Question

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The following pertains to Addison Corporation:

2019    2018

Cash               55,000   20,000
Accounts Receivable 129,000   95,000
Inventory    185,000   154,000
Prepaid Expenses    4,000   1,000
Total Current Assets 373,000   270,000
Land               100,000   100,000
Equipment               571,000    420,000
Accumulated Depreciation (55,000)   (20,000)
   616,000    500,000
TOTAL ASSETS               989,000   770,000
Accounts Payable    183,000    131,000
Income Taxes Payable 8,000    10,000
Accrued Expenses Payable    3,000   9,000
   Total Current Liabilities    194,000   150,000
                  
Long-term Liabilities:                  
Bonds Payable           400,000   300,000
   594,000   450,000
                  
Stockholders' Equity:                  
Capital Stock               60,000   50,000
Additional Paid-in Capital    140,000   100,000
Retained Earnings           195,000   170,000
   Total Stockholders' Equity    395,000   320,000
                  
TOTAL LIABILTIES & STOCKHOLDERS' EQUITY 989,000   770,000

Additional Information for Addison (all 2019 activities):

1. Net Income for 2019 = $65,000
2. 2019 Depreciation Expense = $40,000
3. Additional equipment purchased in 2019 = $191,000
4. Equipment with a cost of $40,000 and book value of $35,000 was sold for $31,000, resulting in a loss of $4,000. (Note: This loss was included in the net income of $65,000).
5. The company issued bonds in 2019 for $100,000.
6. The company issued 1,000 shares of $10 par value capital stock for cash at a price of $50 per share.
7. Cash dividends declared and paid to stockholders totaled $40,000 during the year.

Answer 1

Balance Sheet	Year 2019	year 2018
Current Assets
Cash	55000	20000
Account Receivable	129000	95000
Inventory	185000	154000
Prepaid Expenses	4000	1000
Fixed Assets
Land	100000	100000
Equipments	571000	420000
Less : Accumulated depreciation	(55000)	(20000)
Total of Current Assets and Fixed Assets	989000	770000
Current Liabilities
Accounts Payable	183000	131000
Income tax Payable	8000	10000
Accrued Expenses Payable	3000	9000
Long Term Liabilities
Bonds Payable	400000	300000
Equity
Capital Stock	60000	50000
Additional Capital	140000	100000
Retained Earnings	195000	170000
Total long Term Liab and Share Capital	989000	770000

Equipment Account

Particulars	Debit	Particulars	Credit
To balance brought down	420000	By Sale of Equipments	40000
To Purchases	191000
		By bal Carried down	571000
Total	611000		611000

Depreciation Account

Particulars	Amount	Particulars	Amount
To Fixed Assets	5000	By Balance b/d	20000
		By P&L Account	40000
To balance c/d	55000

Bonds Account

Particulars	Amount	Particulars	Amount
		By balance b/d	300000
		By Cash	100000
To balance c/d	400000
Total	400000		400000

Retained Earnings Account

Particulars	Amount	Particulars	Amount
To Shareholders	40000	By balance b/d	170000
		By P&L	65000
To balance c/d	195000
Total	235000	Total	235000

Share Capital Account

Particulars	Amount	Particulars	Amount
		By balance b/d	50000
		By Cash	10000
To balance c/d	60000
Total			60000

Additional Share Capital Account

Particulars	Amount	Particulars	Amount
		By balance c/d	100000
		By Addl Share Capital	40000
To balance c/d	140000
Total	140000		140000

Loss on Sale of Equipments $ 1000 has already been considered in P&L , hence , no separate entry required.

Equipment account , Depreciation Account , Share Capital Account , Bonds Account , Addltional Share capital account , shown with respective entries , as required.

End of solution