Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

As controller for Henderson, you are attempting to reconstruct and revise the following balance sheet prepared by a staff accountant. Henderson Manufacturing Company Balance Sheet

As controller for Henderson, you are attempting to reconstruct and revise the following balance sheet prepared by a staff accountant.

Henderson Manufacturing Company Balance Sheet At December 31, 2021 ($ in 000s)
Assets
Current assets:
Cash $ 1,250
Accounts receivable 3,750
Allowance for uncollectible accounts (600 )
Finished goods inventory 7,000
Prepaid expenses 3,400
Total current assets 14,800
Long-term assets:
Investments 3,000
Raw materials and work in process inventory 3,900
Equipment 19,500
Accumulated depreciationequipment (9,000 )
Franchise ?
Total assets $ ?
Liabilities and Shareholders Equity
Current liabilities:
Accounts payable $ 7,200
Notes payable 8,000
Interest payablenote 400
Deferred revenue 2,400
Total current liabilities 18,000
Long-term liabilities:
Bonds payable 7,000
Interest payablebonds 200
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 franchise and shareholders equity items were lost. However, a complete, preliminary balance sheet prepared before the records were lost showed a debt to equity ratio of 1.5. That is, total liabilities are 150% of total shareholders equity. Retained earnings at the beginning of the year was $3,200. Net income for 2021 was $2,300, and $1,000 in cash dividends were declared and paid to shareholders.
  2. The investments represent treasury bills purchased in December 2021 that mature in January 2022. These are considered cash equivalents.
  3. Interest on both the notes and the bonds is payable annually.
  4. The notes payable account contains one note that is due in annual installments of $800 for each payment due.
  5. Deferred revenue will be recognized equally over the next 18 months.
  6. The common stock represents 500,000 shares of no par stock authorized, of which 300,000 shares are issued and outstanding.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Economics

Authors: Zvi Bodie, Robert C Merton, David Cleeton

2nd Edition

0558785751, 9780558785758

More Books

Students also viewed these Finance questions

Question

2. Are they aware of the assumptions they are making?

Answered: 1 week ago