Presented below is the unaudited balance sheet of Froning Manufacturing Corp. as of Dezember 31, 2015, as prepared by the brand new bookkeeper of Froning Manufacturing Corporation. Froning Manufacturing Company Balance Sheet For the year ended December 31, 2015 Assets Cash $225,000 Inventories 560,000 Account Receivable 336,100 Prepaid Insurance 40,000 Investments 67,300 Land 450,000 Building 1,750,000 Machinery and Equipment 1,631,000 Goodwill 370,000 Total Assets $5,429,400 Liabilities and Equity Accounts Payable $133,800 Mortgage payable, due 6/30/2016 900,000 Notes Payable 500,000 Lawsuit liability 80,000 Income Tax payable 89,200 Accumulated Depreciation 420,000 Total Liability 2, 123,000 Common stock, $50 par, 40,000 Shares issued $2,123,000 Retaining earnings 1,075,400 Total Equity 3,306,400 Total Liability & Equity $5,429,400

1) Checks totaling $24,000 in payment of accounts payable were mailed on December 30, 2015, but were not recorded until 2016. Late in December 2015, the bank returned a customers $2,000 check, marked NSF but not entry was made. Cash includes $110,000 restricted for building purposes. The companys Board of Directors made an appropriation of retained earnings of the same amount at its last meeting on December 15, 2015.

2) In the past, the company has experienced immaterial amounts of uncollectible accounts. However, in the past year, the company has more aggressively pursued new customers. The auditor estimates, based on the aging of accounts receivable, that $20,000 of the account receivable will not be collected in future accounts periods.

3) During 2015, Froning purchased 500 shares of common stock of a major corporation that supplies Froning with raw materials. Total cost of this stock was $61,300, and fair value at December 31, 2015 was $54,000. The decline in fair value is considered temporary. Froning plans to hold these shares indefinitely. Froning does not regularly engage in the purchase and sale of marketable securities.

4) Treasure stock was recorded at cost when Froning purchased 200 of its own shares for $30 per share in May, 2015. This amount is included in investments.

5) The mortgage payable requires $50,000 principal payments, plus interest, at the end of each month. Payments were made on December 31, 2015, January 31, 2016, and February 28, 2016. The balance of this mortgage was due on June 30, 2016. On March 1, 2016, prior to issuance of the audited financial statements, Froning completed negotiations and signed a non-cancellable agreement with the lender to refinance this mortgage. The new terms require $100,000 annual principal payments, plus interest, on February 28 of each year, beginning in 2017. The final payment is due February 28, 2024.

6) The lawsuit liability will be paid in 2016.

7) The company was authorized to issue 100,000 shares of $50 par value common stock.

8) A review of accounts payable indicates that the company has experienced foreign currency translation losses of $3,000 as of December 31, 2015. The company bookkeeper was unaware of any accounting requirements in this area.

9) The goodwill was related to the purchase of an online shopping subsidiary in 2011. A review of the subsidiarys operations indicates that is near bankruptcy, indicating that the goodwill is 100% impaired.

10) A review of inventory, for which the company uses the FIFO cost flow assumptions, reveals that the market value (replacement cost) of the inventory as defined by GAAP is 530,000. 11) Froning Manufacturing has made some errors and the balance sheet is not in the proper formatting. Prepare a correct classified balance sheet as of December 31, 2015, you may need to add new accounts to the balance sheet. Prepare a well-designed audit schedule for the audit file. For every number in the balance sheet present a properly labeled computation showing the change from the original to the revised number.

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