ACC 2010 Comprehensive Problem #1 (Assessment) Balance Sheet, Schedules and Note
ID: 2556742 • Letter: A
Question
ACC 2010 Comprehensive Problem #1
(Assessment)
Balance Sheet, Schedules and Notes: The following is an alphabetical listing of Leffler Rocks’ balance sheet accounts and account balances on December 31, 2016:
Accounts Payable
$54,200
Income Taxes Payable
$19,700
Accounts Receivable
37,100
Inventory
85,300
Accumulated Depreciation
109,300
Investment in Affiliate
30,000
Additional Paid-in Capital on Common Stock
20,000
Long-Term Liabilities (book value)
91,000
Additional Paid-in Capital on Preferred Stock
3,200
Miscellaneous Current Payables
6,800
Allowance for Doubtful Accounts
1,600
Notes Receivable
17,000
Bond Sinking Fund
12,500
Preferred Stock
32,000
Cash
23,800
Property, Plant, Equipment
296,700
Common Stock
80,000
Retained Earnings
84,600
Additional information:
The company reports on the balance sheet the net book value of property and equipment and long-term liabilities (known as control accounts). The related details are disclosed in the notes.
The straight-line method is used to depreciate property and equipment based upon cost, estimated residual value, and estimated life. The costs of the assets in this account are: land, $39,500; buildings, $264,600; store fixtures, $72,600; and office equipment, $30,000.
The accumulated depreciation breakdown is as follows: buildings, $54,600; store fixtures, $37,400; and office equipment, $17,300.
The long-term debt includes 12%, $36,000 face value bonds that mature on December 31, 2021, and have an unamortized bond discount of $2,000; 11%, $48,000 face value bonds that mature on December 31, 2022, have a premium on bonds payable of $1,800, and whose retirement is being funded by a bond sinking fund; and a 13% note payable that has a face value of $6,200 and matures on January 1, 2019.
The non-interest-bearing note receivable matures on June 1, 2017.
Inventory is listed at lower of cost or market; cost is determined on the basis of average cost.
The investment in affiliate is carried at cost. The company has guaranteed the interest on 12%, $50,000, 15-year bonds issued by this affiliate, Jay Company.
Common stock has a $10 par value per share, 10,000 shares are authorized, and 1,000 shares were issued during 2016 at a price of $13 per share, resulting in 8,000 shares issued at year-end.
Preferred stock has a $50 par value per share, 2,000 shares are authorized, and 140 shares were issued during 2016 at a price of $55 per share, resulting in 640 shares issued at year-end.
On January 15, 2017, before the December 31, 2016 balance sheet was issued, a building with a cost of $20,000 and a book value of $7,000 was totally destroyed. Insurance proceeds will amount to only $5,000.
Net income and dividends declared and paid during the year were $50,500 and $21,000 respectively.
Required:
Prepare Leffler Rocks’ December 31, 2016 balance sheet (including appropriate parenthetical notations).
Prepare a statement of shareholders’ equity for 2016. (Hint: Work back from the ending account balances.)
Accounts Payable
$54,200
Income Taxes Payable
$19,700
Accounts Receivable
37,100
Inventory
85,300
Accumulated Depreciation
109,300
Investment in Affiliate
30,000
Additional Paid-in Capital on Common Stock
20,000
Long-Term Liabilities (book value)
91,000
Additional Paid-in Capital on Preferred Stock
3,200
Miscellaneous Current Payables
6,800
Allowance for Doubtful Accounts
1,600
Notes Receivable
17,000
Bond Sinking Fund
12,500
Preferred Stock
32,000
Cash
23,800
Property, Plant, Equipment
296,700
Common Stock
80,000
Retained Earnings
84,600
Explanation / Answer
LEFFLER ROCKS Balance Sheet 31-Dec-16 Assets Current Assets: Cash 23800 Accounts Receivable 37100 Allowance for doubtful debts 1600 35500 Inventory 85300 Notes Receivable 17000 Total current assets 161600 Long-Term Investments: Investment in affiliate 30000 Total long-term investments 30000 Property, Plant & Equipement 296700 Accumulated Depreciation 109300 Total Property, plant, and equipment 187400 Total Assets 379000 Liabilities Current Liabilities Accounts Payable 54200 Income Taxes payable 19700 Miscallaneous current payables 6800 Total current liabilities 80700 Long-term liabilities 78500 Total Liabilities 159200 Stockholders' Equity Contributed Capital: Common stock 80000 Preferred stock 32000 Additional paid-in capital on: Common stock 20000 Preferred stock 3200 Total contributed capital 135200 Retained earnings 84600 Total Shareholders' Equity 219800 Total Liabilities and Shareholders' Equity 379000 LEFFLER ROCKS Statement of Shareholders’ Equity For Year Ended December 31, 2016 Preferred Stock, $50 par Common Stock, $10 par Additional Paid-in Capital on Preferred Stock Additional Paid-in Capital on Common Stock Retained Earnings Total Balances, 1/1/16* 25000 70000 2500 17000 190300 Common Stock Issued 10000 3000 Preferred Stock Issued 7000 700 Net income 50500 50500 Dividends paid 21000 21000 Balances, 12/31/16 32000 80000 3200 20000 84600 219800
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