Question

The following are the ending balances of accounts at December 31, 2021, for the Valley Pump Corporation.
 

Account Title		Debits			Credits
Cash	$	29,000
Accounts receivable		64,000
Inventory		89,000
Interest payable				$	14,000
Investment in equity securities		52,000
Land		128,000
Buildings		320,000
Accumulated depreciation—buildings					104,000
Equipment		83,000
Accumulated depreciation—equipment					29,000
Copyright (net)		16,000
Prepaid expenses (next 12 months)		36,000
Accounts payable					69,000
Deferred revenue (next 12 months)					24,000
Notes payable					270,000
Allowance for uncollectible accounts					9,000
Common stock					240,000
Retained earnings					58,000
Totals	$	817,000		$	817,000

Additional Information:

1. The $128,000 balance in the land account consists of $104,000 for the cost of land where the plant and office buildings are located. The remaining $24,000 represents the cost of land being held for speculation.

2. The $52,000 balance in the investment in equity securities account represents an investment in the common stock of another corporation. Valley intends to sell one-half of the stock within the next year.

3. The notes payable account consists of a $108,000 note due in six months and a $162,000 note due in three annual installments of $54,000 each, with the first payment due in August of 2022.

Required:
Prepare a classified balance sheet for the Valley Pump Corporation at December 31, 2021. Use the additional information to help determine appropriate classifications and account balances. (Amounts to be deduc

Answer 1

VALLEY Pump CORPORATION Balance sheet At December 31, 2021 Assets Current Assets: Cash Accounts Receivable Alloulance for uncollectible accounts Inventory Prepaid expenses Investment in equity Gewsities $29,000 Е $ 64,000 & -9,000 $ 89,000 $36,000 $ 26,000 Total current assets $235,000 Investments: hand $24,000 Investment in equity securities $ 26,000 Total investments $50,000 Property, plant and equipment; Land $104,000 Buildings $320,000 Equipment $ 83,000 $ 5o 7,ooo ress: Accumulated Depreciation - Buildings 8-104,000 lessi Accumulated Depreciation -Equiponentf-29,000 Net property, plant and equipment copyright (net) 1374,000 Intangible assets! & 16,000 Total assets $675,000

Liabilities and shareholders' Equity Current liabilities: Accounts Payable $ 69000 Notes Payable $ 108,000 Deferred Revenue $24,000 Interest Payable $ $ 14,000 Current matusities of long term debt $ 54,000 Total current liabilities $ 269,000 Long teame liabilities: Notes Payable $ 108,000 Total liabilities 1377,000 Shareholders equity: Common stock $ 240,000 Retained Earnings $ 58,000 Total Shareholders' equity $ 298,000 Total liabilities and shareholders equity 1 675,000 calculation: Investment in equity securities = $52,000x 1 2 = $ 26,000