Question

Preparation of Balance Sheet Ari Company's December 31 post-closing trial balance contains the following normal balances: Cash $19,000 Accounts payable 20,000 Building 439,500 Long-term notes payable 785,000 Common stock 950,000 Retained earnings 75,000 Accumulated depreciation-Equipment 180,000 Land 877,000 Accounts receivable 22,500 Accumulated depreciation-Building 135,000 Wages payable 6,000 Patent (net of amortization) 120,000 Notes payable (short term) 131,000 Inventory 206,000 Equipment 600,000 Allowance for doubtful accounts 2,000 Required Prepare a December 31 classified balance sheet for Ari Company.

Answer 1

ARI COMPANY
Balance Sheet
31-Dec
Assets:
Current assets:
Cash	$19,000.00
Accounts receivable	$22,500.00
Less: Allowance for doubtful accounts	-$2,000.00
Inventory	$206,000.00
Total current assets		$245,500.00
Plant Assets:
Land	$877,000.00
Building	$439,500.00
Less: Accumulated depreciation	-$135,000.00
Equipment	$600,000.00
Less: Accumulated depreciation	-$180,000.00
Total Plant assets		$1,601,500.00
Intangible assets:
Patent (net of amortization)		$120,000.00
Total assets		$1,967,000.00
Liabilities:
Current liabilities:
Accounts payable	$20,000.00
Wages payable	$6,000.00
Notes payable (short term)	$131,000.00
Total current liabilities		$157,000.00
Long term liabilities:
Long term notes payable		$785,000.00
Total liabilities		$942,000.00
Stockholder's equity:
Common stock	$950,000.00
Retained earnings	$75,000.00
Total stockholder's equity		$1,025,000.00
Total liabilities and stockholder's equity		$1,967,000.00

Computation of Acquisition Cost
Invoice price	$34,000
Applicable sales tax	$2,000
Freight paid	$260
Cost of insurance coverage on machine while in transit	$125
Installation costs	$2,000
Testing and adjusting costs	$475
Less: Cash discount taken	-$400
Acquisition Cost	$38,460