Problem 5-5 Presented below is the balance sheet of Sargent Corporation for the

Question

Problem 5-5 Presented below is the balance sheet of Sargent Corporation for the current year, 2017. BLUE CORPORATION BALANCE SHEET DECEMBER 31, 2017 Current assets $ 488,020 Current liabilities $ 383,020 Investments 643,020 Long-term liabilities 1,003,020 Property, plant, and equipment 1,723,020 Stockholders’ equity 1,773,020 Intangible assets 305,000 $3,159,060 $3,159,060 The following information is presented. 1. The current assets section includes cash $153,020, accounts receivable $173,020 less $13,020 for allowance for doubtful accounts, inventories $183,020, and unearned rent revenue $8,020. Inventory is stated on the lower-of-FIFO-cost-or-market. 2. The investments section includes the cash surrender value of a life insurance contract $43,020; investments in common stock, short-term $83,020 and long-term $273,020; and bond sinking fund $243,960. The cost and fair value of investments in common stock are the same. 3. Property, plant, and equipment includes buildings $1,043,020 less accumulated depreciation $363,020, equipment $453,020 less accumulated depreciation $183,020, land $503,020, and land held for future use $270,000. 4. Intangible assets include a franchise $168,020, goodwill $103,020, and discount on bonds payable $33,960. 5. Current liabilities include accounts payable $143,020, notes payable-short-term $83,020 and long-term $123,020, and income taxes payable $33,960. 6. Long-term liabilities are composed solely of 7% bonds payable due 2025. 7. Stockholders’ equity has preferred stock, no par value, authorized 200,000 shares, issued 73,020 shares for $438,120, and common stock, $1.00 par value, authorized 400,000 shares, issued 103,020 shares at an average price of $10. In addition, the corporation has retained earnings of $304,700.

Explanation / Answer

Balance Sheet Decemebr 31 Assets Assets Current assets Cash 153020 Equity Imvestment 83020 Accounts Receivable 173020 Less: Allowance for Doubtful Debts 13020 160000 Inventory (lower of FIFO or market) 183020 Total Current asset 579060 Long term Investments Eqyuity Investment (AFS-at fair value) 273020 Bond Sinking Fund 243960 Cash surrender value of Life insurance 43020 Land Held fo future use 270000 830000 Property Plant & Equipment Land 503020 Building 1043020 Acc dep-Building 363020 680000 Equipment 453020 Acc dep-Equipment 183020 270000 1453020 Intangibe Assets Franchise 168020 Goodwill 103020 271040 Total Assets 3133120 Liabilities & Stockholder Equity Current Liabilities Accounts Payable 143020 Notes payable 83020 Income atx payable 33960 Uneraned Rent Revenue 8020 Total current Liabilities 268020 Long term liabilities Notes Payable 123020 Bonds Payable 1003020 :ess: discount on Bonds payable 33960 969060 1092080 Total Liabilities 1360100 Stockholder Equity Preferred Stock 438120 Common stock 103020 Paid in capital in excess of par-Common stock 837180 Retained Earnings 394700 total stockholder Equity 1773020 Total Liabilities & Stockholder Equity 3133120

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