Question

please complete balance sheet

Additional information ($ in 000s): 1. Certain records that included the account balances for the patent and shareholders' equity items were lost. However, the controller told you that a complete, preliminary balance sheet prepared before the records were lost showed a debt to equity ratio of 12. That Is, total liabilities are 120% of total shareholders' equity, Retained earnings at the beginning of the year was $5,600. Net Income for 2021 was $1,950 and $500 in cash dividends were declared and paid to shareholders. 2. Management intends to sell the investments in the next six months. 3. Interest on both the notes and the bonds is payable annually 4. The notes payable are due in annual installments of $1,400 each. 5. Deferred revenue will be recognized as revenue equally over the next two fiscal years. 6. The common stock represents 400,000 shares of no par stock authorized, 330,000 shares issued and outstanding,

Answer 1

SANDERSON MANUFACTURING COMPANY Balancesheet At December 31, 2021 ( $ in 000s except share data )

Assets	Amount	Amount
Current Asset;
Cash		$2,050
Short term Investment		$3,800
Accounts Receivable, Net of allowances	$5100
Allowance for uncollectible	($1,200)
Net Accounts Receivable		$3,900
Inventory
Raw Materials and Work in process	$3,050
Finished Goods	$6,800
		$9,850
Prepaid Expenses		$2,000
Total Current Asset		$21,600
Property, Plant and Equipment
Equipment	$23,000
Accumulated Depreciation	($5,000)
Net Property, Plant and Equipment		$18,000
Intangible Assets;
Patent (Net)		$3,850
Total Assets		$43,450
Liabilities and Shareholders Equity
Current Liabilities
Accounts Payable		$6,000
Interest Payable ($900 + $ 300)		$1,200
Deferred Revenue		$2,300
Current Materials of long term debt		$1,400
Total Current Liabilities		$10,900
Long Term Liabilities
Deferred Revenue	$2,300
Note Payable ($5,600 - $ 1,400)	$4,200
Bond Payable	$6,300
Total		$12,800
Total Liabilities		$23,700
Shareholders Equity
Common Stock	$12,700
Retained Earnings	$7,050
Total Shareholders Equity		$19,750
Total Liabilities and Shareholders Equity		$43,450

Calculation;

1. Total Shareholders Equity

Liabilities ÷ Equity = 1.2

$23,700 ÷ 1.2 = $ 19,750

2. Retained Earnings

Begining Retained Earnings + Net Income - Dividend = Retained Earnings

$5,600 + $1,950 -  $500 = $ 7,050

3. Common Stock

Total Equity - Retained Earnings = Common Stock

= $ 19,750 - $7,050 = $12,700

4. Patent

Asset = Liabilities + Equity

=$23,700 + $19,750 = $43,450

$43,450 - All other Asset = Patent

$43,450 - $39,600 = $3,850