6E
Question
The bookkeeper for Geronimo Company has prepared the following balance sheet as of July 31, 2017.
GERONIMO COMPANY | |||
Balance Sheet | |||
As of July 31, 2017 | |||
Cash | \(69,000 | Notes and accounts payable | \)44,000 |
Account receivable (net) | 40,500 | Long-term liabilities | 75,000 |
Inventory | 60,000 | Stockholder’s equity | 155,500 |
Equipment (net) | 84,000 |
|
|
Patents | 21,000 |
|
|
| \(274,500 |
| \)274,500 |
The following additional information is provided.
1. Cash includes \(1,200 in a petty cash fund and \)15,000 in a bond sinking fund.
2. The net accounts receivable balance is comprised of the following two items: (a) accounts receivable \(44,000 and (b) allowance for doubtful accounts \)3,500.
3. Inventory costing \(5,300 was shipped out on consignment on July 31, 2017. The ending inventory balance does not include the consigned goods. Receivables in the amount of \)5,300 were recognized on these consigned goods.
4. Equipment had a cost of \(112,000 and an accumulated depreciation balance of \)28,000.
5. Income taxes payable of $6,000 were accrued on July 31. Geronimo Company, however, had set up a cash fund to meet this obligation. This cash fund was not included in the cash balance but was offset against the income taxes payable amount.
Instructions
Prepare a corrected classified balance sheet as of July 31, 2017, from the available information, adjusting the account balances using the additional information.
Step-by-Step Solution
VerifiedThe total of the company’s balance sheet is $280,500.
The charges paid by the business entity earning income in the country’s government are known as income tax. It is charged on the benefits generated during the fiscal year.
| GERONIMO COMPANY | |||||
| Balance Sheet | |||||
| As of July 31, 2017 | |||||
Cash | $52,800 |
| Notes and accounts payable |
| $44,000 |
Add: Income tax offset | 6,000 | $58,800 | Income tax payable |
| 6,000 |
Petty cash |
| 1,200 |
|
|
|
Account receivable | 44,000 | 35,200 | Long-term liabilities |
| 75,000 |
Less: Inventory consigned receivables | (5,300) |
|
|
|
|
Less: allowance for doubtful accounts | (3,500) |
| Stockholder’s equity |
| 155,500 |
Inventory | 60,000 | 65,300 |
|
|
|
Add: Consigned inventory | 5,300 |
|
|
|
|
Bond sinking funds |
| 15,000 |
|
|
|
Equipment | 112,000 | 84,000 |
|
|
|
Less: Accumulated depreciation | (28,000) |
|
|
|
|
Patents |
| 21,000 |
|
|
|
|
| $280,500 |
|
| $280,500 |