Question

A partially completed balance sheet for Blue Co., Inc., as of October 31, 2016, follows. Where amounts are shown for various items, the amounts are correct. Required: Using the following data, complete the balance sheet. a.Blue Co.'s records show that current and former customers owe the firm a total of $4,500; $630 of this amount has been due for more than a year from two customers who are now bankrupt. b.The automobile, which is still being used in the business, cost $15,900 new; a used car dealer's Blue Book shows that it is now worth $10,000. Management estimates that the car has been used for one-third of its total potential use. (The car is being depreciated using the straight-line method.) c.The land cost Blue Co. $13,000; it was recently assessed for real estate tax purposes at a value of $17,000 . d.Blue Co.'s president isn't sure of the amount of the note payable, but he does know that he signed a note. e.Since Blue Co. was formed, net income has totaled $34,000, and dividends to stockholders have totaled $21,000  

• HOME
• ACCESSIBILITY
• PREVIEW

	Blue Co., Inc. Balance Sheet October 31, 2016 Assets Liabilities and Stockholders’ Equity Cash $750 Note payable Accounts receivable Accounts payable 3,500 Land Total liabilities Automobile Less: Accumulated depreciation Stockholders’ Equity Common stock 4,100 Retained earnings Total stockholders’ equity Total assets Total liabilities and stockholders’ equity

+

The full content of this question did not transfer to your assignment. Please try again.
reload

Answer 1

Solution:

Blue Co. Inc
Balance Sheet
October 31, 2016
Assets	Amount	Amount	Liabilities and Stockholder's	Amount	Amount
Cash		$750	Note Payable		$7,620
Accounts receivables		$3,870	Accounts Payable		$3,500
land		$13,000	Total Liabilities		$11,120
Automobile	$15,900
Less: Accumulated Depreciation	$5,300	$10,600	Stockholder's Equity
			Common Stock		$4,100
			Retained Earnings		$13,000
			Total Stockholder's Equity		$17,100
Total Assets		$28,220	Total Liabilities & Stockholder's Equity		$28,220

Working Notes:

a.) Assets is shown in Balance sheet at purchase value Less Accumulated depreciation
Purchase Cost = $15,900
Car usage till now = $one-third
Depreciation = $one third of asset value
Depreciation Amount = $15,900*1/3 =$5,300

b.) Retained Earnings = Net Income - Dividends Paid
= $34,000 - 21,000 = $13,000

c.) Total Liabilities = Total liabilities and stockholder's Equity - Total Stockholder's Equity
Total Liabilities = $28,220 - $17,100 = $11,120

d.) Notes payable = Total liabilities - Accounts payable
= $11,120 - $3,500 = $7,620

e.) Accounts Receivable = Gross Account Receivable - Bad Debt
= $4500 - $630 = $3,870