The following balance sheet for Northumberland Farm Machinery and Supply, Inc. was prepared by an inexperienced accountant and contains several errors.

Additional Information:
1. Inventory is valued at cost (FIFO). At December 31, 2008, the inventory could have been
replaced at a total cost of \($165,000\).
2. Fixed assets is comprised ofl and, buildings, and machinery that cost \($85,000,\) \($840,000,
and\) \($250,000,\) respectively. Accumulated depreciation on the buildings and machinery
was \($480,000\) and \($120,000,\) respectively.
3. Accounts receivable include a \($5,000\) note receivable from the company president due in June 2010. ‘
4. The mortgage is payable in monthly installments; \($15,000\) in principal will be repaid in 2009.
5. The company’s common stock has a \($1\) par value; 50,000 shares have been issued and are outstanding at year-end.
6. Short-term investments consists of other companies’ shares that are appropriately valued at current market prices. These shares are appropriately classified as available-for-sale because management plans to sell them if the company needs additional operating cash in the next few months.
7. The bonds payable mature in 2013 and pay interest semiannually. The accountant forgot to record \($6,000\) in interest that had accrued since the last semiannual payment was made.
Required:
Prepare a classified balance sheet in proper form. Make any necessary corrections.

Transcribed Image Text:

Balance Sheet December 31, 2008 Assets Cash Short-term investments Inventory Accounts receivable Fixed assets Trademark Goodwill Total assets $ 15,000 8,000 175,000 70,000 575,000 5,000 65,000 $913,000 Liabilities and Shareholders' Equity Accounts payable $ 40,000 Wages payable Allowance for bad debts Mortgage payable 6,500 2,500 180,000 Bonds payable 300,000 Common stock 127,000 Retained earnings 257,000 Total liabilities and shareholders' equity $913,000