Chapter 19, Problem 19.11P

To determine

Introduction: The balance sheet of a company discloses the financial position of a company at the end of the year. With the help of a balance sheet one can know the financial capacity of a company at any given point of time.

The balance sheet for B for the year ended December 31,20X4

Answer to Problem 19.11P

Balance Sheet for the year ended December 31, 20X4

Particulars	Amount	Amount
Current Assets:
Cash	100,000
Contributions receivable	100,000
Investments in marketable securities	200,000
Interest receivable	15,000
Accounts receivable	55,000
Inventory	35,000
Total current assets		505,000
Long term assets:
Buildings and equipment	75,000
Less: accumulated depreciation	(325,000)
	425,000
Land	95,000
Investment in marketable securities	300,000
Total long term assets		820,000
Total assets		1,325,000
Liabilities:	50,000
Accounts payable	40,000
Mortgage payable	320,000
Total liabilities		360,000
Net assets:
Unrestricted	555,000
Temporarily restricted (50,000+30,000)	80,000
Permanently restricted (300,000+30,000)	330,000
Total net assets		965,000
Total liabilities and net assets		1,325,000

Explanation of Solution

Working notes:

Calculation of accumulated depreciation for building:

  $\begin{array}{l}accumulateddepreciation=\left[\left(\frac{amountofbuilding}{numberofyears}\right)\times numberofyears\exp ired\right]\\ =\left(\frac{600,000}{30}\right)\times 11years\\ =20,000\times 11\\ =\$220,000\end{array}$

Calculation of depreciation for equipment:

  $\begin{array}{l}accumulateddepreciation=\left[\left(\frac{amountofbuilding}{numberofyears}\right)\times numberofyears\exp ired\right]\\ =\left(\frac{150,000}{10}\right)\times 7years\\ =15,000\times 7years\\ =\$105,000\end{array}$