Question

Presented below is the balance sheet of Blue Corporation as of December 31, 2017.

BLUE CORPORATION BALANCE SHEET DECEMBER 31, 2017
Assets
Goodwill (Note 2)		$  122,580
Buildings (Note 1)		1,640,000
Inventory		314,680
Land		950,000
Accounts receivable		172,580
Treasury stock (50,000 shares)		89,580
Cash on hand		178,480
Assets allocated to trustee for plant expansion
Cash in bank		72,580
Debt investments (held-to-maturity)		140,580
		$3,681,060
Equities
Notes payable (Note 3)		$ 602,580
Common stock, authorized and issued, 1,000,000 shares, no par		1,152,580
Retained earnings		805,580
Noncontrolling interest		57,580
Appreciation capital (Note 1)		572,580
Income tax payable		77,580
Reserve for depreciation recorded to date on the building		412,580
		$3,681,060

Note 1: Buildings are stated at cost, except for one building that was recorded at appraised value. The excess of appraisal value over cost was $572,580. Depreciation has been recorded based on cost.

Note 2: Goodwill in the amount of $122,580 was recognized because the company believed that book value was not an accurate representation of the fair value of the company. The gain of $122,580 was credited to Retained Earnings.

Note 3: Notes payable are long-term except for the current installment due of $100,000.

Prepare a corrected classified balance sheet in good form. The notes above are for information only. (List Current Assets in order of liquidity.)

Answer 1

Blue Corporation Balance Sheet As at 31.12.2017 Assets Current assets Cash Accounts receivable Inventory Total current assets 178480 172580 314680 665740 Long-term investments Assets allocated to trustee for expansion: Cash in bank Debt investments (held-to-maturity) 72580 140580 213160 Property, plant, and equipment Land Buildings Less: Accum. Depreciation buildings Total assets 950000 1067420 -412580 654840 1604840 2483740 Liabilities and Stockholders' Equity Current liabilities Notes payable-current installment Income taxes payable Total current liabilities Long-term liabilities Notes payable Total liabilities 100000 77580 177580 502580 680160 Stockholders' equity Common stock, no par; 1,000,000 shares authorized and issued; 950,000 shares outstanding Retained earnings 1152580 683000 1835580 89580 1746000 57580 Less: Treasury stock, at cost (50,000 shares) Stockholders' equity Equity attributable to Noncontrolling interest Total stockholders' equity Total liabilities and stockholders' equity 1803580 2483740 $1,640,000-$572,580 (to eliminate the excess of appraisal value over cost from the Buildings account. Note that the appreciation capital account is also deleted) $602,580-$100,000 (to reclassify the currently maturing portion of the notes payable as a current liability) $805,580-$122,580 (to remove the value of goodwill from retained earnings. Note 2 indicates that retained earnings was credited. Note that the goodwill account is also deleted)