Question

The bookkeeper for Whispering Winds Corp. has prepared the following statement of financial position as at July 31, 2020: WHISPERING WINDS CORP. Statement of Financial Position As at July 31, 2020 Cash $77,000 Notes and accounts payable Accounts receivable (net) 50,800 Long-term liabilities Inventory 68,000 Shareholders' equity Equipment (net) 131,000 Patents (net) 41,000 $367,800 $61,000 94,000 212,800 $367,800 The following additional information is provided: 1. Cash includes $1,700 in a petty cash fund and $18,000 in a bond sinking fund. 2. The net accounts receivable balance is composed of the following three items: (a) accounts receivable debit balances $65,000; (b) accounts receivable credit balances $9,400; and (c) allowance for doubtful accounts $4,800. 3. Inventory costing $7,100 was shipped out on consignment on July 31, 2020. The ending inventory balance does not include the consigned goods. Receivables of $7,100 were recognized on these consigned goods. 4. Equipment had a cost of $173,000 and an accumulated depreciation balance of $42,000. 5. Income Tax Payable of $9,400 was accrued on July 31. Whispering Winds Corp., 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 tax payable account. 6. Long-term liabilities are bonds payable issued at par, due in 2025. 7. Shareholders' equity is made up of two account balances: Common Shares of $141,900 and Retained Earnings of $70,900. (a) Use the information available to prepare a corrected classified statement of financial position as at July 31, 2020. (Adjust the account balances based on the additional information.) (List Current Assets in order of liquidity.)

Answer 1

Statement of Financial Position
Assets
Current Assets
Cash		$        59,000
Cash Fund		$          9,400
Accounts Receivable	$              48,500
Less - Allowance of Doubtful assets	$              (4,800)	$        43,700
Inventory		$        75,100
Total Current Assets		$     187,200
Non- Current Assets
Bond Sinking Fund		$        18,000
Equipment (Gross)	$            173,000
Less - Accumulated Depreciation	$            (42,000)
Equipment (Net)		$     131,000
Patents (Net)		$        41,000
Total Current Assets		$     190,000
Total Assets		$     377,200
Liabilities and Shareholder's Equity
Current Liabilities
Income Tax Payable		$          9,400
Notes & Accounts Payable		$        61,000
Total Current Liabilities		$        70,400
Non- Current Liabilities
Long -Term Liabilities		$        94,000
Total Liabilities		$     164,400
Common Stock	$            141,900
Retained Earnings	$              70,900
Shareholders Fund		$     212,800
Liabilities and Shareholder's Equity		$     377,200