Concept explainers
Comprehensive:
Additional information related to the statement of cash flows:
- 1. The long-term bonds have a face value of $6,000 and were issued on December 31, 2019.
- 2. The building was purchased on December 30, 2019.
- 3. The land was sold at its original cost.
- 4. The common stock which was sold totaled 300 shares and had a par value of $10 per share.
Required:
Next Level Prepare a classified balance sheet for Mills as of December 31, 2019. (Hint. Review the information on the statement of cash flows and the balances in the beginning balance sheet accounts to determine the impact on the ending balance sheet accounts.)
Prepare a classified balance sheet of Company M for the year ended December 31, 2019.
Explanation of Solution
Classified balance sheet: The main elements of balance sheet assets, liabilities, and stockholders’ equity are categorized or classified further into sections, and sub-sections in a classified balance sheet. Assets are further classified as current assets, long-term investments, property, plant, and equipment (PPE), and intangible assets. Liabilities are classified into two sections current and long-term. Stockholders’ equity comprises of common stock and retained earnings. Thus, the classified balance sheet includes all the elements under different sections.
Prepare a classified balance sheet of Company M for the year ended December 31, 2019 as follows:
Company M | ||
Balance Sheet | ||
For Year Ended December 31, 2018 | ||
Assets: | Amount ($) | Amount ($) |
Current Assets: | ||
Cash (1) | 3,300 | |
Accounts receivable (net) (2) | 5,000 | |
Inventory (3) | 4,200 | |
Total current assets | 12,500 | |
Property, Plant, and Equipment: | ||
Land (4) | 6,800 | |
Buildings and equipment (5) | 82,800 | |
Less: Accumulated depreciation (6) | (16,000) | |
Total property, plant, and equipment | 73,600 | |
Total Assets | 86,100 | |
Liabilities: | ||
Current Liabilities: | ||
Accounts payable (7) | 3,000 | |
Salaries payable (8) | 1,500 | |
Total current liabilities | 4,500 | |
Long-Term Liabilities: | ||
Bonds payable | 6,000 | |
Less: Discount on bonds payable (9) | (300) | |
Total long-term liabilities | 5,700 | |
Total Liabilities (a) | 10,200 | |
Shareholders’ Equity: | ||
Contributed Capital: | ||
Common stock, $10 par (10) | 16,500 | |
Additional paid-in capital (11) | 12,700 | |
Total contributed capital | 29,200 | |
Retained earnings (12) | 46,700 | |
Total Shareholders’ Equity (b) | 75,900 | |
Total Liabilities and Shareholders’ Equity | 86,100 |
Table (1)
Working note (1):
Compute the amount of cash:
Working note (2):
Compute the amount of accounts receivable:
Working note (3):
Compute the amount of inventory:
Working note (4):
Compute the value of land:
Working note (5):
Compute the value of building and equipment:
Working note (6):
Compute the amount of accumulated depreciation:
Working note (7):
Compute the amount of accounts payable:
Working note (8):
Compute the amount of salaries payable:
Working note (9):
Compute the amount of discount on bonds payable:
Working note (10):
Compute the amount of common stock:
Working note (11):
Compute the amount of additional paid-in capital:
Working note (12):
Compute the amount of retained earnings:
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Chapter 5 Solutions
Intermediate Accounting: Reporting And Analysis
- Comprehensive The following are Farrell Corporations balance sheets as of December 31, 2019, and 2018, and the statement of income and retained earnings for the year ended December 31, 2019: Additional information: a. On January 2, 2019, Farrell sold equipment costing 45,000, with a book value of 24,000, for 19,000 cash. b. On April 2, 2019, Farrell issued 1, 000 shares of common stock for 23,000 cash. c. On May 14, 2019, Farrell sold all of its treasury stock for 25,000 cash. d. On June 1, 2019, Farrell paid 50, 000 to retire bonds with a face value (and book value) of 50, 000. e. On July 2, 2019, Farrell purchased equipment for 63, 000 cash. f. On December 31, 2019, land with a fair market value of 150,000 was purchased through the issuance of a long-term note in the amount of 150,000. The note bears interest at the rate of 15% and is due on December 31, 2021. g. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting. Required: 1. Prepare a spreadsheet to support a statement of cash flows for Farrell for the year ended December 31, 2019, based on the preceding information. 2. Prepare the statement of cash flows. (Appendix 21.1) Spreadsheet and Statement Refer to the information for Farrell Corporation in P21-13. Required: 1. Using the direct method for operating cash flows, prepare a spreadsheet to support a 2019 statement of cash flows. (Hint: Combine the income statement and December 31, 2019, balance sheet items for the adjusted trial balance. Use a retained earnings balance of 291,000 in this adjusted trial balance.) 2. Prepare the statement of cash flows. (A separate schedule reconciling net income to cash provided by operating activities is not necessary.)arrow_forwardComprehensive The following are Farrell Corporations balance sheets as of December 31, 2019, and 2018, and the statement of income and retained earnings for the year ended December 31, 2019: Additional information: a. On January 2, 2019, Farrell sold equipment costing 45,000, with a book value of 24,000, for 19,000 cash. b. On April 2, 2019, Farrell issued 1,000 shares of common stock for 23,000 cash. c. On May 14, 2019, Farrell sold all of its treasury stock for 25,000 cash. d. On June 1, 2019, Farrell paid 50,000 to retire bonds with a face value (and book value) of 50,000. e. On July 2, 2019, Farrell purchased equipment for 63,000 cash. f. On December 31, 2019. land with a fair market value of 150,000 was purchased through the issuance of a long-term note in the amount of 150,000. The note bears interest at the rate of 15% and is due on December 31, 2021. g. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting. Required: 1. Prepare a spreadsheet to support a statement of cash flows for Farrell for the year ended December 31, 2019, based on the preceding information. 2. Prepare the statement of cash flows.arrow_forwardInvestments On October 4, 2019, Collins Company purchased 100 bonds of Steph Company for 6,400 as a short-term investment in securities classified as available for sale. On December 31, 2019, the bonds had a fair value of 6,300, and on February 8, 2020, Collins sold the bonds for 6,700. Required: In journal entry form, prepare the spreadsheet entries to record these transactions for Collins Companys 2019 and 2020 statement of cash flows.arrow_forward
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