The following balance sheet, which has some weaknesses in terminology and classification, has been prepared by an inexperienced accountant and submitted to you for review: Mikeska Company Balance Sheet as of December 31, 20X1 ($ in thousands) Assets Fixed assets—tangible Land $ 500 Buildings and equipment 200 Less: Reserve for depreciation (50 ) $ 650 Factory supplies 20 Current assets Inventory 163 Accounts receivable 102 Cash 68 333 Fixed assets—intangibles Patents 51 Goodwill 49 100 Deferred charges Discount on bonds payable 12 Returnable containers 32 44 Total assets $ 1,147 Liabilities Current liabilities Accounts payable 140 Allowance for doubtful accounts 7 Wages payable 195 $ 342 Long-term liabilities Bonds payable 400 Reserve for contingencies 50 450 Equity Capital stock, $10 par, 5,000 shares issued and outstanding 50 Capital surplus 75 Earned surplus 270 Dividends paid (40 ) 355 Total liabilities $ 1,147 Required: Prepare a classified balance sheet. Make any necessary corrections.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter1: Accounting And The Financial Statements

Section: Chapter Questions

Problem 13DQ: Define current assets and current liabilities. Why are current assets and current liabilities...

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The following balance sheet, which has some weaknesses in terminology and classification, has been prepared by an inexperienced accountant and submitted to you for review:

Mikeska Company
Balance Sheet as of December 31, 20X1 ($ in thousands)
Assets
Fixed assets—tangible
Land	$	500
Buildings and equipment		200
Less: Reserve for depreciation		(50	)	$	650
Factory supplies					20
Current assets
Inventory		163
Accounts receivable		102
Cash		68			333
Fixed assets—intangibles
Patents		51
Goodwill		49			100
Deferred charges
Discount on bonds payable		12
Returnable containers		32			44
Total assets				$	1,147
Liabilities
Current liabilities
Accounts payable		140
Allowance for doubtful accounts		7
Wages payable		195		$	342
Long-term liabilities
Bonds payable		400
Reserve for contingencies		50			450
Equity
Capital stock, $10 par, 5,000 shares issued and outstanding		50
Capital surplus		75
Earned surplus		270
Dividends paid		(40	)		355
Total liabilities				$	1,147

Required:
Prepare a classified balance sheet. Make any necessary corrections. (Enter your answers in thousands. Amounts to be deducted should be entered with a minus sign.)

Assets:
Current assets:
Cash
Accounts receivable
Inventory
Factory supplies
Property, plant, and equipment:
Land
Buildings and equipment
Less: Accumulated depreciation
Intangible assets:
Goodwill
Patents
Other assets:
Returnable containers
Total assets
Liabilities:
Current liabilities:
Accounts payable
Wages payable
Long-term liabilities:
Bonds payable
Discount on bonds payable
Liability for contingencies
Total liabilities
Equity:
Capital stock
Additional paid-in capital
Balance Sheet
As of December 31, 20X1
($ in thousands)
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
S
69
68
163
20
500
200
(50)
49
51
140
195
400
(12)
50
75
$
$
$
$
$
251
650
100
32
1,033
335
388
50
773
125
125
898

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