ABC Company reported the following account balances at December 31, 2019: Accoun
ID: 2331412 • Letter: A
Question
ABC Company reported the following account balances at December 31, 2019: Accounts receivable ......... $33,000 Equipment ................... $47,000 Notes payable ............... $15,000 Utilities expense ........... $23,000 Dividends ................... $18,000 Trademark ................... $16,000 Retained earnings ........... $58,000 (at January 1, 2019) Rental revenue .............. $19,000 Land ........................ ? Cost of goods sold .......... $36,000 Supplies .................... $21,000 Accumulated depreciation .... $11,000 Income tax expense .......... $12,000 Common stock ................ $94,000 Copyright ................... ? Utilities payable ........... $13,000 Sales revenue ............... $90,000 Cash ........................ $19,000 Mortgage payable ............ $17,000 Advertising expense ......... $10,000 Inventory ................... ? Accounts payable ............ $47,000 The following additional information is available: 1. The total P-P-E at December 31, 2019 was equal to 140% of the total current liabilities at December 31, 2019. 2. Total current assets at December 31, 2019 amounted to $111,000. 3. The note payable was a 3-year loan taken out on March 1, 2017. 4. The mortgage payable was a 15-year loan taken out on May 1, 2010. Calculate the balance in the copyright account at December 31, 2019.
Explanation / Answer
Solution:
Ending retained earnings = Beginning retained earnings + Net income - Dividend
= $58,000 + $28,000 - $18,000 = $68,000
Current liabilities = Notes payable + Utilities payable + Accounts payable
= $15,000 + $13,000 + $47,000 = $75,000
Long term liabilities = Mortgage payable = $17,000
Stockholder's equity = Common stock + Retained earnings = $94,000 + $68,000 = $162,000
Total liabilities and stockholder's equity = $75,000 + $17,000 + $162,000 = $254,000
Property plant and equipment = 140% of current liabilities = $75,000 * 140% = $105,000
Total current assets = $111,000
Total intangible assets = Total liabilities and stockholder's equity - Total PPE - Current assets
= $254,000 - $105,000 - $111,000 = $38,000
Copyright = Total intangible assets - Trademark = $38,000 - $16,000 = $22,000
Computation of net income For year ended December 31, 2019 Particulars Amount Sales revenue $90,000.00 Cost of goods sold $36,000.00 Gross Profit $54,000.00 Add: Rental revenue $19,000.00 Less: Expenses: Utilities expense $23,000.00 Advertising expense $10,000.00 Income before taxes $40,000.00 Les: Income tax expense $12,000.00 Net Income $28,000.00Related Questions
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