Question

Problem 3-4 Balance sheet preparation (LO3-2, 3-3) The following is the ending balances of accounts at December 31, 2018 for the Welsmuller Publishing Company. Account Title Cash Accounts receivable Inventories Prepaid expenses Machinery and equipment Accumulated depreciation equipment Investments Accounts payable Interest payable Deferred revenue Taxes payable Notes payable Allowance for uncollectible accounts Conmon stock Retained earnings Totals Debits Credits 67,000 162,000 286,000 150,000 322,000 111,000 142,000 61,000 21,000 81,000 31,000 205,000 17,000 401,000 201,000 1,129,000 1,129,000 Additional information: 1. Prepaid expenses include $122,000 paid on December 31, 2018, for a two-year lease on the building that houses both the administrative offices and the manufacturing facility. 2. Investments include $31,000 in Treasury bills purchased on November 30, 2018. The bills mature on January 30, 2019. The remaining $111,000 includes investments in marketable equity securities that the company intends to sell in the next year. 3. Deferred revenue represents customer prepayments for magazine subscriptions. Subscriptions are for periods of one year or less. 4. The notes payable account consists of the following: a. a $41,000 note due in six months. b. a $101,000 note due in six years. C. a $63,000 note due in three annual installments of $21,000 each with the next installment due August 31, 2019. 5. The common stock account represents 401,000 shares of no par value common stock issued and outstanding. The corporation has 700,000 shares authorized. Required: Prepare a classified balanced sheet for the Welsmuller Publishing Company at December 31, 2018. (Amounts to be deducted should be indicated by a minus sigo.) < Prev 3 of 4 SH Next >

Answer 1

Solution ;

                            Weismuler publishing company

                              Balancesheet

                           At the December 31 , 2018

Asset	Amount	Amount
Current asset
Cash and cash equialent	98000
Investment in equity securities	111,000
Account receivable                                  162000
less.allowance for uncollectable a/c's         17000
Net accounts receivable	145000
Inventories	286000
Prepaid expenses	89000
Total current asset		729000
Property , plant and equipment
Equipment	322000
less. Accumulated depreciation	111000
Net property ,plant and equipment		211000
Other assets
Prepaid expenses		61000
		1001000
Liabilities and shareholder's equity
Current liability
Accounts payable	61000
Interest payable	21000
Deffered revenue	81000
Income taxpayable	31000
Notes payable	41000
Current maturities of long term debt	21000
Total current liabilities
Total current liabilities		256000
Long term liabilities
Notes payable		143000
Shareholder's equity
Commonstock	401000
Retained earning	201000
Total shareholders equity		602000
		1001000

Working note*

1. Computation of cash and cash equivalents

    Cash                   67000

   Trasure bill maturity on 30/01/2019       31000

   Cash and cash equivalent                     98000

2. Prepaid expenses related to current asset

   Total prepaid expenses       150,000

less.Prepaid expenses more than one year   (122,000 / 2 )          61000

                                                                                              89000

Out of total prepaid expense 150,000 , One year prepaid expense is $61000 comes under current asset . The

balance of 2 year prepaid expense classified under other asset .

3. Notes payable under longterm liability

     Notes payable not due in six years            101000

     Notes payable annual installments which due is more than one year (21000*2)       42000

                                                                                                                            143000

     a) Notes payable of 21000 with the next installment due on August 31 , 2019 is current maturities of long

        term debt

    b) Notes payable of $41000 which are due after six months is classified under current liabilities .