(TCO D) The following balance sheet was prepared by the bookkeeper for Stripes C
ID: 2414455 • Letter: #
Question
(TCO D) The following balance sheet was prepared by the bookkeeper for Stripes Company as of December 31, 201X Stripes Company Balance Sheet as of December 31, 201X is as follows.
Cash
$ 80,000
Accounts payable
$ 75,000
Accounts receivable (net)
52,200
Long-term liabilities
100,000
Inventories
57,000
Stockholders' equity
218,500
Investments
76,300
Equipment (net)
96,000
Patents
$393,500
$393,500
The following additional information is provided.
(1) Cash includes the cash surrender value of a life insurance policy $12,000 and a bank overdraft of $2,500 has been deducted.
(2) The net accounts receivable balance includes
(a) accounts receivable debit balances $58,000;
(b) accounts receivable $2,000; and
(c) allowance for doubtful accounts $3,800.
(3) Inventories do not include goods costing $3,000 shipped out on consignment. Receivables of $3,000 were recorded on these goods.
(4) Investments include investments in common stock, trading $13,000, available-for-sale $48,300, and franchises $15,000.
(5) Equipment costing $5,000 with accumulated depreciation $4,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000.
Instructions:
Prepare a balance sheet in good form (stockholders' equity details can be omitted).
Cash
$ 80,000
Accounts payable
$ 75,000
Accounts receivable (net)
52,200
Long-term liabilities
100,000
Inventories
57,000
Stockholders' equity
218,500
Investments
76,300
Equipment (net)
96,000
Patents
$393,500
$393,500
Explanation / Answer
Solution:
As the given balance sheet is not matching and amount of Patents is missing, so first it will be calculated:
= Total of assets – Cash-Accounts receivable (net) - Inventories-Investments-Equipment (net)
= $ 393,500 - 80,000- 52,200-57,000-76,300-96,000
= $ 32,000
STRIPES COMPANY
BALANCE SHEET
AS OF DECEMBER 31, 201X
ASSETS
AMOUNT ($)
LIABILITIES & STOCKHOLDERS’ EQUITY
AMOUNT ($)
Current Assets
Current liabilities
Cash (WN 1)
70,500
Accounts payable (WN 6)
77,000
Trading securities
13,000
Bank overdraft
2,500
Accounts receivable (WN 2)$ 55,000
Less: Allowance for doubtful accounts : $ 3,800
51,200
Inventories (WN 3)
60,000
Equipment held for sale (WN 4)
1,000
Total Current Assets
195,700
Total current liabilities
79,500
Investments
Long-term liabilities
100,000
Available-for-sale securities
48,300
Cash surrender value (life insurance policy)
12,000
Total Investments
60,300
Total Liabilities
179,500
Property, plant, and equipment
Stockholders’ equity
218,500
Equipment (WN 5) : $ 135,000
Less: Accumulated depreciation
: $ 40,000
95,000
Intangible assets
Patents
32,000
Franchises
15,000
Total intangible assets
47,000
TOTAL ASSETS
398,000
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY
398,000
Working notes (WN):
1. Cash correct amount
= Given cash balance - Cash surrender value of a life insurance policy + Bank overdraft deducted
= $ 80,000 - $12,000 + $2,500
=$ 70,500
2. Accounts receivable correct amount
=Accounts receivable debit balances - Receivables of goods shipped out on consignment wrongly included
=$58,000 - $3,000
= $ 55,000
3. Inventories correct amount
= Given inventories balance - Goods shipped out on consignment wrongly included in Receivables
= $ 57,000 + $ 3,000
= $ 60,000
4. Equipment held for sale
= Cost - Accumulated depreciation
= $ 5,000 - $ 4,000
= $ 1,000
It can alternatively be shown as another asset.
5. Equipment correct amount
= Given equipment balance (net) + Accumulated depreciation – Cost of equipment no longer used and held for sale + Accumulated depreciation of equipment no longer used and held for sale)
= $ 96,000 + $ 40,000 – $ 5,000 + $ 4,000
= $ 135,000
6. Accounts payable
= Given accounts payable balance + Accounts receivable—credit balances
= $ 75,000 + $ 2,000
= $ 77,000
STRIPES COMPANY
BALANCE SHEET
AS OF DECEMBER 31, 201X
ASSETS
AMOUNT ($)
LIABILITIES & STOCKHOLDERS’ EQUITY
AMOUNT ($)
Current Assets
Current liabilities
Cash (WN 1)
70,500
Accounts payable (WN 6)
77,000
Trading securities
13,000
Bank overdraft
2,500
Accounts receivable (WN 2)$ 55,000
Less: Allowance for doubtful accounts : $ 3,800
51,200
Inventories (WN 3)
60,000
Equipment held for sale (WN 4)
1,000
Total Current Assets
195,700
Total current liabilities
79,500
Investments
Long-term liabilities
100,000
Available-for-sale securities
48,300
Cash surrender value (life insurance policy)
12,000
Total Investments
60,300
Total Liabilities
179,500
Property, plant, and equipment
Stockholders’ equity
218,500
Equipment (WN 5) : $ 135,000
Less: Accumulated depreciation
: $ 40,000
95,000
Intangible assets
Patents
32,000
Franchises
15,000
Total intangible assets
47,000
TOTAL ASSETS
398,000
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY
398,000
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