Question

290 Chapter 5 Balance Sheet and Statement of Cash Flows EASTWOOD COMPANY ADSTEDT BALANCE DECEMBER 31, 2012 Credits Debit $ 41,000 163,500 8.700 Cash Accounts Receivable Allowance for Doubtful Accounts Prepaid insurance Inventory Equity Investments long-term Land Construction in Proces building Patents Equipment Accumulated Depreciation Equipment Discount on Bonds Payable Accounts Payable Accrued Expenses Notes Payable Bonds Payable Common Stock Pald-in Capital in Excess of Per-Common Stock Retained Caming 8.000 208,500 330,000 A5.000 124.000 M.000 400,000 20.000 240,000 148.000 40,200 4.000 200.000 500.000 45.000 130,000 $149.900 Additional information: 1. The LIFO method of inventory value is used 2. The cost and fair value of the long-term Investments that consist of stocks and bonds is the same. 3. The amount of the Construction in Progress account represents the costs expended to date on a build. ing in the process of construction. (The company rents factory space at the present time.) The land on which the building is being constructed cost $85.000, as shown in the trial balance. 4. The patents were purchased by the company at a cost of $40,000 and are being amortized on a straight-line basis. 5. Of the discount on bonds payable, $2,000 will be amortized in 2013. 6. The notes payable represent bank loans that are secured by long-term investments carried at $120,000 These bank loans are due in 2013. 7. The bonds payable bear interest at 8% payable every December 31, and are due January 1, 2023. 8. 600,000 shares of common stock of a par value of i were authorized, of which 500,000 shares were issued and outstanding. Instructions Prepare a balance sheet as of December 31, 2012, so that all important information is fully disclosed. P5-4 (Preparation of a Corrected Balance Sheet) Presented below and on the next page is the balance chant of Kishwaukee Corporation as of December 31, 2012. 3

Answer 1

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Eastwood Company Balance Sheet December 31, 2012 Assets 41,000 Current assets: Cash Accounts Receivable Less : Allowance for Doubtful accounts Prepaid Insurance Inventory Total Current assets $ $ 163,500 $ 8,700 $ $ $ $ 154,800 5,900 208,500 410,200 $ 339,000 209,000 Long term investments Equity Investments Property, plant and equipment Land Construction in Process (building) Equipment Less : Accumulated Depreciation - Equipment Total Property, Plant, and Equipment Intangible Assets Patents Total Assets $ 85,000 $ 124,000 $ $ 400,000 $ 240,000 $ $ 160,000 708,000 $ 36,000 $ 1,154,200 Liabilities and Stockholders' Equity Current Liabilities Note payable Accounts Payable Accrued Expense Total Current Liabilities $ 94,000 $ 148,000 $ 49,200 $ 291,200 Long-term Debt Interest Expense Less: Discount on Bonds Payable Interest Payable Total Liabilities $ 200,000 $ 20,000 $ $ 180,000 471,200 Stockholders' Equity Common Stock Authorized 600,000 shares of $1 par value; issued and outstanding, 500,000 Paid-in Capital in Excess of Par-Common Stock Retained Earnings Total Stockholders' Equity Total Laibilities and Stockholders' Equity $ 500,000 $ 45,000 $ 138,000 $ 683,000 $ 1,154,200