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Sudden Ltd. is formed as a Canada Business Corporation. It pays an incorporation fee of $20,000 and pays legal fees of $15,650 to do this. Organization costs are set up as an intangible asset and are not amortized. Class A unrestricted, voting common shares sold at various times during the first year are 3,000 @ $11+ 15,650@ $13+ 4,000@$15. The Company received a $80,530 grant from the government to build a factory in an area of the country with chronic high unemployment. No dividends were paid the first year. Net income before tax in year 1 is $80,530. The firm has $20,000 liabilities at year end and a 25% tax rate.

Sudden Ltd. is formed as a Canada Business Corporation. It pays an incorporation fee of $20,000 and pays legal fees of $15,650 to do this. Organization costs are set up as an intangible asset and are not amortized. Class A unrestricted, voting common shares sold at various times during the first year are 3,000 @ $11+ 15,650@ $13+ 4,000@$15. The Company received a $80,530 grant from the government to build a factory in an area of the country with chronic high unemployment. No dividends were paid the first year. Net income before tax in year 1 is $80,530. The firm has $20,000 liabilities at year end and a 25% tax rate.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sudden Ltd. is formed as a Canada Business Corporation. It pays an incorporation fee of $20,000 and pays legal fees of $15,650 to do this. Organization costs are set up as an intangible asset and are not amortized. Class A unrestricted, voting common shares sold at various times during the first year are 3,000 @ $11+ 15,650@ $13+ 4,000@$15. The Company received a $80,530 grant from the government to build a factory in an area of the country with chronic high unemployment. No dividends were paid the first year. Net income before tax in year 1 is $80,530. The firm has $20,000 liabilities at year end and a 25% tax rate. Required 1: What is the net book balance of Organization Costs in the year end financial statements? $ Required 2: What is the balance of the Share Capital account in the year end financial statements? $ Required 3: What is the balance of the Contributed Surplus account in the year end financial statements? $ Required 4: What is the balance of Retained Earnings in the year end financial statements? $ Required 5: What is the amount of Total Assets in the year end financial statements? $
Transcribed Image Text:Sudden Ltd. is formed as a Canada Business Corporation. It pays an incorporation fee of $20,000 and pays legal fees of $15,650 to do this. Organization costs are set up as an intangible asset and are not amortized. Class A unrestricted, voting common shares sold at various times during the first year are 3,000 @ $11+ 15,650@ $13+ 4,000@$15. The Company received a $80,530 grant from the government to build a factory in an area of the country with chronic high unemployment. No dividends were paid the first year. Net income before tax in year 1 is $80,530. The firm has $20,000 liabilities at year end and a 25% tax rate. Required 1: What is the net book balance of Organization Costs in the year end financial statements? $ Required 2: What is the balance of the Share Capital account in the year end financial statements? $ Required 3: What is the balance of the Contributed Surplus account in the year end financial statements? $ Required 4: What is the balance of Retained Earnings in the year end financial statements? $ Required 5: What is the amount of Total Assets in the year end financial statements? $
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