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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:

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

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.)

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.)

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.

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

Cash

$

260

Short-term investments

210

Accounts receivable

260

Inventories

370

Property, plant, and equipment (net)

1,600

Total assets

$

2,700

Liabilities and Shareholders Equity

Current liabilities

$

460

Long-term liabilities

410

Paid-in capital

1,050

Retained earnings

780

Total liabilities and shareholders equity

$

2,700

The companys 2016 income statement reported the following amounts ($ in 000s):

Net sales

$

5,200

Interest expense

50

Income tax expense

160

Net income

220

Required:

1.

Calculate the current ratio. (Round your answer to 2 decimal places.)

Current ratio

?

2.

Calculate the acid-test ratio. (Round your answer to 2 decimal places.)

Acid-test ratio

?

3.

Calculate the debt to equity ratio. (Round your answer to 2 decimal places.)

Debt to equity ratio

?

4.

Calculate the times interest earned ratio. (Round your answer to 1 decimal place.)

Times interest earned ratio

? Times

6.

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.

SANDERSON MANUFACTURING COMPANY Balance Sheet At December 31, 2016 ($ in 000s)

Assets

Current assets:

Cash

$

2,150

Accounts receivable

5,300

Allowance for uncollectible accounts

(1,300

)

Finished goods inventory

6,900

Prepaid expenses

2,100

Total current assets

15,150

Noncurrent assets:

Investments

3,900

Raw materials and work in process inventory

3,150

Equipment

18,000

Accumulated depreciationequipment

(5,100

)

Patent

?

Total assets

$

?

Liabilities and Shareholders Equity

Current liabilities:

Accounts payable

$

6,100

Note payable

5,800

Interest payablenote

1,000

Deferred revenue

4,800

Total current liabilities

17,700

Long-term liabilities:

Bonds payable

6,400

Interest payablebonds

400

Shareholders equity:

Common stock

$

?

Retained earnings

?

?

Total liabilities and shareholders equity

?

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.

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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