OVO Muskrat Toupees, Inc. (No AFS) Compatibility Mode Exce Home Insert Draw Page

Question

OVO Muskrat Toupees, Inc. (No AFS) Compatibility Mode Exce Home Insert Draw Page Layout Formulas Data Rview View Help Tell me what you want to do Balance Sheet Correction Problem Below is the December 31. 2016 preliminary balance sheet of Muskrat Toupees Inc Muskrat Toupees, Inc. Balance Sheet December 31, 2016 Current assets Investments Property, plant, and equipment Intangible assets $ 242.500 322,500 152,500 Total assets $-1,577,500 Current liabilities Long-term liabilities Stockholders' equity $ 190,000 500,000 887,500 Total assets s 1,577.500 This balance sheet was prepared by Muskrat's bookkeeper and obviously needs some work. As the new CPA working with this client, you dig a little deeper and come up with the following: Muskrat Toupees Blank 3 col Type here to search

Explanation / Answer

Muskrates Toupees inc. Balance Sheet December 31, 2016 Current Assets Cash $75,000 Trading securities (at fair value) $40,000 Accounts receivable $85,000 Less: Allowance for doubtful accounts -$5,000 $80,000 Inventory (lower-of-average-cost-or-market) $90,000 Total current assets $285,000 Long Term Investments Investments in common stock (at fair value) $135,000 Bond sinking fund $125,000 Cash surrender value of life insurance $20,000 Land held for future use $135,000 $415,000 Property, plant, and equipment Land $250,000 Building $520,000 Less: Accum. depreciation—building -$180,000 $340,000 Equipment $225,000 Less: Accum. depreciation—equipment -$90,000 $135,000 $725,000 Intangible assets Franchise $82,500 Goodwill $50,000 $132,500 Total assets $1,557,500 Liabilities and Stockholders’ Equity Accounts Payable $35,000 Salaries and Wages Payable $25,000 Interest Payable $10,000 Notes Payable $40,000 Taxes Payable $20,000 Unearned revenue $2,500 Total current liabilities $132,500 Long-term liabilities Notes payable $60,000 Bonds payable $500,000 Less: Discount on bonds payable -$20,000 $480,000 Total liabilities $672,500 Stockholders’ equity Capital stock 3% Preferred stock, $100 par value 100,000 shares authorized ,2,000 issued and outstanding $200,000 Common stock, $1 par value; 2,000,000 shares authorized, 50,000 issued and outstanding $50,000 Paid-in capital in excess of par— Preferred stock [2000 X ($113.75 – $100.00)] $27,500 Paid-in capital in excess of par on common stock (50,000 X [$10 – $1.00)] $450,000 Retained earnings $157,500 Total stockholders’ equity $885,000 Total liabilities and stockholders’ equity $1,557,500 Retained Earnings = $135000 + 25000 Dividend - 2500 (loss) $157,500.00

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