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THE FOLLOWING IS THE CHART OF ACCOUNTS FOR MICRODRIVE, INC. AT DEC. 31, 2016 AND

ID: 2340795 • Letter: T

Question

THE FOLLOWING IS THE CHART OF ACCOUNTS FOR MICRODRIVE, INC. AT DEC. 31, 2016 AND 2015 2015 2016 387,000 1,050,000 700,000 (1,375,000) 625,000 ACCOUNTS PAYABLE ACCOUNTS RECEIVABLE ACCRUED LIABILITIES 1,375,000 750,000 (1,875,000) 960,000 (125,000) 200,000 40,000 70,000 9,500,000 500,000 380,000 300,000 3,700,000 3,399,000 95,000 12,500,000 1,275,000 750,000 ACCUMULATED DEPRECIATION ADDITIONAL PAID-IN CAPITAL ALLOWANCE FOR BAD DEBTS CASH AND EQUIVALENTS COMMON STOCK ($2 PAR, 20,000 SH. o/S) 960,000 (100,000) 150,000 40,000 60,000 COMMON STOCK DIVIDENDS COST OF GOODS SOLD DEPRECIATION EXPENSE INCOME TAX EXPENSE 9,100,000 425,000 370,000 275,000 3,212,000 2,500,000 105,000 11,900,000 INTEREST EXPENSE INVENTORY LONG-TERM DEBT LONG-TERM INVESTMENTS NET SALES NOTES PAYABLE PAYROLL EXPENSE PREFERRED STOCK ($100 PAR, 2,000 SH. o/s) 375,000 200,000 9,000 50,000 700,000 200,000 9,000 38,000 PREFERRED STOCK DIVIDENDS PREPAID EXPENSES PROPERTY, PLANT, AND EQUIPMENT RETAINED EARNINGS SELLING AND ADMINISTRATIVE EXPENSES SHORT-TERM INVESTMENTS 6,625,000 2,871,000 500,000 75,000 4,375,000 2,380,000 475,000 87,000

Explanation / Answer

Balance sheet is a statement of financial position of a firm till date. It includes assets, liabilities, and owners’ equity. The following equation must vsatisfy there:

Assets = Liabilities + Owners’ equity

In the books of M, Inc

Balance sheet

As at 31st December, 2015 and 2016

Assets

Liabilities & Owners’equity

Current assets:

2016, $

2015, $

Current liabilities:

2016, $

2015, $

Cash

200,000

150,000

Accounts payable

625,000

387,000

Accounts receivable

1375000

1050000

Accrued liabilities

750,000

700,000

Less: Allowance

125,000

100,000

Notes payable

1275000

375000

Net realizable value

1,250,000

950,000

Total current liabilities

2,650,000

1462000

Short-term invest

75,000

87,000

Long-term debt

3399000

2500000

Inventory

3700000

3212000

Prepaid expense

50,000

38,000

Total liabilities

6049000

3962000

Total current assets

5,275,000

4,437,000

Long-term invest

95,000

105,000

Owners’ Equity:

Equipment

6625000

4375000

Common stock

40,000

40,000

Less: Accu. Depr.

1875000

1375000

Additional paid-in-capital

960,000

960,000

Book value of Equip

4,750,000

3,000,000

Preferred-stock

200,000

200,000

Retained earnings

2871000

2380000

Total equity

4071000

3580000

Total assets

10120000

7542000

Total liab & equity

10120000

7542000

Note: The balance sheet tallied exactly. All the other figures should not be considered here.

Assets

Liabilities & Owners’equity

Current assets:

2016, $

2015, $

Current liabilities:

2016, $

2015, $

Cash

200,000

150,000

Accounts payable

625,000

387,000

Accounts receivable

1375000

1050000

Accrued liabilities

750,000

700,000

Less: Allowance

125,000

100,000

Notes payable

1275000

375000

Net realizable value

1,250,000

950,000

Total current liabilities

2,650,000

1462000

Short-term invest

75,000

87,000

Long-term debt

3399000

2500000

Inventory

3700000

3212000

Prepaid expense

50,000

38,000

Total liabilities

6049000

3962000

Total current assets

5,275,000

4,437,000

Long-term invest

95,000

105,000

Owners’ Equity:

Equipment

6625000

4375000

Common stock

40,000

40,000

Less: Accu. Depr.

1875000

1375000

Additional paid-in-capital

960,000

960,000

Book value of Equip

4,750,000

3,000,000

Preferred-stock

200,000

200,000

Retained earnings

2871000

2380000

Total equity

4071000

3580000

Total assets

10120000

7542000

Total liab & equity

10120000

7542000