Question

The bookkeeper for Kingbird Company has prepared the following balance sheet as of July 31, 2017 KINGBIRD COMPANY BALANCE SHEET AS OF JULY 31, 2017 $48,440 79,440 159,940 $287,820 Cash $73,440 Notes and accounts payable Accounts receivable (net) 44,940 Long-term liabilities 64,440 Stockholders' equity 84.000 21,000 Equipment (net) $287,820 The following additional information is provided. 1. Cash includes $1,200 in a petty cash fund and $11,820 in a bond sinking fund 2. The net accounts receivable balance is comprised of the following two items: (a) accounts receivable $48,440 and (b) allowance for doubtful accounts $3,500. 3. Inventory costing S5,389 was shipped out on consignment on July 31, 2017. The ending inventory balance does not include the consigned goods. Receivables in the amount of $5,389 were recognized on these consigned goods. 4. Equipment had a cost of $116,440 and an accumulated depreciation balance of $32,440. 5. Income taxes payable of $6,000 were accrued on July 31. Kingbird 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. Prepare a corrected classified balance sheet as of July 31, 2017, from the available information, adjusting the account balances using the additional information. (List Current Assets in order of liquidity)

Answer 1

Ans- KINGBIRD COMPANY

Balance Sheet

July 31, 2017

	Amount ($)	Amount ($)
ASSETS:-
Current Assets:
Cash (WN 1)	67,620
Accounts Receivable (WN 2)	43,051
Less: Allowance for doubtful accounts	-3,500
Inventories (WN 3)	69,829
Total Current Assets		177,000
Long-term investments:-
Bond sinking fund		11,820
Property, Plant and Equipment :-
Equipment (Net)		84,000
Intangible assets:
Patents		21,000
Total Assets		293,820
LIABILITIES:-
Current Liabilities:-
Notes and accounts payable	48,440
Taxes Payable	6,000
Total current liabilities		54,440
Long-term Liabilities:		79,440
Total Liabilities		133,880
Stockholder's Equity		159,940
Total Liabilities and Equity		293,820

Working Note:

(1)	Cash:	Amount ($)
	Cash balance given	73,440
	Less: Sinking fund balance	11,820
	Add: Increase in income tax payable	6,000
	Cash at the end of the period	67,620
(2)	Accounts Receivable :-
	Accounts Receivable Given	48,440
	Less: From consigned goods	5,389
		43,051
(3)	Inventories given	64,440
	Add: Inventory under consignment	5,389
		69,829

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