Mallard Incorporated (MI) is a small manufacturing company that makes model trains to sell to toy stores. It has a small service department that repairs customers' trains for a fee. The company has been in business for five years. At the end of the previous year, the accounting records reflected total assets of $650,000 and total liabilities of $275,000. During the current year, the following summarized events occurred: a. Issued additional shares of common stock for $145,000 cash. b. Borrowed $161,000 cash from the bank and signed a 10-year note. c. Built an addition on the buildings for $270,000 and paid cash to the contractor. d. Purchased equipment for the new addition for $44,500, paying $4,450 in cash and signing a note for the balance due in two years. e. Returned a $4,450 piece of equipment, from (d), because it proved to be defective; received a reduction of the notes payable. f. Purchased a delivery truck (equipment) for $32,250; paid $22,575 cash and signed a two-year note for the remainder. g. A stockholder sold $5,950 of his stock in Mallard Incorporated to his neighbor. Required:
Mallard Incorporated (MI) is a small manufacturing company that makes model trains to sell to toy stores. It has a small service department that repairs customers' trains for a fee. The company has been in business for five years. At the end of the previous year, the accounting records reflected total assets of $650,000 and total liabilities of $275,000. During the current year, the following summarized events occurred: a. Issued additional shares of common stock for $145,000 cash. b. Borrowed $161,000 cash from the bank and signed a 10-year note. c. Built an addition on the buildings for $270,000 and paid cash to the contractor. d. Purchased equipment for the new addition for $44,500, paying $4,450 in cash and signing a note for the balance due in two years. e. Returned a $4,450 piece of equipment, from (d), because it proved to be defective; received a reduction of the notes payable. f. Purchased a delivery truck (equipment) for $32,250; paid $22,575 cash and signed a two-year note for the remainder. g. A stockholder sold $5,950 of his stock in Mallard Incorporated to his neighbor. Required:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Mallard Incorporated (MI) is a small manufacturing company that makes model trains to sell to toy stores. It has a small service
department that repairs customers' trains for a fee. The company has been in business for five years. At the end of the previous year,
the accounting records reflected total assets of $650,000 and total liabilities of $275,000. During the current year, the following
summarized events occurred:
a. Issued additional shares of common stock for $145,000 cash.
b. Borrowed $161,000 cash from the bank and signed a 10-year note.
c. Built an addition on the buildings for $270,000 and paid cash to the contractor.
d. Purchased equipment for the new addition for $44.500. paying $4,450 in cash and signing a note for the balance due in two years.
e. Returned a $4,450 piece of equipment, from (d), because it proved to be defective; received a reduction of the notes payable.
f. Purchased a delivery truck (equipment) for $32,250; paid $22,575 cash and signed a two-year note for the remainder.
g. A stockholder sold $5,950 of his stock in Mallard Incorporated to his neighbor.
Required:
1. Complete the spreadsheet that follows. The first transaction is used as an example.
3. Based on beginning balances plus the completed spreadsheet, provide the Total assets, liabilities and stockholders' equity at the
end of year.
4. As of the current year-end, has the financing for Mallard Incorporated's (MI's) investment in assets primarily come from liabilities or
stockholders' equity?
Complete the spreadsheet that follows. The first transaction is used as an example. (Enter any decreases to account balances
with a minus sign.)
a.
b.
C
d.
e.
f.
g.
Change in
Balances
Cash
145,000
145,000
OLiabilities
Assets
Equipment Buildings
a. Total assets at the end of the year.
b. Total liabilities at the end of the year.
c. Total stockholders' equity at the end of the year.
0
Stockholders' Equity
=
=
=
=
Liabilities + Stockholders' Equity
Notes
Payable
0
Amount
+
+
+
+
+
+
Common Retained
Stock Earnings
145,000
Based on beginning balances plus the completed spreadsheet, provide the Total assets, liabilities and stockholders' equity at
the end of year.
145,000
0
As of the current year-end, has the financing for MI's investment in assets primarily come from liabilities or stockholders'
equity?
A
A
A
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