act Questions 8-11 A bookkeeper, who was not familiar with proper accounting procedures, prepared the fol- lowing financial report for Largor Corporation as of December 31, 2015. In addition to the errors in presentation, additional data below was not considered in the preparation of the report. Restate this balance sheet in proper form, giving recognition to the additional data, so that you will be able to determine the required information to answer Questions 8 through 11. DIRECTIONS: Answer Questions 8 through 11 on the basis of the information given below. LARGOR CORPORATION December 31, 2015 $110,000 53,000 Current Assets Cash Marketable Securities Accounts Receivable Accounts Payable Inventories Prepaid Expenses Treasury Stock Cash Surrender Value of Officers' Life Insuranc Policies $261,400 125.000 136,400 274,000 24,000 20,000 $722,400 105,000 Plant Assets Equipment Building Reserve for Plant Expansion Land TOTAL ASSETS 350,000 200,000 75,000 125,000 47.500 522,500 $1,244,900 3 (81) Liabilities Salaries Payable Cash Dividend Payable Stock Dividend Payable Bonds Payable Less Sinking Fund TOTAL LIABILITIES 16,500 50,000 70,000 200,000 y 90.000 110.000 Stockholders' Equity Paid In Capital Common Stock $246,500 350,000 Retained Earnings and Reserves Reserve for lncome Taxes Reserve for Doubtful Accounts Reserve for Treasury Stock Reserve for Deprecation Equipment Reserve for Depreciation Building Premium on Common stock Retained Earnings 90,000 6,500 20,000 70,000 80,000 15,000 366.900 648.400 998 400 TOTAL LIABILITIES & EQUITY $1,244,900 Additional Data A Bond Payable will mature eight (8) years from Balance Sheet date. The Stock Dividend Payable was declared on December 31, 2015. B. C The Reserve for Income Taxes represents the balance due on the estimated liabil- ity for taxes on income for the year ended December 31. D. Advances from Customers at the Balance Sheet date totaled $13,600. This total is still credited against Accounts Receivable. E. Prepaid Expenses include Unamortized Mortgage Costs of $15,000. F Marketable Securities were recorded at cost. Their market value at December 31, 2015 was $50,800. 8. After restatement of the balance sheet in proper form and giving recognition to the addi- tional data, the Total Current Assets should be 8. C. $712,300 D. $827,300 B. $702,400 A. $597,400 9. After restatement of the balance sheet in proper form and giving recognition to the addi- tional data, the Total Current Liabilities should be 9. D. .D. $370,100 C. $295,100 B. $281,500 A. $261,500 After restatement of the balance sheet in proper form and giving recognition to the addi- 10. tional data, the net book value of plant and equipment should be 10. D. $597,500 C. $550,000 B B, $447,500 A. $400,000 11. After restatement of the balance sheet in proper form and giving recognition to the addi- tional data, the Stockholders Equity should be 11. D. $874,700 C. $764,700 B. $335,000 A. $320,000 00088
