INTERMEDIATE ACCOUNTING
INTERMEDIATE ACCOUNTING
8th Edition
ISBN: 9780078096488
Author: SPICELAND
Publisher: MCG
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Chapter 3, Problem 3.5P
To determine

Balance sheet:

Balance sheet is the statement which is prepared to report the financial position of the business. The balance sheet contains the various assets, liabilities and shareholders' equities of the business as on a given date.

To Prepare: A classified balance sheet for Company E at June 30, 2016.

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Explanation of Solution

Classified balance sheet:

Classified balance sheet is the financial statement of a company which shows the grouping of similar assets and liabilities under subheadings.

Prepare a classified balance sheet for Company E at June 30, 2016 is as follows:

COMPANY E
Balance Sheet
At June 30, 2016
Particulars Amount($) Amount($)
Assets    
Current assets:    
     Cash and cash equivalents(1) 101,000  
     Short-term investments (2) 47,000  
     Accounts receivable (3) 210,000  
     Interest receivable  5,000  
     Prepaid expenses  32,000  
               Total current assets    395,000
Investments:    
     Note receivable  65,000  
     Land held for sale(6) 25,000 90,000
Property, plant, and equipment:    
     Land(5) 50,000  
     Buildings  320,000  
     Equipment  265,000  
  635,000  
     Less: Accumulated depreciation-buildings  (160,000  
     Less: Accumulated depreciation-equipment  (120,000)  
               Net property, plant, and equipment    355,000
Total assets    840,000
Liabilities and Shareholders' Equity
Current liabilities:    
     Accounts payable    173,000
     Accrued expenses    45,000
     Note payable    50,000
     Current maturities of long-term debt    10,000
               Total current liabilities    278,000
Long-term liabilities:    
     Note payable  50,000  
     Mortgage payable(4) 240,000  
               Total long-term liabilities    290,000
                                                                      Total liabilities    568,000
Shareholders’ equity:    
     Common stock  100,000  
     Retained earnings  172,000  
               Total shareholders’ equity    272,000
       Total liabilities and shareholders’ equity    840,000

Table (1)

Cash and cash equivalents:

Cash and cash equivalents are the highly liquid investments with the maturity period of less than three months from the date of purchase. It includes money market funds, treasury bills and commercial papers.

Working note:

Calculate cash and cash equivalents:

Cash and cash equivalents = (Cash as per trial balance +Amount of U.S treasury bill)=$83,000+$18,000=$101,000(1)

Calculate the amount of short-term investment:

Short-term investment = (Short term investment as per trial balance Amount of U.S treasury bill)=$65,000$18,000=$47,000(2)

Calculate the amount of notes receivable, net of allowance for uncollectible accounts.

Notes receivable, net of allowance for uncollectible accounts) = (Amount owned by customer Allowances for uncollectible accounts)=$225,000$15,000=$210,000(3)

Calculate the amount of mortgage payable.

Mortgage payable) = (Mortgage payable as per trial balance Semiannual installment plus interest)=$250,000$10,000=$240,000(4)

Calculate the land value:

Total cost of land is given as $75000 in the trial balance. In total cost, $50,000(5) is considered as the property because where office buildings are resided. Remaining $25,000(6) of land is being held by the company for sale so it is considered as the investment

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Chapter 3 Solutions

INTERMEDIATE ACCOUNTING

Ch. 3 - Disclosure notes are an integral part of the...Ch. 3 - A summary of the companys significant accounting...Ch. 3 - Define a subsequent event.Ch. 3 - Prob. 3.14QCh. 3 - Prob. 3.15QCh. 3 - Prob. 3.16QCh. 3 - Prob. 3.17QCh. 3 - Show the calculation of the following solvency...Ch. 3 - Prob. 3.19QCh. 3 - Prob. 3.20QCh. 3 - (Based on Appendix 3) Segment reporting...Ch. 3 - Prob. 3.22QCh. 3 - Prob. 3.23QCh. 3 - Current versus long-term classification LO32,...Ch. 3 - Prob. 3.2BECh. 3 - Prob. 3.3BECh. 3 - Prob. 3.4BECh. 3 - Prob. 3.5BECh. 3 - Prob. 3.6BECh. 3 - Balance sheet preparation; missing elements LO32,...Ch. 3 - Financial statement disclosures LO34 For each of...Ch. 3 - Prob. 3.9BECh. 3 - Prob. 3.10BECh. 3 - Calculating ratios; solving for unknowns LO38 The...Ch. 3 - Prob. 3.1ECh. 3 - Prob. 3.2ECh. 3 - Prob. 3.3ECh. 3 - Prob. 3.4ECh. 3 - Prob. 3.5ECh. 3 - Prob. 3.6ECh. 3 - Prob. 3.7ECh. 3 - Prob. 3.8ECh. 3 - Prob. 3.9ECh. 3 - Financial statement disclosures LO34 The...Ch. 3 - Prob. 3.11ECh. 3 - Prob. 3.12ECh. 3 - Prob. 3.13ECh. 3 - FASB codification research LO32, LO34 Access the...Ch. 3 - Prob. 3.15ECh. 3 - Prob. 3.16ECh. 3 - Prob. 3.17ECh. 3 - Prob. 3.18ECh. 3 - Prob. 3.19ECh. 3 - Effect of management decisions on ratios LO38...Ch. 3 - Prob. 3.21ECh. 3 - Prob. 3.22ECh. 3 - Prob. 1CPACh. 3 - Prob. 2CPACh. 3 - Prob. 3CPACh. 3 - Prob. 4CPACh. 3 - Prob. 5CPACh. 3 - Prob. 6CPACh. 3 - Prob. 7CPACh. 3 - Prob. 8CPACh. 3 - Prob. 1CMACh. 3 - Prob. 2CMACh. 3 - Prob. 3CMACh. 3 - Balance sheet preparation LO32, LO33 Presented...Ch. 3 - Prob. 3.2PCh. 3 - Prob. 3.3PCh. 3 - Prob. 3.4PCh. 3 - Prob. 3.5PCh. 3 - Prob. 3.6PCh. 3 - Prob. 3.7PCh. 3 - Prob. 3.8PCh. 3 - Prob. 3.9PCh. 3 - Prob. 3.10PCh. 3 - Communication Case 31 Current versus long-term...Ch. 3 - Analysis Case 32 Current versus long- term...Ch. 3 - Prob. 3.4BYPCh. 3 - Prob. 3.5BYPCh. 3 - Prob. 3.6BYPCh. 3 - Prob. 3.7BYPCh. 3 - Prob. 3.8BYPCh. 3 - Prob. 3.9BYPCh. 3 - Prob. 3.11BYPCh. 3 - Analysis Case 3–14 Balance sheet information LO3–2...Ch. 3 - Prob. 3.15BYPCh. 3 - Ethics Case 316 Segment reporting Appendix 3 You...
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