Problems 249 EASTWOOD COMPANY ADJUSTED TRIAL BALANCE DECEMBER 31, 2017 Debit Cre

ID: 2565885 • Letter: P

Question

Problems 249 EASTWOOD COMPANY ADJUSTED TRIAL BALANCE DECEMBER 31, 2017 Debit Credit 5 4 1,000 Cash Accounts Receivable Allowance for Doubtful Accounts Prepaid Insurance 163,500 5,900 339,000 124,000 $ 8,700 Equity Investments (long-term) Land Construction in Process (building) 36,000 240,000 20,000 Discount on Bonds Payable Accounts Payable Accrued Liabilities Notes Payable Bonds Payable Common Stock 148,000 49,200 94000 200,000 500,000 Paid-in Capital in Excess of Par--Common Stock Retained Earnings 138,000 $1,422,900 $1,422900 Additional information: 1. The LIFO method of inventory value is used. 2 The cost and fair value of the long-term investments that consist of stocks (with ownership less than 20% of total shares) are the same. 3. The amount of the Construction in Progress account represents the costs expended to date on a building in the process of construction (The company rents factory space at the present time.) The land on which the building is being constructed cost $85,000, as shown in the trial balance. 4. The patents were purchased by the company at a cost of $40,000 and are being amortized on a straight-line basis. 5. Of the discount on bonds payable, $2,000 will be amortized in 2018. 6. The notes payable represent bank loans that are secured by long-term investments carried at $120,000. These bank loans are due in 2018 7. The bonds payable bear interest at 8% payable every December 31, and are due January 1, 2028. 8. 600,000 shares of common stock of a par value of $1 were authorized, of which 500,000 shares were issued and outstanding. Phepare a balance sheet as of December 31,2017,so that all important information is fully disclosed.

Explanation / Answer

Balance Sheet as of December 31, 2017 :

Assets

Amount $

Current Assets:

Cash

41000

163500

Less: Allowance for Doubtful Accounts

(8700)

154800

Prepaid Insurance

5900

Inventory (valued at LIFO method)

208500

Total Current Assets

409700

Long term assets:

Equity Investments (represents security for bank loan of $120000)

339000

Land

85000

Building (constructed on land mentioned)

124000

Patents (depreciated on SDM)

36000

Equipment

400000

Less: Accumulated Depreciation - Equipment

(240000)

160000

Discount on Bonds Payable (2018-amortisation $2000)

20000

Total Assets

$1174200

Liabilities and Shareholder’s Equity:

Amount $

Current Liabilities:

148000

Accrued Liabilities

49200

Notes Payable (represents bank loans – secured by long-term investments amounting $120000)

94000

Total Current Liabilities=

291200

8% Bonds Payable (interest payable half-yearly and due on Jan 1, 2028)

200000

Shareholder’s Equity:

Common Stock (Authorised:600000 @ par $1 ; Outstanding:500000 @ par $1)

500000

Paid-in Capital in Excess of Par – Common Stock

45000

Retained Earnings

138000

Total liabilities and Shareholder’s Equity:

$1174200