Exercise 5-6

The bookkeeper for Headland Company has prepared the following balance sheet as of July 31, 2020.

HEADLAND COMPANY BALANCE SHEET AS OF JULY 31, 2020
Cash		$ 73,930		Notes and accounts payable		$ 48,930
Accounts receivable (net)		45,430		Long-term liabilities		79,930
Inventory		64,930		Stockholders equity		160,430
Equipment (net)		84,000				$289,290
Patents		21,000
		$289,290

The following additional information is provided.

1.		Cash includes $1,200 in a petty cash fund and $12,810 in a bond sinking fund.
2.		The net accounts receivable balance is comprised of the following two items: (a) accounts receivable $48,930 and (b) allowance for doubtful accounts $3,500.
3.		Inventory costing $5,569 was shipped out on consignment on July 31, 2020. The ending inventory balance does not include the consigned goods. Receivables in the amount of $5,569 were recognized on these consigned goods.
4.		Equipment had a cost of $116,930 and an accumulated depreciation balance of $32,930.
5.		Income taxes payable of $6,000 were accrued on July 31. Headland Company, however, had set up a cash fund to meet this obligation. This cash fund was not included in the cash balance but was offset against the income taxes payable amount.

Prepare a corrected classified balance sheet as of July 31, 2020, from the available information, adjusting the account balances using the additional information. (List Current Assets in order of liquidity)

HEADLAND COMPANY Balance Sheet July 31, 2020 Assets Current Assets Cash Cash Accounts Receivable Less : Allowance for Doubtful Accounts Inventory Total Current Assets Long-term Investments Bond Sinking Fund Property, Plant and Equipment Equipment Less : Accumulated Depreciation-Equipment Intangible Assets Patents Total Assets Liabilities and Stockholders' Equity Current Liabilities Notes and Accounts Payable Income Tax Payable Total Current Liabilities Long-term Liabilities Total Liabilities Stockholders' Equity Total Liabilities and Stockholders' Equity