Question 4
Question
P5-4 (L03) GROUPWORK (Preparation of a Corrected Balance Sheet) The balance sheet of Kishwaukee Corporation as of December 31, 2017, is as follows.
KISHWAUKEE CORPORATION | |
Balance Sheet | |
December 31, 2017 | |
Assets |
|
Goodwill (Note 2) | \(120,000 |
Building (Note 1) | 1,640,000 |
Inventory | 312,100 |
Land | 950,000 |
Accounts receivable | 170,000 |
Treasury Stock (50,000 shares) | 87,000 |
Cash on hand | 175,900 |
Assets allocated to trustee for plant expansion |
|
Cash in bank | 70,000 |
Debt investment (held to maturity) | 138,000 |
| \)3,663,000 |
|
|
Equities |
|
Note payable (Note 3) | \(600,000 |
Common stock authorized and issue, 1,000,000 shares no par | 1,150,000 |
Retained earnings | 103,000 |
Non-controlling Interest | 55,000 |
Appreciation capital (Note 1) | 570,000 |
Income tax payable | 75,000 |
Reserve for depreciation recorded to the date of building | 410,000 |
| \)3,663,000 |
Note 1: Buildings are stated at cost, except for one building that was recorded at appraised value. The excess of appraisal value over cost was \(570,000. Depreciation has been recorded based on cost.
Note 2: Goodwill in the amount of \)120,000 was recognized because the company believed that book value was not an accurate representation of the fair value of the company. The gain of \(120,000 was credited to Retained Earnings.
Note 3: Notes payable are long-term except for the current installment due of \)100,000.
Instructions
Prepare a corrected classified balance sheet in good form. The notes above are for information only
Step-by-Step Solution
VerifiedThe balance sheet of the business entity totals $3,576,000.
The cash balance held by the business entity that cannot be used in general business activities as it is held for some special purpose is known as restricted cash.
| KISHWAUKEE CORPORATION | ||
| Balance Sheet | ||
| December 31, 2017 | ||
Assets |
|
|
Current assets |
|
|
Cash on hand |
| $175,900 |
Restricted cash in bank |
| 70,000 |
Inventory |
| 312,100 |
Accounts receivable |
| 170,000 |
|
|
|
Long-Term investments |
|
|
Debt investment (held to maturity) |
| 138,000 |
|
|
|
Property, Plant, and Equipment |
|
|
Land |
| 950,000 |
Building |
| 1,640,000 |
|
|
|
Intangible assets |
|
|
Goodwill |
| 120,000 |
Total assets |
| 3,576,000 |
|
|
|
Liabilities |
|
|
Current liabilities |
|
|
Income tax payable |
| 75,000 |
Note payable |
| 100,000 |
|
|
|
Non-current liabilities |
|
|
Note payable |
| 500,000 |
|
|
|
Equities |
|
|
Common stock authorized and issued, 1,000,000 shares no par | 1,150,000 |
|
Less: Treasury Stock (50,000 shares) | (87,000) | 1,063,000 |
Non-controlling Interest |
| 55,000 |
|
|
|
Reserve and surplus |
|
|
Retained earnings |
| 803,000 |
Appreciation capital |
| 570,000 |
Reserve for depreciation recorded to the date of building |
| 410,000 |
Total liabilities and equity |
| $3,576,000 |