Part $1$: Classified Balance Sheet

The adjusted trial balance of Jordan Contracting and other related information for the year $2018$ is presented below.

Adjusted Trial Balance

December $31,2018$

Debits Credits

Cash $$22,550$

Accounts Receivable $89,925$

Allowance for Doubtful Accounts $$4,785$

Prepaid Insurance $3,245$

Inventory $169,675$

Long$-$term Investments $186,450$

Land $46,750$

Construction Work in Progress $68,200$

Patents $19,800$

Equipment $220,000$

Accumulated Depreciation of Equipment $77,000$

Unamortized Discount on Bonds Payable $11,000$

Accounts Payable $81,400$

Accrued Expenses $27,060$

Notes Payable $51,700$

Bonds Payable $220,000$

Capital Stock $275,000$

Premium on Capital Stock $24,750$

Retained Earnings $75,900$

$$837,595$ $$837,595$

Additional Information

$1.$ The LIFO method of inventory valuation is used.

$2.$ The cost and fair value of the long$-$term investments consisting of stock and bonds is the same.

$3.$ The amount of Construction Work in Progress account represents the costs expended to date on a building in the process of being constructed. The land on which the building sits cost $$46,750.$

$4.$ The patents were purchased at a cost of $$11,000$ and are being amortized on a straight$-$line basis.

$5.$ $$1,000$ of the unamortized discount on bonds payable will be amortized in $2019.$

$6.$ The notes payable are bank loans secured by long$-$term investments with a fair value of $$66,000.$ The bank loans will mature in $2019.$

$7.$ The bonds payable have an interest rate of $11\%.$ Interest is payable each December $31,$ and the bonds mature January $1,2020.$

$8.600,000$ shares of $$1$ par value common stock are authorized and $150,000$ shares have been issued and are outstanding.

Part $2$: Income Statement

Presented below is information related to D$.$ B$.$ Stanley Company for $2018.$

Retained earnings balance, January $1,2018$ $$539,000$

Sales for the year $13,750,000$

Cost of goods sold $9,350,000$

Interest revenue $38,500$

Selling and administrative expenses $2,585,000$

Write$-$off of goodwill $($not tax deductible$)451,000$

Income taxes for $2018497,750$

Gain on the sale of investments $($normal recurring$)60,500$

Loss due to flood damage$-$extraordinary item $($net of tax$)214,500$

Loss on the disposition of the wholesale division $($net of tax$)242,000$

Loss on operations of the wholesale division $($net of tax$)49,500$

Dividends declared on common stock $137,500$

Dividends declared on preferred stock $38,500$

Part $3$: Cash Flow Statement Analysis

The financial statements of Falcon Company are found below.

Comparative Balance Sheets

December $31$

Assets $20182017$

Cash $$14,300$ $$18,150$

Accounts receivable $15,4007,700$

Merchandise inventory $20,90013,750$

Property, plant, and equipment $$38,500$ $$42,900$

Less: Accumulated depreciation $-14,85023,65013,20029,700$

Total $$74,250$ $$69,300$

Liabilities and Stockholders$$ Equity

Accounts payable $$17,050$ $$23,650$

Income taxes payable $14,30011,000$

Bonds payable $11,0005,500$

Common stock $13,75013,750$

Retained earnings $18,15015,400$

Total $$74,250$ $$69,300$

Falcon Company

Income Statement

For the Year Ended December $31,2018$

Sales $$157,300$

Cost of goods sold $106,700$

Gross profit $50,600$

Selling expenses $$15,400$

Administrative expenses $4,95020,350$

Income from operations $30,250$

Interest expense $3,850$

Income before income taxes $26,400$

Income tax expense $3,850$

Net income $$22,550$

Additional Information

$1.$ Dividends of $$19,800$ were declared and paid.

$2.$ During $2018$ equipment was sold for $$5,500$ cash. The equipment originally cost $$8,250$ and had a book value of $$5,500$ at the time of the sale.

$3.$ All depreciation expense, $$4,400,$ was in the selling expense category.

$4.$ All sales and purchases were on account.

$5.$ Additional equipment was purchased for $$3,850$ cash.

Part $4$: Revenue Recognition

Worth More Industries is split into two different divisions$$Clear Water Pools and Madoff Securities. Each operates with its own accounting system and revenue recognition method.

Clear Water Pools

For fiscal year ending November $30,2018,$ Clear Water Pools worked on one construction project. It was awarded a contract for $$1,650,000$ on May $18,2018,$ to construct a swimming pool, and the construction started on June $19,2018.$ Its estimated completion costs were $$1,375,000$ for a $2-$year time period that started at the date of the contract. On November $30,2018,$ $$429,000$ of construction costs had been incurred and $$522,500$ progress billings had been made. On November $30,2018,$ the construction costs to complete the project were reviewed and the estimated amount was $$891,000,$ which was lower than projected. The change was due to a decline in raw material costs. Revenue recognition is based upon a percentage$-$of$-$completion method.

Madoff Securities

Madoff Securities uses manufacturers$$ agents who forward orders for alarm systems and the down payments. Madoff then ships its products from the f