Question

Following is a partially completed balance sheet for Episco, Inc., at December 31, 2016, together with comparative data for the year ended December 31, 2015. From the statement of cash flows for the year ended December 31, 2016, you determine the following: Net income for the year ended December 31, 2016, was $182. Dividends paid during the year ended December 31, 2016, were $56. Cash increased $56 during the year ended December 31, 2016. The cost of new equipment acquired during 2016 was $105; no equipment was disposed of. There were no transactions affecting the land account during 2016, but it is estimated that the fair market value of the land at December 31, 2016, is $294.

Required: Complete the balance sheet at December 31, 2016.

  

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EPISCO, INC. Balance Sheets December 31, 2016 and 2015 Assets 2016 2015 Liabilities and Stockholders’ Equity 2016 2015 Current assets Current liabilities Cash $210 Note payable $343 $280 Accounts receivable 882 840 Accounts payable 861 770 Inventory 1,687 1,610 Total current liabilities $1,204 $1,050 Total current assets $2,660 Long-term debt $560 Total liabilities $1,610 Land $175 Stockholders’ Equity Equipment 2,625 Common stock $1,400 $1,400 Less: Accumulated depreciation (1,260) (1,120) Retained earnings 1,330 Total land & equipment $1,680 Total stockholders’ equity $2,730 Total assets $4,340 Total liabilities & stockholders’ equity $4,340

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Answer 1

Answer:

For the year ended December 31, 2016:

Cash = Cash as of year ended December 31, 2015 + Cash increase during the year ended December 31, 2016

= $210 + $56 = $266

Hence, total current assets for 2016 = Cash + Account receivable + Inventory = $266 + 882 + 1687 = $2,835

Given that there were no transactions affecting the land account during 2016:

Land (for the year ended December 31, 2016) = $175

Equipment (for the year ended December 31, 2016) = Equipment (for the year ended December 31, 2015) + cost of new equipment acquired during 2016

= 2,625 + 105 = $2,730

Total land & equipment = Land + Equipment - Accumulated depreciation = $175 + $2,730 - $1,260 = $1,645

Total Assets = Total current assets + Total land & equipment = $2,835 + $1,645 = $4,480

Total liabilities & stockholders’ equity = Total Assets = $4,480

Retained earnings (for the year ended December 31, 2016) = Retained earnings (for the year ended December 31, 2015) + Net Income for 2016 - Dividends paid during 2016 = $1,330 + $182 - $56 = $1,456

Total stockholders’ equity = Common stock + Retained earnings =$1,400 + $1,456 = $2,856

Total liabilities = Total liabilities & stockholders’ equity - Total stockholders’ equity = $4,480 - $2,856 = $1,624

Long-term debt = Total liabilities - Total current liabilities = $1624 - $1204 = $420

Completed balance sheet at December 31, 2016 is as follows:

EPISCO, INC. Balance Sheets December 31, 2016 and 2015 2016 2015 Liabilities and Stockholders' Equity 2015 Assets Current assets Cash Accounts receivable Inventory Total current assets 2016 Current liabilities $266 $882 $1,687 $2,835 $343 $861 $1,204 $420 $1,624 $280 $770 $1,050 $560 $1,610 $210Note payable $840 Accounts payable $1,610 Total current liabilities $2,660 Long-term debt Total liabilities $175 $2,730 Less: Accumulated depreciation($1,260) $1,645 $4,480 $175 Stockholders' Equi $2,625 Common stock ($1,120) Retained earnings $1,680 Total stockholders' equity Land $1,400 $1,456 $2,856 $4,340 Total liabilities & stockholders' equity $4,480 $1,400 $1,330 $2,730 $4,340 Equipment Total land & equipment Total assets