Question

Problem 24-1 Your firm has been engaged to examine the financial statements of Monty Corporation for the year 2017. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on January 2, 2012. The client provides you with the information below. MONTY CORPORATION BALANCE SHEET DECEMBER 31, 2017 Assets Liabilities Current assets $1,873,000 Current liabilities $975,000 Other assets 5,238,360 Long-term liabilities 1,414,000 Capital 4,722,360 $7,111,360 $7,111,360 An analysis of current assets discloses the following. Cash (restricted in the amount of $296,000 for plant expansion) Investments in land Accounts receivable less allowance of $30,000 Inventories (LIFO flow assumption) $567,000 183,000 476,000 647,000 $1,873,000 Other assets include: Prepaid expenses Plant and equipment less accumulated depreciation of $1,441,000 Cash surrender value of life insurance policy Unamortized bond discount Notes receivable (short-term) Goodwill Land $63,000 4,172,000 82,000 63,360 163,000 257,000 438,000 $5,238,360 Current liabilities include: Accounts payable Notes payable (due 2020) Estimated income taxes payable Premium on common stock $520,000 159,000 146,000 150,000 $975,000

Answer 1

Monty Corporation

Balancesheet

December 31, 2017

Assets	Amount	Amount
Current Assets
Cash($ 567, 000 - $ 296,000)		$ 271,000
Accounts Receivable ($476,000 +$ 30,000)	$ 506,000
Less ; Allowance for doutful accounts	$ (30,000)	$476,000
Notes Receivable		$ 163,000
Inventories		$647,000
Prepaid Expenses		$63,000
Total Current Asset		$ 1,620,000
Long Term Investments
Cash Restricted for Plant Expansion		$296,000
Cash Surrender Value of Life Insurance Policy		$ 82,000
Investment In Land		$183,000
Property Plant & Equipment
(Plant & Equipment ) ($4,172,000 + $1,441,000)	$5,613,000
Less :Accumulated Depreciation	$ (1,441,000)	$ 4,172,000
Land		$438,000
Intangible Assets;
Good Will		$ 257,000
Total Asset		$7,048,000
Liabilities and Stockholders Equity
Accounts Payable	$ 520,000
Unearned Revenue	$ 498,000
Income Taxe Payable	$ 146,000
Interest Payable ($ 720,000*8%*8/12)	$ 38,400
Salaries and Wages Payable	$ 222,000
Dividend Payable	$ 196,000
Total Current Liabilities		$ 1,620,400
Long Term Liabilities
Notes Payable		$ 159,000
Bonds Payable	$ 720,000	$ 665,088
Less: Unamortized Bond Discount	$ (54,912)
Total Liabilities		$ 2,444,488
Stockholders Equity
Common Stock	$ 1,820,000
Paid in Capital in excess of Par	$ 150,000
Retained Earnings	$ 2,633,512
Total Stockholders Equity		$4,603,512
Total Liabilities and Stockholders Equity		$ 7,048,000

Unamortized bond discount = ($720,000 - ($720,000 * 91.20% )%5

= $12,672

$12672 * 8/12 = $ 8448 ; = $ 63,360 - $ 8,448 = $54,912

Retained Earnings	$2,902,360
Accured wages omitted	$(222,000)
Accrued Interest	$(38,400)
Bond Amortization	$(8,448)
	$ 2,633,512