Question

Mallard Incorporated (MI) is a small manufacturing company that makes model trains to sell to toy stores. It has a small service department that repairs customers’ trains for a fee. The company has been in business for five years. At the end of the previous year, the accounting records reflected total assets of $590,000 and total liabilities of $245,000. During the current year, the following summarized events occurred:

1. Issued additional shares of common stock for $115,000 cash.
2. Borrowed $115,000 cash from the bank and signed a 10-year note.
3. Built an addition on the buildings for $205,000 and paid cash to the contractor.
4. Purchased equipment for the new addition for $35,750, paying $3,575 in cash and signing a note for the balance due in two years.
5. Returned a $3,575 piece of equipment, from (d), because it proved to be defective; received a reduction of the notes payable.
6. Purchased a delivery truck (equipment) for $14,750; paid $10,325 cash and signed a two-year note for the remainder.
7. A stockholder sold $6,650 of his stock in Mallard Incorporated to his neighbor.

Required:

1. 1. Complete the spreadsheet that follows. The first transaction is used as an example.

2. 3. Based on beginning balances plus the completed spreadsheet, provide the Total assets, liabilities and stockholders' equity at the end of year.

3. 4. As of the current year-end, has the financing for MI’s investment in assets primarily come from liabilities or stockholders’ equity?
   Required 1 Required 3 Required 4 Complete the spreadsheet that follows. The first transaction is used as an example. (Enter any decreases to account balances with a minus sign.) = + Cash 115,000 Assets Equipment Buildings Equipment Buildings Liabilities Notes Payable Stockholders' Equity Common Retained Stock Earnings 115,000 End. < Required 1 Required 3 >
   

Answer 1

	Assets			=	Liabilities	+	Stockholder's equity
	Cash	Equipment	Building		Notes payable		Common stock	Retained earnings
a	115000						115000
b	115000				115000
c	(205000)		205000
d	(3575)	35750			32175
e		(3575)			(3575)
f	(10325)	14750			4425
End	11100	46925	205000	=	148025	+	115000

		Amount
a	Total assets at the end of the year	853025
b	Total liabilities at the end of the year	393025
c	Total stockholders' equity at the end of the year	460000

As of the current year-end,the financing for MI's investment in assets primarily come from stockholders' equity