Question

Ron Abrams has come into your office for his weekly 1 on 1 in which you update him on your weekly progress on your projects. He has arrived with a stack of paperwork in his hands and a befuddled look on his face. You ask what’s going on and he responds as follows. “Last year, as you know, we purchased a bankrupt, closed down bottling facility in The Ukraine. I don’t know if you know this but in countries other than Canada they are using somewhat different accounting policies than we do, and the reports I have for the first few months of operations for that location look nothing like anything I have seen before. I’m aware that the company made no money this month as it’s had no sales or operations, but I cannot understand our capital position. I’m leaving you with a new project. I know you’ve been learning accounting so I want you to take the opening information for the business from the date of purchase and come up with the balance sheet as it should appear to me as a Canadian Reader.” You are somewhat puzzled with this new challenge, yet flattered at the same time, and agree to take it on. Given: The newly purchased firm was bought on November 1. At inception the balance sheet accounts of the firm were as follows: Account Name $ Account Name $ Accounts Payable 85,000 Bonds Payable (Over 1 Year) 45,000 Accounts Receivable 67,000 Share Capital 936,200 Land 490,000 Furniture and Fixtures 15,000 Building 320,000 Wages Payable 55,000 Equipment 175,000 Bottle Processing Patent Fee's Payable 25,000 Cash 2,200 Taxes Payable 58,000 Notes Payable 60,000 Bottle Inventory 195,000 During the month of November the following transactions occurred: Accounts Receivable for $16,000 was collected. Wages due of $15,000 were paid out in cash. $175,000 in Equipment was purchased on credit ($100 was due on delivery and was paid in cash). Their land was appraised and found to be worth $560,000. A stakeholder, Bruce Wayne, provided the company with equipment and in return received $65,000 in shares. $300,000 in shares was retired for bonds payable on December 15, 2025. Bottle Processing Patent Fees were paid completely out on Credit. $175,000 in Old Bottles was returned to the former supplier for their cash value. A bank loan for $65,000 was taken out. The amount was kept in cash over the end of the month. Required: Create a Balance Sheet for November 30th assuming no other transactions occurred for the month other than those noted above. 1-Conversion to Canadian Balance Sheet and T-Accounts (17 marks) 2- Final Balance Sheet (23 Marks)

Answer 1

G H J K Opening balance sheet As on 1 November Amount$ Assets Current Assets: Accounts receivable 00049 Bottle Inventory 195000 cash 264200 2200 Fixed assets land 490000 building 320000 equipment furniture and fixture 175000 10000- 15000 TOTAL 1264200

Amount$ Liabilities short term liabilities account payable Notes payable 85000 60000 Wages payable Taxespayable 55000 58000 Bottle processing fees 25000 283000 Long term liability Bonds payable 45000 SHARE CAPITAL 936200 Total 1264200

T-accounts Accounts recceivable Opening balance cash 67000 16000 closing balance 51000 cash account Opening balance Accounts receivable 2200 Wages Equipment 175000 Bottle processing fees 15000 16000 100 Old bootles 25000 Bank loan 65000 closing balance 218100 Land account Opening balance 490000 Revaluation reserve 70000 closing balance 560000

Share capital account Opening balance Equipment 936200 65000 Closing balance 300000 1301200 Bonds payable Bottle Inventory account Opening balance cash 195000 175000 20000 closing balance Bank loan account clsoing balance 65000 opening balance cash 65000 Equipment account opening balance 175000 cash 100 closing balance share capital 65000 240100

Bonds payable account share capital 300000 opening balance redemption of bonds payable 45000 loss on 255000 closing balance sheet AMOUNTS ASSETS Current assets 51000 bottle inventory 20000 289100 218100 cash Fixed assets 560000 land 320000 building 240100 equipment 1135100 15000 furniture and fixture 1424200 Total

Liabilities short term liabilities accounts payable 85000 notes payable 60000 wages payable taxes payable 40000 58000 Bootle processing fe 243000 0 Long term liablity Bonds payable Bank loan 65000 65000 share capital Revaluation reserce 70000 Loss on redemption of bonds -255000 1116200 TOTAL 1424200