Question

The bookkeeper for Stellar Company has prepared the following balance sheet as of July 31, 2020.

STELLAR COMPANY BALANCE SHEET AS OF JULY 31, 2020
Cash		$ 70,190		Notes and accounts payable		$ 45,190
Accounts receivable (net)		41,690		Long-term liabilities		76,190
Inventory		61,190		Stockholders’ equity		156,690
Equipment (net)		84,000				$278,070
Patents		21,000
		$278,070

The following additional information is provided.

1.		Cash includes $1,200 in a petty cash fund and $11,890 in a bond sinking fund.
2.		The net accounts receivable balance is comprised of the following two items: (a) accounts receivable $45,190 and (b) allowance for doubtful accounts $3,500.
3.		Inventory costing $4,991 was shipped out on consignment on July 31, 2020. The ending inventory balance does not include the consigned goods. Receivables in the amount of $4,991 were recognized on these consigned goods.
4.		Equipment had a cost of $113,190 and an accumulated depreciation balance of $29,190.
5.		Income taxes payable of $6,000 were accrued on July 31. Stellar 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, 2020, from the available information, adjusting the account balances using the additional information. (List Current Assets in order of liquidity)

STELLAR COMPANY Balance Sheet 4 Assets $ $ $ 4 $ Liabilities and Stockholders' Equity $

Answer 1

Answer:

STELLER COMPANY
Balance Sheet
July 31 2020
Amount ($)		Amount ($)
ASSETS:-
Current Assets:
Cash (WN 1)		64,300
Accounts Receivable (WN 2)	40,199
Less: Allowance for doubtful accounts	-3500	$36,699
Inventories (WN 3)		66,181
Total Current Assets			167,180
Long-term investments:-
Bond sinking fund			11,890
Property, Plant and Equipment :-
Equipment (Net)			84,000
Intangible assets:
Patents			21,000
Total Assets			284,070
LIABILITIES:-
Current Liabilities:-
Notes and accounts payable		45,190
Taxes Payable		6,000
Total current liabilities			51,190
Long-term Liabilities:			76,190
Total Liabilities			127,380
Stockholder's Equity			156,690
Total Liabilities and Equity			284,070

Working Note:

1)	Cash:	Amount ($)
	Cash balance given	70,190
	Less: Sinking fund balance	(11,890)
	Add: Increase in income tax payable	6,000
	Cash at the end of the period	$64,300
(2)	Accounts Receivable :-
	Accounts Receivable Given	45,190
	Less: From consigned goods	(4,991)
		40,199
(3)	Inventories given	61,190
	Add: Inventory under consignment	4,991
		66,181