Question

Problems: (25 points) 1. (Balance Sheet Preparation) Presented below are a number of balance sheet items for Montoya, Inc. for the current year, 2020. (15 points) Accumulated depreciation-equipment S 292,000 Payroll taxes payable 52.591 Inventory 239,800 Bonds payable 285,000 Rent payable (short-term) 45,000 Income taxes payable 98,362 Cash 360,000 Rent payable (long-term) 480,000 Land 480,000 Common stock, Si par value 200,000 Notes receivable 445.700 Preferred stock, S10 par value 150,000 Notes payable (to banks) 265.000 Prepaid expenses 87,920 Accounts payable 490,000 Equipment 1.470,000 Retained camnings 713,897 Debt investments (trading) 121,000 Income taxes receivable 97,630 Accumulated depreciation buildings 270.200 Notes payable (long-term) 1,600,000 Buildings 1.640,000 Instructions Prepare a classified balance sheet in good form. Common stock authorized was 400,000 shares, and preferred stock authorized was 20,000 shares. Assume that notes receivable and notes payable are short- term, unless stated otherwise. Cost and fair value of debt investments (trading) are the same.

Answer 1

Solution:

Classified Balance Sheet: Montoya Inc.,2020

Montoya, Inc.
Balance Sheet
For the current year, 2020
Current assets:			Current liabilities:
Cash		$                360,000	Accounts payable	$                490,000
Notes receivable		$                445,700	Payroll taxes payable	$                   52,591
Income Tax Receivable		$                  97,630	Notes payable(to banks)	$                265,000
Inventory		$                239,800	Rent payable[short term]	$                   45,000
Prepaid Expenses		$                  87,920	Income Tax payable	$                   98,362
Total current assets		$            1,231,050	Total current liabilities	$                950,953
Long-term investments			Long-term liabilities
Debt Investments(trading)		$                121,000	Bonds payable	$                285,000
			Notes payable(long term)	$             1,600,000
			Rent payable[long term]	$                480,000
Property,plant, and equipment:			Total long-term liabilities	$             2,365,000
Land		$                480,000	Total liabilities	$             3,315,953
Equipment	$        1,470,000		Stockholder's equity:
Accumulated depreciation	$         (292,000)	$            1,178,000	Capital Stock	$                350,000
Buildings	$        1,640,000		Retained earnings	$                713,897
Accumulated depreciation	$         (270,200)	$            1,369,800
Property,plant, and equipment-net		$            3,027,800	Total stockholder's equity	$             1,063,897
Total assets		$            4,379,850	Total liabilities and stockholder's equity	$             4,379,850

Notes:

Calculation of Capital stock:

Capital Stock:
Preferred Stock,Authorized 20000 shares, issued 15000 shares of $10 par	$        150,000
Common Stock,Authorized 400,000 shares, issued 200,000 shares of $1 par	$        200,000
Total	$        350,000