Question

The trial balance of Pronghorn Inc. and other related information for the year 2020 follows: Credits $8,800 PRONGHORN INC. Trial Balance December 31, 2020 Debits Cash $44,000 Accounts receivable 168,500 Allowance for doubtful accounts Prepaid insurance 6,200 Inventory 191,200 FV-OCI Investments 339,000 Land 94,000 Construction in process 124.000 Intangible assets-patents 36,000 Equipment 400.000 Accumulated depreciation-equipment Accounts payable Income tax payable Notes payable Bonds payable Common shares Accumulated other comprehensive income Retained earnings $1,402.900 240.000 147.900 49.200 94,000 180,000 500.000 45.000 138.000 $1,402,900

Answer 1

answer:

(1)Investments: Market Value of Investments has increased on reporting date, so we have taken market value on position statement. accordingly accumulated profit balance is increased by the amount of increase in market value of investments

(2). Notes Payable are going to pay in next year so are shown under current liabilities. No further disclouser required as are secured and covered by the investment mkt valaue.

(3) Inventory is shown at Cost or Market Value whichever is lower.

(4). Company show the bonds payable value at net payable value after reducing the face value of bonds to net payable value. hence company must shown this fact either in notes to accounts every year or instead of that a ficticious assets head can be shown in assets side and 20000 discount amount can be presents under ficticious assets.

PRONGHORN INC. Statement of Financila Position As at 31st dec 202 ASSETS AMOUNT Land $ 94,000.00 Construction in Progress $ 124,000.00 EQUIPMENTS $ 400,000.00 Less: Depreciation $ 240,000.00 $ 160,000.00 Intangible Assets Patent 36,000.00 FV-OCI- Investments(BV: $339000, FV: $378000) $ 378,000.00 $ 191,200.00 Inventory(Cost: 191200, NRV: $212000) Accounts Receivable Less: Allowance for debts Prepaid Insurance Cash $ 168,500.00 $ 8,800.00 $ $ $ 159,700.00 6,200.00 44,000.00 1,193,100.00 $ LIABILITIES Common Shares $ Retained Earning $ Accumlated Other Income $ 45,000.00 Add: Increase in investment value $ 39,000.00 $ 500,000.00 138,000.00 84,000.00 7% Bonds Payable $ 180,000.00 Notes Payable Accounts Payable Income Tax Payable $ $ $ 94,000.00 147,900.00 49,200.00 $ 1,193,100.00 List of Current Assets Cash Prepaid Insurance Accounts Receivable Inventory $ 44,000.00 $ 6,200.00 $ 159,700.00 $ 191,200.00 Property Plans & Equipments Land Construction in Progress Equipments $ 94,000.00 $ 124,000.00 $ 160,000.00

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