Question 12 E - Intermediate Accounting (Kieso)

Question

E5-12 (L03) (Preparation of a Balance Sheet) Presented below is the trial balance of Scott Butler Corporation at December 31, 2017.

Particular	Debit	Credit
Cash	\(197,000
Sales Revenue		\)8,100,000
Debt investment (trading) (at cost \(145,000)	153,000
Cost of goods sold	4,800,000
Debt investment (long-term)	299,000
Equity Investment (long-term)	277,000
Notes payable (Short-term)		90,000
Account payable		455,000
Selling expenses	2,000,000
Investment revenue		63,000
Land	260,000
Buildings	1,040,000
Dividend payable		136,000
Accrued Liabilities		96,000
Accounts Receivable	435,000
Accumulated depreciation – Building		152,000
Allowance for doubtful accounts		25,000
Administrative expenses	900,000
Interest expenses	211,000
Inventory	597,000
Gain		80,000
Notes payable		900,000
Equipment	600,000
Bonds payable		1,000,000
Accumulated depreciation – Equipment		60,000
Franchises	160,000
Common stock		1,000,000
Treasury stock	191,000
Patents	195,000
Retained Earnings		78,000
Paid-in-capital in excess of par		80,0000
Total	\)12,315,000	$12,315,000

 

Instructions Prepare a balance sheet at December 31, 2017, for Scott Butler Corporation. (Ignore income taxes.)

Step-by-Step Solution

Answer

The balance sheet of the company totals $3,976,000.

Definition of Accrued Liabilities

Accrued Liabilities can be defined as the expenses incurred by the business entity but are still unpaid. These unpaid expenses are reported as current liabilities in the accrued liabilities account.

Classified Balance Sheet

Particular	Amount $	Amount $
Assets
Current assets
Cash		$197,000
Debt investment (trading) (at cost $145,000)		153,000
Accounts Receivable	435,000
Less: Allowance for doubtful accounts	(25,000)	410,000
Inventory		597,000
Property, Plant, and Equipment
Land		260,000
Buildings	1,040,000
Less: Accumulated depreciation – Building	(152,000)	888,000
Equipment	600,000
Less: Accumulated depreciation – Equipment	(60,000)	540,000
Long-term Investment
Debt investment (long-term)		299,000
Equity Investment (long-term)		277,000
Intangible assets
Franchises		160,000
Patents		195,000
Total assets		3,976,000
Liabilities
Current liabilities
Dividend payable		136,000
Accrued Liabilities		96,000
Notes payable (Short-term)		90,000
Account payable		455,000
Non-Current liabilities
Notes payable		900,000
Bonds payable		1,000,000
Total liabilities		2,677,000
Equity
Common stock		1,000,000
Paid-in-capital in excess of par		80,000
Treasury stock		(191,000)
Reserve and surplus
Retained Earnings (332,000 + 78,000)		410,000
Total liabilities and Equity		$3,976,000

Working note: 

Calculation of net income

Particular	Amount $
Sales Revenue	$8,100,000
Less: Cost of goods sold	(4,800,000)
Gross profit	3,300,000
Less: Other expenses
Selling expenses	(2,000,000)
Administrative expenses	(900,000)
Interest expenses	(211,000)
Net Operating income	189,000
Add: Gains	80,000
Add: Investment revenue	63,000
Total income	$332,000