Question

Exercise 5-6 The bookkeeper for Marin Company has prepared the following balance sheet as of July 31, 2020. Sn Cash Accounts receivable (net) Inventory Equipment (net) Patents MARIN COMPANY BALANCE SHEET AS OF JULY 31, 2020 $ 73,030 Notes and accounts payable 44,530 Long-term liabilities 64,030 Stockholders' equity 84,000 21,000 $286,590 $ 48,030 79,030 159,530 $286,590 The following additional information is provided. 1. Cash includes $1,200 in a petty cash fund and $12,950 in a bond sinking fund. 2. The net accounts receivable balance is comprised of the following two items: (a) accounts receivable $48,030 and (b) allowance for doubtful accounts $3,500. 3. Inventory costing $5,323 was shipped out on consignment on July 31, 2020. The ending inventory balance does not include the consigned goods. Receivables in the amount of $5,323 were recognized on these consigned goods. 4. Equipment had a cost of $116,030 and an accumulated depreciation balance of $32,030. 5. Income taxes payable of $6,000 were accrued on July 31. Marin Company, however, had set up a cash fund to meet this obligation. This cash fund was not included in the cash balance but was offset against the income taxes payable amount.

Answer 1

Marin company

Corrected Balance sheet

July 31, 2020

Assets	Amt ($)	Amt ($)
Current asset :-
Cash	66080
Account receivable	42707
Less: Allowance for doubtful debts	(3500)
Inventories	69353
Total current asset		174640
Long term investment:-
Bank sinking fund		12950
Property,plant and equipment:-
Equipment (net)		84000
Intangible assets :-
Patents		21000
Total assets		$292590
Liabilities
Current liability :-
Notes and accounts payable	48030
Taxes payable	6000
Total current liability		54030
Long-term liability		79030
Total liability		133060
Stockholders equity		159530
Total liabilities & equity		$292590

working notes :-

1	Cash:-	Amt ($)
	Cash balance given	73030
	Less: sinking fund balance	(12950)
	Add: increase in income tax payable	6000
		$66080
2.	Account receivable:-
	Account receivable (given)	48030
	Less:- from consigned goods	(5323)
		42707
3	inventories given	64030
	Add:- inventory under consignment	5323
		69353
4	Notes &accounts payable:-
	Notes and account payable (given)	48030
	Add: income tax payable	6000
		54030