Integrating Case 4–12 Balance sheet and income statement; Chapters 3 and 4 • LO4–3 Rice Corporation is negotiating a loan for expansion purposes and the bank requires financial statements. Before closing the accounting records for the year ended December 31, 2018, Rice’s controller prepared the following financial statements: RICE CORPORATION Balance Sheet At December 3 1, 2018 ($ in thousands) Assets Cash $ 275 Marketable securities 78 Accounts receivable 487 Inventories 425 Allowance for uncollectible accounts (50) Property and equipment, net 160 Total assets $1,375 Liabilities and Shareholders’ Equity Accounts payable and accrued liabilities $ 420 Notes payable 200 Common stock 260 Retained earnings 495 Total liabilities and shareholders’ equity $1,375 RICE CORPORATION Income Statement For the Year Ended December 31, 2018 ($ in thousands) Net sales $1,580 Expenses: Cost of goods sold $755 Selling and administrative 385 Miscellaneous 129 Income taxes 100 Total expenses 1,369 Net income $ 211 1. The company’s common stock is traded on an organized stock exchange. 2. The investment portfolio consists of short-term investments valued at $57,000. The remaining investments will not be sold until the year 2020. 3. Notes payable consist of two notes: 1. Note 1: $80,000 face value dated September 30, 2018. Principal and interest at 10% are due on September 30, 2019. 2. Note 2: $120,000 face value dated April 30, 2018. Principal is due in two equal installments of $60,000 plus interest on the unpaid balance. The two payments are scheduled for April 30, 2019, and April 30, 2020. 3. Interest on both loans has been correctly accrued and is included in accrued liabilities on the balance sheet and selling and administrative expenses on the income statement. 4. Selling and administrative expenses include $90,000 representing costs incurred by the company in restructuring some of its operations. The amount is material. Required: Identify and explain the deficiencies in the presentation of the statements prepared by the company’s controller. Do not prepare corrected statements. Include in your answer a list of items which require additional disclosure, either on the face of the statement or in a note.
Integrating Case 4–12 Balance sheet and income statement; Chapters 3 and 4 • LO4–3 Rice Corporation is negotiating a loan for expansion purposes and the bank requires financial statements. Before closing the accounting records for the year ended December 31, 2018, Rice’s controller prepared the following financial statements: RICE CORPORATION Balance Sheet At December 3 1, 2018 ($ in thousands) Assets Cash $ 275 Marketable securities 78 Accounts receivable 487 Inventories 425 Allowance for uncollectible accounts (50) Property and equipment, net 160 Total assets $1,375 Liabilities and Shareholders’ Equity Accounts payable and accrued liabilities $ 420 Notes payable 200 Common stock 260 Retained earnings 495 Total liabilities and shareholders’ equity $1,375 RICE CORPORATION Income Statement For the Year Ended December 31, 2018 ($ in thousands) Net sales $1,580 Expenses: Cost of goods sold $755 Selling and administrative 385 Miscellaneous 129 Income taxes 100 Total expenses 1,369 Net income $ 211 1. The company’s common stock is traded on an organized stock exchange. 2. The investment portfolio consists of short-term investments valued at $57,000. The remaining investments will not be sold until the year 2020. 3. Notes payable consist of two notes: 1. Note 1: $80,000 face value dated September 30, 2018. Principal and interest at 10% are due on September 30, 2019. 2. Note 2: $120,000 face value dated April 30, 2018. Principal is due in two equal installments of $60,000 plus interest on the unpaid balance. The two payments are scheduled for April 30, 2019, and April 30, 2020. 3. Interest on both loans has been correctly accrued and is included in accrued liabilities on the balance sheet and selling and administrative expenses on the income statement. 4. Selling and administrative expenses include $90,000 representing costs incurred by the company in restructuring some of its operations. The amount is material. Required: Identify and explain the deficiencies in the presentation of the statements prepared by the company’s controller. Do not prepare corrected statements. Include in your answer a list of items which require additional disclosure, either on the face of the statement or in a note.
Solution Summary: The author lists the deficiencies in the presentation of the balance sheet and the income statement prepared by the company's controller.
Balance sheet and income statement; Chapters 3 and 4
• LO4–3
Rice Corporation is negotiating a loan for expansion purposes and the bank requires financial statements. Before closing the accounting records for the year ended December 31, 2018, Rice’s controller prepared the following financial statements:
RICE CORPORATION
Balance Sheet At December 3 1, 2018
($ in thousands)
Assets
Cash
$ 275
Marketable securities
78
Accounts receivable
487
Inventories
425
Allowance for uncollectible accounts
(50)
Property and equipment, net
160
Total assets
$1,375
Liabilities and Shareholders’ Equity
Accounts payable and accrued liabilities
$ 420
Notes payable
200
Common stock
260
Retained earnings
495
Total liabilities and shareholders’ equity
$1,375
RICE CORPORATION
Income Statement
For the Year Ended December 31, 2018
($ in thousands)
Net sales
$1,580
Expenses:
Cost of goods sold
$755
Selling and administrative
385
Miscellaneous
129
Income taxes
100
Total expenses
1,369
Net income
$ 211
1. The company’s common stock is traded on an organized stock exchange.
2. The investment portfolio consists of short-term investments valued at $57,000. The remaining investments will not be sold until the year 2020.
3. Notes payable consist of two notes:
1. Note 1: $80,000 face value dated September 30, 2018. Principal and interest at 10% are due on September 30, 2019.
2. Note 2: $120,000 face value dated April 30, 2018. Principal is due in two equal installments of $60,000 plus interest on the unpaid balance. The two payments are scheduled for April 30, 2019, and April 30, 2020.
3. Interest on both loans has been correctly accrued and is included in accrued liabilities on the balance sheet and selling and administrative expenses on the income statement.
4. Selling and administrative expenses include $90,000 representing costs incurred by the company in restructuring some of its operations. The amount is material.
Required:
Identify and explain the deficiencies in the presentation of the statements prepared by the company’s controller. Do not prepare corrected statements. Include in your answer a list of items which require additional disclosure, either on the face of the statement or in a note.
Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.
The Pixel Company reported total manufacturing costs of $186,000; manufacturing overhead totaling $42,000 and direct materials totaling $31,000. How much is direct labor cost? General Account
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