Question

Q1. (25 marks)

The following statement of financial position was prepared by the bookkeeper for Badger Corp. at December 31, 2020.

Badger Corp.

Statement of Financial Position

December 31, 2020

Cash$ 90,000Accounts payable$ 75,000

Accounts receivable (net)52,200Long-term liabilities110,000

Inventories57,000Shareholders’ equity208,500

Investments76,300

Equipment (net)86,000

Patents 32,000____

$393,500$393,500

The following additional information is provided:

1.“Cash” includes prepaid insurance of $9,400; as well, a bank overdraft of $1,500 has been deducted.

2.The net accounts receivable balance includes:

(a) accounts receivable—debit balances $62,000;

(b) accounts receivable—credit balances $5,000;

(c) allowance for doubtful accounts $4,800.

3.Inventories do not include goods costing $5,000 shipped out on consignment. Receivables of $5,000 were recorded on these goods.

4.Investments include investments in common shares, trading $24,000 and long-term $43,300, and franchises $9,000.

5.Equipment costing $8,000 with accumulated depreciation $6,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000.

Instructions

Prepare a statement of financial position in good form (shareholders’ equity details can be omitted.)

Answer 1

Answer-

Badger Corp

Statement of Financial Position

Current Assets
Cash (90,000-9400+1500)		82,100
Accounts receivable (62000 -5,000)	57,000
Less: allowance for doubtful debts	-4800	52200
Inventories (57000 +5000)		62,000
Prepaid insurance		9400
Equipment held for sale (8000-6000)		2,000
Investments held for trading		24,000
Total current assets		231,700
Investments- Long term		43,300
Property, Plant & Equipment ($86,000 + $40,000 – $8,000 + $6,000)	124000
Less: accumulated depreciation	-40000	84,000
Intangible assets -
Patents		32000
Franchises - investments		9000
Total Assets		400,000
Liabilities and shareholders' equity
Current Liabilities
Accounts Payable ($75,000 + $5,000)		80,000
Bank Overdraft		1,500
Total current liabilities		81,500
Long term liabilities		110000
Total Liabilities		191500
Shareholders equity		208500
Total Liabilities and shareholders' equity		400,000