Question

Exercise 5-5 Stellar Company has decided to expand its operations. The bookkeeper recently completed the following balance sheet in order to obtain additional funds for expansion. $235,500 345,500 406,500 145,500 575,500 165,500 180,500 STELLAR COMPANY BALANCE SHEET FOR THE YEAR ENDED 2020 Current assets Cash Accounts receivable (net) Inventory (lower-of-average-cost-or-market) Equity investments (marketable)-at cost (fair value $125,500) Property, plant, and equipment Buildings (net) Equipment (net) Land held for future use Intangible assets Goodwill Cash surrender value of life insurance Prepaid expenses Current liabilities Accounts payable Notes payable (due next year) Pension obligation Rent payable Premium on bonds payable Long-term liabilities Bonds payable Stockholders' equity Common stock, $1.00 par, authorized 400,000 shares, issued 295,500 Additional paid-in capital Retained earnings 85,500 95,500 17,500 140,500 130,500 87,500 54,500 58,500 505,500 295,500 165,500 Prepare a revised balance sheet given the available information. Assume that the accumulated depreciation balance for the buildings is $165,500 and for the equipment, $110,500. The allowance for doubtful accounts has a balance of $22,500. The pension obligation is considered a long-term liability. (List Current Assets in order of liquidity. List Property, plant and Equipment in order of Buildings and Equipment. Enter account name only and do not provide the descriptive information provided in the question.)

Answer 1

Stellar Company Balance Sheet As of December 31, 2020 Assets Current Assets 235,500 Cash Equity Investments (marketable) at cost (fair value $125,500) 145,500 368,000 (22,500) Accounts Receivable Less: Allowance for doubtful accounts 345.500 Inventory 406,500 Prepaid expenses 17,500 Total Current Assets 1,150,500 Long-term Investments Cash surrender value of insurance 95,500 Land held for future use 180,500 Total Long-term Investments 276,000 Property, Plant & Equipment Buildings Less: Accumulated Depreciation-Buildings 741,000 (165,500) 575,500 Equipment 276,000 Less: Accumulated Depreciation-Equipment (110,500) 165,500 741,000 Property, Plant & Equipment, Net Intangible Assets Goodwill 85,500 Total Assets 2,253,000 Liabilities & Stockholders Equity Current Liabilities Accounts Payable 140,500 Notes Payable (due next year) Rent Payable 130,500 54,500 Total Current Liabilities 325,500 Long-term Liabilties Bonds Payable 505,500 Add: Premium on Bonds Payable 58,500 564,000 Pension Obligation 87,500 Total Long-term Liabilties 651,500 Total Liabilties 977,000 Stockholders Equity Paid in Capital Common Stock, $1.00 par, authorized 400,0000 shares, Issued 295,500 295,500 Additional Paid in Capital 165,500 Total Paid in Capital 461,000 Retained earnings 815,000 Total Stockholders Equity 1,276,000 Total Liabilities & Stockholders Equity 2,253,000 Calculations Retained earnings Total Assets-Total Liabilties- Total Paid in Capital 2,253,000-977,000-461,000 = 851,000

Stellar Company
Balance Sheet
As of December 31, 2020
Assets
Current Assets
Cash		235,500
Equity Investments (marketable) at cost (fair value $125,500)		145,500
Accounts Receivable	368,000
Less: Allowance for doubtful accounts	(22,500)	345,500
Inventory		406,500
Prepaid expenses		17,500
Total Current Assets			1,150,500
Long-term Investments
Cash surrender value of insurance		95,500
Land held for future use		180,500
Total Long-term Investments			276,000
Property, Plant & Equipment
Buildings	741,000
Less: Accumulated Depreciation-Buildings	(165,500)	575,500
Equipment	276,000
Less: Accumulated Depreciation-Equipment	(110,500)	165,500
Property, Plant & Equipment, Net			741,000
Intangible Assets
Goodwill			85,500
Total Assets			2,253,000
Liabilities & Stockholders Equity
Current Liabilities
Accounts Payable		140,500
Notes Payable (due next year)		130,500
Rent Payable		54,500
Total Current Liabilities			325,500
Long-term Liabilties
Bonds Payable	505,500
Add: Premium on Bonds Payable	58,500	564,000
Pension Obligation		87,500
Total Long-term Liabilties			651,500
Total Liabilties			977,000
Stockholders Equity
Paid in Capital
Common Stock, $1.00 par, authorized 400,000 shares, Issued 295,500	295,500
Additional Paid in Capital	165,500
Total Paid in Capital		461,000
Retained earnings		815,000
Total Stockholders Equity			1,276,000
Total Liabilities & Stockholders Equity			2,253,000
			-
Calculations
Retained earnings
Total Assets - Total Liabilties - Total Paid in Capital
=2,253,000-977,000-461,000 = 815,000

Stellar Company Balance Sheet As of December 31, 2020 Assets Current Assets 235,500 Cash Equity Investments (marketable) at cost (fair value $125,500) 145,500 368,000 (22,500) Accounts Receivable Less: Allowance for doubtful accounts 345.500 Inventory 406,500 Prepaid expenses 17,500 Total Current Assets 1,150,500 Long-term Investments Cash surrender value of insurance 95,500 Land held for future use 180,500 Total Long-term Investments 276,000 Property, Plant & Equipment Buildings Less: Accumulated Depreciation-Buildings 741,000 (165,500) 575,500 Equipment 276,000 Less: Accumulated Depreciation-Equipment (110,500) 165,500 741,000 Property, Plant & Equipment, Net Intangible Assets Goodwill 85,500 Total Assets 2,253,000 Liabilities & Stockholders Equity Current Liabilities Accounts Payable 140,500 Notes Payable (due next year) Rent Payable 130,500 54,500 Total Current Liabilities 325,500 Long-term Liabilties Bonds Payable 505,500 Add: Premium on Bonds Payable 58,500 564,000 Pension Obligation 87,500 Total Long-term Liabilties 651,500 Total Liabilties 977,000 Stockholders Equity Paid in Capital Common Stock, $1.00 par, authorized 400,0000 shares, Issued 295,500 295,500 Additional Paid in Capital 165,500 Total Paid in Capital 461,000 Retained earnings 815,000 Total Stockholders Equity 1,276,000 Total Liabilities & Stockholders Equity 2,253,000 Calculations Retained earnings Total Assets-Total Liabilties- Total Paid in Capital 2,253,000-977,000-461,000 = 851,000