Analyze the above information to prepare a corrected balance sheet for Almaden in accordance with proper accounting and reporting principles. Prepare a description of any notes that might need to be prepared. The books are closed and adjustments to income are to be made through retained earnings.

Problem 24-1 Page 1 of 3 Print by: Kelly Casebier AC302: Intermediate Accounting III - 1602B-01 / AC302 Unit 10 HW Assignment *Problem 24-1 Your firm has been engaged to examine the financial statements of Almaden Corporation for the year 2014. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on January 2, 2009. The client provides you with the information below. ALMADEN CORPORATION BALANCE SHEET DECEMBER 31, 2014 Assets Current assets Liabilities $1,884,350 Other assets 5,190,179 Current liabilities Long-term liabilities Capital $7,074,529 $969,670 1,445,230 4,659,629 $7,074,529 An analysis of current assets discloses the following. Cash (restricted in the amount of $302,260 for plant expansion) $571,260 Investments in land 185,560 Accounts receivable less allowance of $30,720 482,030 Inventories (LIFO flow assumption) 645,500 $1,884,350 Other assets include: Prepaid expenses Plant and equipment less accumulated depreciation of $1,438,800 Cash surrender value of life insurance policy Unamortized bond discount $62,410 4,145,800 84,480 35,419 Notes receivable (short-term) 162,410 Goodwill 253,150 Land 446,510 $5,190,179 Current liabilities include: Accounts payable $512,350 Notes payable (due 2017) 158,800 Estimated income taxes payable 146,940 Premium on common stock 151,580 $969,670 Long-term liabilities include: Unearned revenue Dividends payable (cash) 8% bonds payable (due May 1, 2019) $491,310 200,320 753,600 $1,445,230 Capital includes: Retained earnings Capital stock, par value $10; authorized 200,000 shares, 185,820 shares issued $2,801,429 1,858,200 $4,659,629 The supplementary information below is also provided. 1. On May 1, 2014, the corporation issued at 95.3, $753,600 of bonds to finance plant expansion. The long-term bond agreement provided for the annual payment of interest every May 1. The existing plant was pledged as security for the loan. Use the straight-line method for discount amortization. 2. The bookkeeper made the following mistakes. (a) In 2012, the ending inventory was overstated by $184,630. The ending inventories for 2013 and 2014 were correctly computed. http://edugen.wiley.com/edugen/shared/assignment/test/qprint.uni 5/31/2016 Problem 24-1 Page 2 of 3 (b) In 2014, accrued wages in the amount of $226,600 were omitted from the balance sheet, and these expenses were not charged on the income statement. (c) In 2014, a gain of $176,910 (net of tax) on the sale of certain plant assets was credited directly to retained earnings. 3. A major competitor has introduced a line of products that will compete directly with Almaden's primary line, now being produced in a specially designed new plant. Because of manufacturing innovations, the competitor's line will be of comparable quality but priced 50% below Almaden's line. The competitor announced its new line on January 14, 2015. Almaden indicates that the company will meet the lower prices that are high enough to cover variable manufacturing and selling expenses, but permit recovery of only a portion of fixed costs. 4. You learned on January 28, 2015, prior to completion of the audit, of heavy damage because of a recent fire to one of Almaden's two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail. Analyze the above information to prepare a corrected balance sheet for Almaden in accordance with proper accounting and reporting principles. Prepare a description of any notes that might need to be prepared. The books are closed and adjustments to income are to be made through retained earnings. (List current assets in order of liquidity. Enter account name only and do not provide descriptive information.) ALMADEN CORPORATION Balance Sheet December 31, 2014 Assets $ $ : $ $ : $ Liabilities and Stockholders' Equity $ http://edugen.wiley.com/edugen/shared/assignment/test/qprint.uni 5/31/2016 Problem 24-1 Page 3 of 3 $ $ : $ Question Attempts: 0 of 3 used Copyright 2000-2016 by John Wiley & Sons, Inc. or related companies. All rights reserved. http://edugen.wiley.com/edugen/shared/assignment/test/qprint.uni 5/31/2016