Question

*Exercise 5-12 Presented below is the trial balance of Vaughn Corporation at December 31, 2020. Credit Debit $ 201,970 $ 8,104,060 $ 157,060 4,800,000 303,970 281,970 94,060 459,060 2,004,060 66,860 264,060 1,044,970 140,970 100,060 439,060 Cash Sales Debt Investments (trading) (at cost, $145,000) Cost of Goods Sold Debt Investments (long-term) Equity Investments (long-term) Notes Payable (short-term) Accounts Payable Selling Expenses Investment Revenue Land Buildings Dividends Payable Accrued Liabilities Accounts Receivable Accumulated Depreciation-Buildings Allowance for Doubtful Accounts Administrative Expenses Interest Expense Inventory Gain Notes Payable (long-term) Equipment Bonds Payable Accumulated Depreciation Equipment Franchises Common Stock ($5 par) Treasury Stock Patents Retained Earnings Paid-in Capital in Excess of Par Totals 152,000 29,060 903,860 214,860 601,970 83,860 904,970 604,060 1,004,970 60,000 160,000 1,004,060 195,060 195,000 82,970 84,970 $12,371,930 $12,371,930 Prepare a balance sheet at December 31, 2020, for Vaughn Corporation. (Ignore income taxes). (List Current Assets in order of liquidity. List Property, Plant and Equipment in or and do not provide the descriptive information provided in the question.)

Answer 1

Vaughn Corporation Balance Sheet As of December 31, 2020 Assets Current Assets Cash Debt Investments (trading) (at cost, $145,000) Accounts Receivable Less: Allowance for doubtful accounts Inventory Total Current Assets 201,970 157,060 439,060 (29,060) 410,000 601,970 1,371,000 Long-term Investments Debt Investments (long-term) Equity Investments (long-term) Total Long-term Investments 303,970 281,970 585,940 264,060 Property, Plant & Equipment Land Buildings Less: Accumulated Depreciation-Buildings Equipment Less: Accumulated Depreciation-Equipment Property, Plant & Equipment, Net 892,970 1,044,970 (152,000) 604,060 (60,000) 544,060 1,701,090 Intangible Assets Franchises Patents Total Intangible Assets Total Assets 160,000 195,000 355,000 4,013,030 Liabilities & Stockholders Equity Current Liabilities Accounts Payable Notes Payable (short-term) Dividends Payable Accrued Liabilties Total Current Liabilities 459,060 94,060 140,970 100,060 794,150 Long-term Liabilties Notes Payable (long-term) Bonds Payable Total Long-term Liabilties Total Liabilties 904,970 1,004,970 1,909,940 2,704,090 1,004,060 84,970 Stockholders Equity Paid in Capital Common Stock ($5 par) Paid in Capital in Excess of Par Total Paid in Capital Retained Earnings Total Paid in Capital and Retained Earnings Less: Treasury Stock Total Stockholders Equity Total Liabilities & Stockholders Equity 1,089,030 414,970 1,504,000 (195,060) 1,308,940 4,013,030

Workings

8,104,060 4,800,000 3,304,060 Vaughn Corporation Income Statement For the Year Ended December 31, 2020 Sales Cost of goods sold Gross profit Operating expenses Selling expense Administrative expense Total Operating expenses Operating Income Non-operating expense (income) Interest expense Gain Investment revenue Total Non-operating expense (income) Net Income 2,004,060 903,860 2,907,920 396,140 214,860 (83,860) (66,860) 64,140 332,000 Statement of Retained Earnings For the Year Ended December 31, 2020 Beginning balance Net Income Ending Balance 82,970 332,000 414,970