P. 3-5 Rubber Industries: Evaluate the Balance sheet; explain proper treatment o
ID: 2692312 • Letter: P
Question
P. 3-5
Rubber Industries: Evaluate the Balance sheet; explain proper treatment of items The following is the balance sheet of Rubber Industries:
RUBBER INDUSTRIES
Balance Sheet For the Year Ended December 31, 2008
Assets
Current assets:
Cash $ 50,000
Marketable equity securities 19,000
Accounts receivable, net 60,000
Inventory 30,000
Treasury stock 20,000
Total current assets $179,000
Plant assets:
Land and buildings, net 160,000
Investments:
Short-term U.S. notes 20,000
Other assets:
Supplies 4,000
Total assets $363,000
Liabilities and Stockholders' Equity Liabilities:
Bonds payable $123,000
Accounts payable 40,000
Wages payable 10,000
Total liabilities $173,000
Stockholders' equity:
Common stock ($20 par, 20,000 shares authorized, 6,000 shares outstanding) 120,000
Retained earnings 50,000 Redeemable preferred stock 20,000
Total liabilities and stockholders' equity $363,000
Indicate your criticisms of the balance sheet and briefly explain the proper treatment of any item criticized.
Explanation / Answer
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