETS
Current Assets
Cash(51,000 -20,000)	31,000
Accounts Receivable	37,000
Inventory	61,000
Prepaid Expenses	14,000
Total	$143,000
Non Current Assets
Short term trading investments @FMV	17000
Fixed Deposit	20,000
Total	$37,000
Other Assets	0
TOTAL OF ASSETS		$180,000

With the given information only these are available, so Assets total and liabilities total will not match.