Classified Balance Sheet—Including NotesAdjusted account balances and supplemental information for Brockbank Research Corp. as of December 31, 2013, are as follows: Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,160 Accounts Receivable—Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,731 Accumulated Depreciation—Leasehold Improvements and Equipment. . . . . 579,472 Additional Paid-In Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .265,000 Allowance for Bad Debts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,731 Automotive Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,800 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25,600 Cash Fund for Bond Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .3,600 Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 35,000 Deferred Income Tax Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..45,000 Dividends Payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37,500 Franchises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12,150 Furniture, Fixtures, and Store Equipment . . . . . . . . . . . . . . . . . .. . . .769,000 Insurance Claims Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..120,000 Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..201,620 Investment in Unconsolidated Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . .80,000 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6,000 Leasehold Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65,800 7½%–12%Mortgage Notes Payable. . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 Notes Payable—Banks (due in 2014) . . . . . . . . . . . . . . . . . . . . . . . . .12,000 Notes Payable—Trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63,540 Patent Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,402 Prepaid Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......5,500 Profit Sharing, Payroll, and Vacation Payable. . . . . . . . . . . . . . . . . . . . . . .40,000 Retained Earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..225,800 Supplemental information is as follows: (a) Depreciation is provided by the straight-line method over the estimated useful lives of the assets. (b) Common stock is $1 par, and 35,000 of the 100,000 authorized shares were issued and are outstanding. (c) The cost of an exclusive franchise to import a foreign company’s ball bearings and a related patent license are being amortized on the straight-line method over their remaining lives: franchise, 10 years; patents, 15 years. (d) Inventories are stated at the lower of cost or market; cost was determined by the specific identification method. (e) Insurance claims based on the opinion of an independent insurance adjustor are for property damages at the central warehouse. These claims are esti-mated to be two-thirds collectible in the following year and one-third collectible thereafter. (f) The company leases all of its buildings from various lessors. Estimated fixed-lease obligations are $50,000 per year for the next 10 years. The leases do not meet the criteria for capitalization. (g) The company is currently in litigation over a claimed overpayment of income tax of $13,000. In the opinion of counsel, the claim is valid. The company is contin-gently liable on guaranteed notes worth $12,000. Instructions: Prepare a properly classified balance sheet. Include all notes and paren-thetical notations necessary to properly disclose the essential financial data.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Classified
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,160
Additional Paid-In Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .265,000
Allowance for
Automotive Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,800
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25,600
Cash Fund for Bond Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .3,600
Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 35,000
Dividends Payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37,500
Franchises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12,150
Furniture, Fixtures, and Store Equipment . . . . . . . . . . . . . . . . . .. . . .769,000
Insurance Claims Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..120,000
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..201,620
Investment in Unconsolidated Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . .80,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6,000
Leasehold Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65,800
7½%–12%Mortgage Notes Payable. . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Notes Payable—Banks (due in 2014) . . . . . . . . . . . . . . . . . . . . . . . . .12,000
Notes Payable—Trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63,540
Patent Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,402
Prepaid Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......5,500
Profit Sharing, Payroll, and Vacation Payable. . . . . . . . . . . . . . . . . . . . . . .40,000
Supplemental information is as follows:
(a) Depreciation is provided by the straight-line method over the estimated useful lives of the assets.
(b) Common stock is $1 par, and 35,000 of the 100,000 authorized shares were issued and are outstanding.
(c) The cost of an exclusive franchise to import a foreign company’s ball bearings and a related patent license are being amortized on the straight-line method over their remaining lives: franchise, 10 years; patents, 15 years.
(d) Inventories are stated at the lower of cost or market; cost was determined by the specific identification method.
(e) Insurance claims based on the opinion of an independent insurance adjustor are for property damages at the central warehouse. These claims are esti-mated to be two-thirds collectible in the following year and one-third collectible thereafter.
(f) The company leases all of its buildings from various lessors. Estimated fixed-lease obligations are $50,000 per year for the next 10 years. The leases do not meet the criteria for capitalization.
(g) The company is currently in litigation over a claimed overpayment of income tax of $13,000. In the opinion of counsel, the claim is valid. The company is contin-gently liable on guaranteed notes worth $12,000.
Instructions: Prepare a properly classified balance sheet. Include all notes and paren-thetical notations necessary to properly disclose the essential financial data.
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