Question
2. The following are the typical classifications used in a balance sheet: a. Current assets f. Current liabilities b. Investments and funds g. Long-term liabilities
2.
The following are the typical classifications used in a balance sheet: |
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a. | Current assets | f. | Current liabilities |
b. | Investments and funds | g. | Long-term liabilities |
c. | Property, plant, and equipment | h. | Paid-in-capital |
d. | Intangible assets | i. | Retained earnings |
e. | Other assets |
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Required: |
For each of the following 2016 balance sheet items, use the letters above to indicate the appropriate classification category. (If the item is a contra account, select the appropriate letter with a minus sign.) |
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1. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Accrued interest payable | 10. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Supplies |
2. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Franchise | 11. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Machinery |
3. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Accumulated depreciation | 12. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Land, in use |
4. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Prepaid insurance, for 2017 | 13. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Deferred revenue |
5. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Bonds payable, due in 10 years | 14. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| copyrights |
6. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Current maturities of long term debt | 15. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Preferred stock |
7. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Note payable, due in three months | 16. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Land, held for speculation |
8. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Long term recivables | 17. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Cash equivalents |
9. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Restricted cash, will be used to retire bonds in 10 years | 18. | ? a,b,c,d,e,f,g,h,i -a,-b,-c,-d,-e,-f,-g,-h,-i
| Wages payable |
3.
The following are typical disclosures that would appear in the notes accompanying financial statements. For each of the items listed, indicate where the disclosure would likely appeareither in (A) the significant accounting policies note or (B) a separate note. (The first item is shown as an example.) |
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1. | Inventory costing method | A or B? |
2. | Information on related party transactions | A or B? |
3. | Composition of property, plant and equipment | A or B? |
4. | Depreciation method | A or B? |
5. | Subsequent event information | A or B? |
6. | Measurement basis for certain financial instruments | A or B ? |
7. | Important merger occurring after year-end | A or B? |
8. | Composition of receivables | A or B? |
4.
Parkman Sporting Goods is preparing its annual report for its 2016 fiscal year. The companys controller has asked for your help in determining how best to disclose information about the following items: |
Required: |
Indicate whether the above items should be disclosed (A) in the summary of significant accounting policies note, (B) in a separate disclosure note, or (C) on the face of the balance sheet. |
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1. | A related party transaction | A,B,C? |
2. | Depreciation method | A,B,C? |
3. | Allowance for uncollectible accounts | A,B,C? |
4. | Composition of investments | A,B,C? |
5. | Composition of long-term debt | A,B,C? |
6. | Inventory costing method | A,B,C? |
7. | Number of shares of common stock authorized, issued, and outstanding. | A,B,C? |
8. | Employee benefit plans. | A,B,C? |
5.
The 2016 balance sheet for Hallbrook Industries, Inc., is shown below. |
HALLBROOK INDUSTRIES, INC. | |||
Balance Sheet | |||
December 31, 2016 | |||
($ in 000s) | |||
Assets |
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Cash | $ | 260 |
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Short-term investments |
| 210 |
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Accounts receivable |
| 260 |
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Inventories |
| 370 |
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Property, plant, and equipment (net) |
| 1,600 |
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Total assets | $ | 2,700 |
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Liabilities and Shareholders Equity |
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Current liabilities | $ | 460 |
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Long-term liabilities |
| 410 |
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Paid-in capital |
| 1,050 |
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Retained earnings |
| 780 |
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Total liabilities and shareholders equity | $ | 2,700 |
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The companys 2016 income statement reported the following amounts ($ in 000s): |
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Net sales | $ | 5,200 |
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Interest expense |
| 50 |
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Income tax expense |
| 160 |
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Net income |
| 220 |
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Required: |
1. | Calculate the current ratio. (Round your answer to 2 decimal places.) | ||
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2. | Calculate the acid-test ratio. (Round your answer to 2 decimal places.) |
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Acid-test ratio | ? |
3. | Calculate the debt to equity ratio. (Round your answer to 2 decimal places.) | ||
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4. | Calculate the times interest earned ratio. (Round your answer to 1 decimal place.) | ||
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6. |
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The following incomplete balance sheet for the Sanderson Manufacturing Company was prepared by the companys controller. As accounting manager for Sanderson, you are attempting to reconstruct and revise the balance sheet. | |||
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SANDERSON MANUFACTURING COMPANY Balance Sheet At December 31, 2016 ($ in 000s) | |||||
Assets | |||||
Current assets: |
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Cash |
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| $ | 2,150 |
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Accounts receivable |
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| 5,300 |
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Allowance for uncollectible accounts |
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| (1,300 | ) |
Finished goods inventory |
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| 6,900 |
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Prepaid expenses |
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| 2,100 |
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Total current assets |
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| 15,150 |
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Noncurrent assets: |
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Investments |
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| 3,900 |
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Raw materials and work in process inventory |
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| 3,150 |
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Equipment |
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| 18,000 |
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Accumulated depreciationequipment |
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| (5,100 | ) |
Patent |
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| ? |
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Total assets |
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| $ | ? |
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Liabilities and Shareholders Equity | |||||
Current liabilities: |
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Accounts payable |
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| $ | 6,100 |
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Note payable |
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| 5,800 |
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Interest payablenote |
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| 1,000 |
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Deferred revenue |
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| 4,800 |
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Total current liabilities |
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| 17,700 |
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Long-term liabilities: |
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Bonds payable |
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| 6,400 |
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Interest payablebonds |
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| 400 |
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Shareholders equity: |
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Common stock | $ | ? |
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Retained earnings |
| ? |
| ? |
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Total liabilities and shareholders equity |
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| ? |
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Additional information ($ in 000s): |
1. | Certain records that included the account balances for the patent and shareholders equity items were lost. However, the controller told you that a complete, preliminary balance sheet prepared before the records were lost showed a debt to equity ratio of 1.4. That is, total liabilities are 140% of total shareholders equity. Retained earnings at the beginning of the year was $5,800. Net income for 2016 was $2,000 and $400 in cash dividends were declared and paid to shareholders. |
2. | Management intends to sell the investments in the next six months. |
3. | Interest on both the note and the bonds is payable annually. |
4. | The note payable is due in annual installments of $1,450 each. |
5. | Deferred revenue will be earned equally over the next two fiscal years. |
6. | The common stock represents 400,000 shares of no par stock authorized, 340,000 shares issued and outstanding. |
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Required: |
Prepare a complete, corrected, classified balance sheet. (Amounts to be deducted should be indicated by a minus sign.) |
Sanderson Manufacturing Company
Balance Sheet
At December 31, 2016
($ in 000s, except share data)
Assets, Assets and Shareholders equity, Liabilities, Liabilities and Shareholders equity?
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